Legal and Financial Considerations in TBI
Legal and Financial Issues Following Acquired Brain Injury
The first days, weeks and months following an acquired brain injury are a difficult time of adjustment for a person with acquired brain injury, their family and friends. Many important decisions must be made. Stress, emotion and uncertainty abound. Typically, when a loved one suffers an acquired brain injury, the injured person and family must make decisions that fall into three broad categories: medical/treatment issues, legal issues, and financial issues. The last two categories are often intertwined. Many of the decisions that must be made will have lifelong consequences. Thus, making the correct decisions the first time is of paramount importance. This paper will provide guidance to those faced with these difficult legal and financial decisions.
II. Initial Decisions
The first question that many will confront is whether the injured person is legally competent to make their own decisions regarding medical care and treatment. A person is incompetent under North Carolina law if they lack "sufficient capacity to manage his own affairs or to make or communicate important decisions concerning his person, family, or property whether such lack of capacity is due to mental illness, mental retardation, epilepsy, cerebral palsy, autism, inebriety, senility, disease, injury, or similar cause or condition."
Several factors should be considered in deciding whether to bring an incompetency proceeding to have a person with a brain injury declared legally incompetent and to have a guardian appointed. First, what is the long-term prognosis for recovery? Unfortunately, there is a social stigma to having been declared incompetent. If the long-term prognosis for recovery is good, it is probably best to postpone this decision to a later date. Second, has the injured person executed a durable power of attorney prior to their injury? If so, it will be much easier for someone to act on their behalf without having the injured person declared incompetent. A power of attorney is a legal document giving one person the legal authority to act on another's behalf. A properly executed durable power of attorney remains effective even after the grantor becomes incompetent. Thus, a person who holds a durable power of attorney (the attorney-in-fact) can act in many of the same ways as a guardian appointed by the court. Third, how urgent is the need for decisions to be made regarding day-to-day business affairs? If the injured person owns a business or property that requires constant management, there may be an immediate need for someone to assume decision making responsibility.
North Carolina law provides for three types of guardians: guardian of the person, guardian of the estate; and a general guardian. The term "guardian of the person" means a guardian appointed solely for the purpose of performing duties relating to the care, custody, and control of a ward. A guardian of the person has the authority to make decisions relating to the personal well-being of the ward, such as where they will live and what type of medical treatment they will receive. The term "guardian of the estate" means a guardian appointed solely for the purpose of managing the property, estate, and business affairs of a ward. A guardian of the estate has the right to buy and sell property, to make financial transactions and any other matters affecting the ward's property. A guardian of the estate will generally be required to post a bond and file regular accountings with the court summarizing all transactions they have made on the ward's behalf. It is best to open a separate bank account for the ward to make record keeping easier. A general guardian has the authority of both a guardian of the person and a guardian of the estate and can, therefore, act in all matters affecting the ward.
An incompetency proceeding is begun by filing a Petition in the county in which the person alleged to be incompetent resides. A hearing is then scheduled before the Clerk of Court. The potential ward must be served with a copy of the petition and a notice of hearing. A guardian ad litem is appointed by the Court to represent the interests of the incompetent person in the incompetency hearing. The guardian ad litem meets with the person alleged to be incompetent and communicates with the treating doctors. The guardian ad litem then reports their findings to the court at the hearing. The hearing is informal in that strict rules of evidence do not apply. If the court determines that the person is in fact incompetent, a guardian will be appointed. A person who has been declared incompetent may later petition the court to have their competency restored if they recover sufficiently to manage their own affairs.
B. Do we Need an Attorney?
1. When should an attorney be hired?
If the acquired brain injury results from a negligent act of another or occurs as a result of a compensable on-the-job injury the services of an attorney may prove helpful. If you plan to hire an attorney it is best to do so right away. It is certainly uncomfortable to think about legal issues shortly after a serious accident occurs. When you or a loved one is seriously injured the last thing you want to think about is getting into a legal dispute. We want to believe that the insurance company will treat the injured person fairly. Unfortunately, one of the ironies of our legal system is that the more seriously a person is injured, the less likely it is that the case will be settled without litigation. It is simply a matter of economics. When a person is seriously injured, the medical expenses alone may exceed several hundred thousand dollars. The more money there is at stake in a claim, the more likely it is that the insurance company will attempt to limit the amount they have to pay or avoid payment altogether.
One of the most crucial time periods for having an attorney is immediately after an accident. Evidence must be preserved or it may be lost forever Skid marks, crash debris and other evidence at the scene of an accident may disappear in the first few hours or days. Insurance companies have systems in place to preserve evidence that is helpful to them. It is unrealistic to expect an insurance company to preserve evidence that is harmful to their case. Remember, in our system of justice the person making a claim has the burden of proving that they are entitled to recover. Often the injured person will have no memory of what happened, which makes preservation of other evidence all the more important. Witnesses need to be interviewed while memories are fresh. Photos of injuries, scene, vehicles, etc. should be made. In addition to the need for evidence preservation, during the first few days and weeks following an accident, the insurance company will be asking for signed releases, recorded statements and other documents. It is best to have these documents reviewed by an attorney before signing them.
If the attorney is hired on a contingent fee basis the fee is likely to be the same whether you hire them right after the injury or months later. Obviously, if you are paying the same fee it makes sense to have the benefit of legal advice as early as possible in the case. Having an attorney from the onset will reduce the possibility that mistakes may be made that will affect the value of the claim later. Once an attorney is hired, never speak to the insurance company or sign anything for anybody without your attorney's knowledge.
2. Which attorney should we hire?
It is extremely important to choose the right attorney for these complex cases. The ability to obtain adequate medical care and the other necessities of life after an injury may well depend on the knowledge and skill of the attorney you hire. Like doctors, attorneys tend to specialize in one area. Not all attorneys have the same level of expertise in handling personal injury claims. The trial skills of attorneys vary greatly. If possible, choose an attorney that limits his/her practice to personal injury cases. The best approach is to interview more than one attorney. Don't be afraid to ask about the attorney's experience in handling similar cases and the results they have obtained.
In recent years a field of law has developed known as "neurolaw." "Neurolawyers" are attorneys who have taken the time and effort to learn about the special needs of persons with acquired brain injury. They are familiar with the general medical issues which arise in brain injury cases and with the best methods to prove the long-term consequences following a brain injury.
3. How will my attorney be paid?
There are two traditional methods of compensation for attorneys. They are the hourly rate and the contingent fee. Most attorneys will accept accident cases on a contingent fee basis. This means that the attorney will be paid a percentage of the total amount recovered in the case. There are advantages and disadvantages in each method from the client's point-of-view. The advantage of hiring an attorney on an hourly rate basis is that the total fee will be less than a contingent fee in many cases. The disadvantages are that the client must usually pay a retainer at the time the attorney is hired which can be quite large given the amount of time involved in a case involving acquired brain injury. The client must also pay the attorney whether they win or lose the case and must pay all fees incurred as the case progresses.
When the attorney is hired on a contingent fee basis the attorney does not get paid until the client does. A contingent fee arrangement is the only real choice available to many clients. Many people simply cannot afford to pay an attorney while they are recovering from an injury. In most cases they will be out of work with little or no income. Their mortgage payments, car payments, bills and other living expenses continue. They may be incurring thousands, or tens of thousands, of dollars in medical expenses in addition to their day-to-day expenses. The contingent fee system offers at least four advantages to the client: One, they can retain an attorney with no out-of-pocket expense. Second, the attorney has every incentive to maximize the client's recovery since that will result in a higher attorney's fee. Third, since they do not get paid until the client does, it encourages the attorney to move the case along as quickly as possible. Fourth, the client can afford the best attorney they can find since most attorneys charge similar contingent fees.
III. Funding Issues
Two issues quickly arise after a traumatic brain injury. "How are we going to pay for the medical care that is needed?" and "How can I pay my bills if I am unable to work?" There are four typical sources of funding that may be available following a brain injury: liability insurance, workers' compensation, private health insurance, and government benefits.
A. Private Insurance
In order to recover monetary damages for personal injury, the injured party must show that the tortfeasor was negligent in some fashion and that such negligence was a proximate cause of the injuries and damages sustained by the injured party. One common myth is that if you are hurt on someone else's property they are liable for your injuries. That is only true if the property owner was negligent in some way. North Carolina generally follows the traditional common-law rules of negligence. The North Carolina Pattern Jury Instructions define negligence as follows:
Negligence refers to a person's failure to follow a duty of conduct imposed by law. Every person is under a duty to use ordinary care to protect himself and others from injury. Ordinary care means that degree of care which a reasonable and prudent person would use under the same or similar circumstances to protect himself and others from injury. A person's failure to use ordinary care is negligence.
"'The law imposes upon every person who enters upon an active course of conduct the positive duty to exercise ordinary care to protect others from harm, and calls a violation of that duty negligence.'"Williamson v. Clay , 243 N.C. 337, 343, 90 S.E.2d 727, 731 (1956), quoting Council v. Dickerson's, Inc., 233 N.C. 472, 474, 64 S.E.2d 551, 553 (1951).
The standard of care in the ordinary negligence case is reasonable care under all of the circumstances. The standard of care may also be established by statute. Violation of a statute or ordinance may constitute negligence per se if the statute creates a specific duty of care and prescribes a specific course of conduct for the safety of others. Violation of many motor vehicle statutes is negligence per se.
North Carolina is one of only four states that still follows the principle of contributory negligence. This rule of law states that if the injured person contributes in any way to their injury they are not permitted to recover from the other party. Other states follow the principle of comparative negligence. In those states, the injured party may recover if their own negligence does not exceed the negligence of the other party. However, the damages they may recover are reduced by a percentage equal to the amount of their own negligence.
Once negligence is established, the insurance company for the at-fault person is responsible for paying all damages suffered by the injured person up to its policy limits. In North Carolina the minimum automobile insurance limits are $25,000 per person and $50,000 per accident. This is known as a "split limit." It means that any one person can recover up to $25,000 and that the maximum the insurance company must pay if more than one person is injured is $50,000. Obviously, these amounts are grossly insufficient to compensate a seriously injured person.
Underinsured motorist (UIM) coverage is optional coverage in North Carolina. The rules governing when underinsured motorist coverage applies and how much coverage is available are extremely complicated. Even attorneys have difficulty understanding this complex area of the law. In simplest terms, in North Carolina a UIM carrier is obligated to pay damages up to the policy limit once all liability insurance policies have been exhausted-- but only if the UIM policy limit exceeds the liability insurance limits of the person at fault.
Other types of insurance coverage that may apply when an accident occurs include uninsured motorist coverage, medical payments coverage and umbrella policies. Under certain circumstances coverages from more than one policy can be "stacked" or combined together.
Most insurance carriers will not make ongoing payments to an injured party while the claim is pending. Some carriers will make limited payments to the injured person so long as they are not represented by an attorney. This is one method insurance companies use to discourage people from obtaining legal representation early in a claim.
B. Workers' Compensation.
North Carolina law requires all employers who regularly employ three or more employees to maintain workers' compensation coverage. The workers' compensation insurance carrier is liable if an employee is injured by accident during the course and scope of their employment. The worker's compensation carrier is then responsible for all "medical, surgical, hospital, nursing, and rehabilitative services, and medicines, sick travel, and other treatment, including medical and surgical supplies, as may reasonably be required to effect a cure or give relief and for such additional time as... will tend to lessen the period of disability."
In addition to medical care, the employee is entitled to receive 66 2/3% of their average weekly wage at the time of the injury while they remain totally disabled. There is a cap on the amount that an injured worker may receive. The cap is periodically changed. Payments begin once the injured employee has missed more than seven calendar days from work. Average weekly wage is defined as the "earnings of the injured employee in the employment in which he was working at the time of the injury during the period of 52 weeks immediately preceding the date of the injury." Temporary total disability benefits (TTD) are paid directly to the employee on a weekly basis by the compensation carrier. Medical benefits are paid directly to the medical providers.
The injured employee may be entitled to additional benefits if they have a permanent disability after reaching maximum medical improvement. "Maximum medical improvement" simply means the injured employee has reached the maximum benefit from medical treatment and their condition is permanent. If the employee has a permanent disability they are entitled to receive "permanent partial disability (PPD) benefits if they are capable of some gainful employment or permanent total disability (PTD) if they are unable to return to any gainful employment. If a person is permanently and totally disabled they will receive the same weekly amount for the remainder of their life.
The injured party is required to file a Form 18, "Employees Report of Injury" within 30 days from the date of injury. The employer is required to file a Form 19, "Employers Report of Injury" with the Industrial Commission. The Industrial Commission is a quasi-judicial body that administers the workers' compensation system in North Carolina. The workers' compensation carrier is entitled to a lien against any sums recovered from third parties once they make payments to or on behalf of an injured worker.
C. Health Insurance
Fortunately, many people are covered by health insurance policies through their employment or through private plans. It is extremely important to review the entire policy carefully following an accident or injury. For those persons with health insurance, problems usually arise after the acute stage of care. Almost all health care plans cover hospital and doctor bills for acute care. However, many plans have significant limitations on what they will pay for long term-institutional care, home health care, attendant care and rehabilitation. Many plans have lifetime caps that are quite low and other limitations on treatment for "mental and nervous disorders."
The following example is from the health insurance plan of a major employer in North Carolina:
The Major Medical Benefits that will be paid for a person for the treatment of neurosis, psychosis, personality or other mental or nervous disorders, alcoholism and psychological or physiological drug addiction will be no more than $10,000. This limit applies to the total amount which can be paid.
This provision is often cited by health insurance carriers in an attempt to deny coverage to persons who have sustained mild brain injuries where there is no evidence of organic injury to the brain on MRI, CAT, EEG, etc. As in the case of social security claims, DO NOT GIVE UP if the claim is denied. Make sure to follow the appeal procedures which are listed in the policy if the claim is denied. Have the treating doctor document in writing that the symptoms are the result of an organic injury to the brain and not the result of a "mental disorder."
Here is another provision from that same policy:
Benefits payable for psychiatrists' or psychologists' charges for outpatient psychiatric care will be as follows:
1. Only the first $20 for any visit will count as a Covered Expense;
2. Benefits will not be paid for more than 50 visits in one Calendar Year; and
3. The Covered Percentage will be 50%.
Health insurance policies are contracts. As such they are governed by the general law which applies to contract cases. Any ambiguities in the policy will be interpreted against the insurance company by the courts. It may be necessary to retain the services of an attorney to force the carrier to pay for quality long-term care or a comprehensive rehabilitation program. Insurance companies deny claims if there is any plausible basis for the denial because they know that many people will simply accept the denial without a fight. If you fight long and hard enough, you will likely prevail if there is any basis in the policy for payment of the claim.
If your health plan is funded by your employer pursuant to ERISA (Employee Retirement Income Security Act) the plan may have a lien against any amount you recover from a third party. They plan will usually require the execution of a subrogation or reimbursement agreement before it will pay your medical bills. Always review the plan documents before executing such an agreement. If possible, have the agreement and health plan documents reviewed by an attorney before you sign them.
D. Social Security
The social security application process should be initiated immediately after a person has sustained a moderate to severe brain injury. It usually takes several months from the time the claim is initially filed to final approval. Do not give up if the claim is denied. Many claims are denied in the initial stages of the process which are eventually approved. There are two primary social security programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
To be eligible for SSDI benefits the person must:
Be medically disabled (illness/disability must be expected to last one year or longer)
Have worked, paid into the social security system (FICA) and earned sufficient quarterly credits
or be a disabled widow/widower of a person who was covered by social security at the time of their death
or be a dependent of someone who is disabled, retired or deceased.
The SSDI payment amount is based on a worker's lifetime average earnings covered by social security. The payment amount may be reduced by workers' compensation benefits and certain other public disability benefits. It is not affected by other income or resources. SSDI benefits do not begin until after the 6th full month of disability.
Once eligibility for SSDI is established a person is automatically entitled to Medicare benefits. However such benefits will not begin until 24 months after SSDI benefits begin. Medicare has two parts: Part A (hospital insurance) and Part B (medical insurance). Part B coverage is optional and a monthly premium is charged to SSDI recipients who elect to purchase it.
To be eligible to receive SSI, a person must:
Be 65 years of age
or be blind
or have a physical or mental disability that is expected to last at least one year or longer or to result in death
and the impairments must be so severe and disabling that the person cannot do the type of work they performed prior to the disability or any other kind of gainful work which exists in the national economy. The persons' age, education and work experience are considered in determining whether they are capable of gainful employment.
There are significant restrictions on the property and income a person may have to be eligible for SSI. A person eligible for SSI benefits also receives Medicaid health insurance. Medicaid pays for the following services:
Hospital inpatient and outpatient services
Laboratory and x-ray services
Office visits to doctor or dentist
Home health care
Drugs, supplies, medical equipment and appliances
Transportation to and from medical care
Other designated health services.
An application for social security benefits may be obtained by contacting the local social security office or by calling (800) 772-1213. Always keep a copy of any documents filed in connection with the social security claim.
For those persons who have a workers' compensation or other type of insurance claim, two questions will invariably arise: When should I settle my case and what is a fair settlement?
A. When should I settle?
Ideally, no attempt should be made to settle any case involving traumatic brain injury until the injured person has reached maximum medical improvement. Our legal system only permits an injured person one opportunity to resolve a claim. The exception to this rule is the settlement of a workers' compensation claim, which because of state law, is different from other types of insurance claims. In a case not involving a workers' compensation settlement, the insurance carrier will be making a one-time, lump sum payment equal to the present value of all past, present and future damages the injured person has sustained. Thus, it is important to ascertain the future damages the injured party will incur with as much accuracy as possible. This cannot be done until the injured person's condition has stabilized to the point where a determination of any permanent deficits can be made. Often, it will be necessary to have a Life Care Plan prepared in order to determine future medical needs. The services of an economist may also be required to calculate the present value of future medical care and lost earning capacity.
A claim may be settled before the injured person reaches maximum medical improvement where there is limited insurance coverage available. Where the amount of available coverage is not sufficient to fully compensate the injured person for all of the losses they have suffered, the claim should be settled as soon as the injured party can establish that their losses exceed the amount of coverage available.
A workers' compensation case should never be settled until the injured worker has reached maximum medical improvement unless it is obvious that the person will be permanently, totally disabled and the case is settled in a way that the medical claim remains open. There are two ways to settle a workers' compensation case. One is by execution of a Form 26 agreement and the other is by a clincher agreement. A Form 26 agreement pays the client any benefits they are entitled to receive for permanent disability and preserves the injured employee's right to future medical treatment. A clincher is an agreement to pay the employee a one-time lump sum payment equal to the present value of all future wage and medical compensation. Once a clincher agreement is approved by the Industrial Commission the workers' compensation claim is closed. The employee is then responsible for the payment of all future medical care.
B. What amount is fair?
North Carolina follows the traditional common law tort system for personal injury claims (does not include workers' compensation). The goal of the civil tort system is to make the injured party whole to the fullest extent possible. This means that the injured party is entitled to recover such actual damages as are reasonably necessary to restore the party to their pre-injury status.
The Pattern Jury Instruction defines actual damages as follows:
Actual damages are the fair compensation to be awarded to a person for any past, present, or future injury proximately caused by the negligence of another. The total of all damages are to be awarded in one lump sum.
Such damages may include: medical expenses, loss of earnings, pain and suffering, scars or disfigurement, loss or loss of use of part of the body, or permanent injury...
Damages for personal injury also include fair compensation for permanent injury. An injury is permanent when any of its effects will continue throughout the plaintiff's life. These effects may include future medical expense, loss of earnings, pain and suffering, scars and disfigurement, loss of use of part of the body, or any other element of damages supported by the evidence to be incurred or experienced by the plaintiff over her life expectancy. Life expectancy is the period of time the plaintiff may reasonably be expected to live.
Thus, the goal of a jury in setting the amount of actual damages is to arrive at a fair, just and proper verdict. When a arriving at a proper verdict the fact-finder may consider the following factors:
1. The nature, extent and duration of any physical injuries;
2. Any past, present or future medical expenses for the following:
d) Rehabilitation Services;
f) Any other medical treatment.
3. Any past or future lost earnings or lost earning capacity;
4. General damages for the following:
e) Mental Anguish;
Thus, a fair settlement is an amount sufficient to compensate the injured person for the actual amount of each type of damage listed above. Unfortunately, there is no set formula for determining what constitutes "fair compensation" for damages such as pain, suffering, disfigurement and mental anguish. That is why it is important to have an experienced attorney who has handled similar cases in the past.
The North Carolina Workers' Compensation Act does not provide compensation for pain and suffering no matter how severe the injuries are. Generally, when a workers' compensation case involving brain injury is settled the only considerations are future medical expenses and future wage earning capacity. All settlements in North Carolina workers' compensation cases must be approved by the Industrial Commission.
C. How should I settle?
Most settlements are finalized by the payment of a lump sum to the injured person. Sometimes it may be advantageous to settle the case by the use of a structured settlement. A structured settlement involves the purchase of an annuity by the insurance company. A properly executed structured settlement provides two benefits to the injured person: First, due to certain provisions in the tax code, the interest income generated by the settlement is not taxed. While personal injury settlements themselves are not taxable, the interest generated after the settlement is received is taxable. This tax advantage allows the injured person to receive a higher return on their "investment." Second, the annuity provides a steady stream of income for the injured person without the worry of having to actively manage the money or hire a financial adviser.
One word of caution. There are many very complex legal issues which may arise after an acquired brain injury. The law varies from state to state. The law of the state where the accident occurs is generally the law that applies to most issues. Some choices may seem simple at first blush. The "correct" course of action often varies from case to case depending on circumstances of the individual. Only general principles have been discussed here. If you have any doubt about what to do in any given situation, consult with an attorney of your choosing.
©2000 Charles G. Monnett III & Associates
ABOUT THE AUTHOR: Charles G. Monnett III, Esquire
Charles G. Monnett III is the founding partner of Charles G. Monnett III & Associates. Mr. Monnett's practice focuses on catastrophic personal injury, traumatic brain injury, medical malpractice and workers' compensation cases before both federal and state courts. Mr. Monnett is a featured speaker throughout the United States educating lawyers prosecuting traumatic brain injury, medical malpractice and other catastrophic injury claims. He remains dedicated to achieving justice for those who have been injured.
Copyright Charles G. Monnett III & Associates
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.