Understanding Settlement Costs and Fees in Car Accidents: A 20,000 Dollar Case

Have you ever found yourself in a situation where you've received a settlement from your car accident but aren't entirely sure how the funds were allocated? Sometimes, the amounts and percentages can be confusing, leading to misunderstandings and concerns. In this article, we'll break down a specific case of a 20,000 dollar settlement and explore the often murky waters of legal fees, medical costs, and subrogation.

What Happened in the Case?

Our case involves a 42-year-old lawyer and accountant who recently received a 20,000 dollar settlement for a car accident. The process, however, was not as straightforward as one might hope. Here's a detailed breakdown of what transpired:

The lawyer was informed they needed to use the insurance company's doctors to potentially lower the settlement costs. Despite the initial disbursement of 8,600 dollars, the settlement was ultimately for 20,000 dollars. This process took 6 months to complete.

The lawyer explains their long history in the field, representing hospitals and insurance companies, which gives insight into the common practices and regulations surrounding car accident settlements.

The Role of Subrogation in Car Accident Settlements

Subrogation is a critical concept in car accidents. Defined as:

"Jones causes a car accident damaging Smith. Smith's insurance pays Smith. Smith's insurance then makes a demand or sues Jones or his insurer to get reimbursed."

This process allows the insurance company to seek repayment for the amount they've already paid out, ensuring a fair balance is maintained.

Changes in Settlement Calculations and Fees

Over the years, the calculations for auto liability have evolved. In the early 2000s, the calculation was typically 2.5-to-3 times the sum of medical bills, lost wages, and property repair costs. However, with the reduction in liability payments, contingency attorney fees have also increased:

Around 2000, the ratio was changed to 2 times the total medical bills, lost wages, and repair costs. In some cases, it can even be 1.5 times. Lawyers now often charge 40%, with additional fees for legal services and expenses such as filing and deposition fees, postage, and copies.

It's important to note that while medical practices and law firms cannot have formal agreements for reduced charges, they can have informal understandings.

Debunking the Myth of 'Their Doctors'

The lawyer explains that the term 'their doctors' is not an actual policy but rather a tactic used by insurance companies to potentially reduce settlement costs.

"Your lawyer said to use 'their' doctors. That is why. 'Their doctors' is just a tactic, not an actual policy."

It is also clarified that the 8,600 dollars received was actually about 12,000 dollars in value after legal fees were deducted, with the rest used to pay medical bills.

In many places, a final settlement amount covers all medical expenses and associated expenses, leaving no bills for the injured party. Conversely, in areas like the one described, the settlement amount minus the lawyer's fee and medical expenses can leave a net amount of 20,000 dollars.

If you find that the process has been overly complicated or disagree with the disbursement, you might want to consider involving government regulators to investigate the case.

Conclusion

The car accident settlement process can be confusing, especially when legal fees and medical expenses are involved. Understanding the role of subrogation, changes in settlement calculations, and the possibility of 'their doctors' is crucial. If you ever find yourself in a similar situation, ensure you fully understand the process and the allocation of funds in your settlement.