Settlement of a personal injury case between the injured party and a liability insurance carrier, usually involves a general release. Most injury claim releases are standard form releases. In the release, the defense does not acknowledge legal liability or fault. This is typical and safe language. Usually, a release simply identifies the settlement amount and indicates that it is “a settlement of a claim of disputed amount and disputed legal liability.” If your settlement involves multiple at-fault parties or multiple insurance carriers, then there may be more than one release.
If the settlement involves payment from Uninsured Motorist (UM) coverage, the insurer providing the UM policy may require a release to be signed or some are willing to waive the release requirement for UM claims.
In most UIM cases, the UIM insurer will not pay the UIM advance and they will not preserve their rights to subrogation and reimbursement. In these cases, the settlement is reached in two stages. In the first stage, the victim settles with the liability insurance carrier by signing a covenant not to enforce judgment (hereinafter referred to as a “covenant”). The covenant contains the victim’s promise that he or she will not seek any money or assets from the at-fault party. The legal effect is to preserve the victim’s rights to payment under all available UIM policies and to allow the victim to bring the case through trial if necessary to determine case value and to force payment from UIM carriers. However, the covenant also provides that if the trial verdict exceeds the amount of available UIM coverage, the victim cannot collect any amount directly from the at-fault parties or seek payment of any amount that exceeds the available UIM coverage.
If your claim involves serious injuries and large money damages, and if you are facing a liability limits tender with additional benefits available through UIM policies, proceed with caution. Be careful to avoid signing a general release prior to your UIM claim. Typically, if a UIM policy is applicable, we will ask the settling insurance company to send a Covenant Not to Enforce Judgment (CNEJ). A CNEJ usually allows a party to settle their claim without limiting their ability to pursue UIM insurance coverage.
Procedurally, to pursue a UIM claim, we typically secure a liability limits tender confirmation in writing and then provide written notice of liability tender to all UIM insurance carriers. The UIM insurers usually have thirty days to decide whether they will preserve their right to subrogation by paying the amount of the liability tender offer through a UIM advance payment or if they will waive their subrogation rights and allow the victim to settle directly with the liability insurance carrier. If they waive subrogation, the injury claimant may be able to sign a CNEJ and receive the liability limits payment. Next, one usually needs to present medical evidence and settlement demands to all UIM carriers and push toward a second payout through settlement. If settlement can be reached, the UIM carriers will seek signatures on a UIM release, which contains the victim’s agreement that he or she can present no further claims against that policy.
Some insurance companies are adding Medicare hold harmless agreements to their settlement documents. Dealing with Medicare can be complicated and any Medicare liens should be ascertained prior to settlement if feasible.
Medicare rights and rules are beyond the scope of this article but we handle Medicare liens on our clients’ behalf so that they do not have to deal with Medicare when they seek reimbursement for accident-related medical treatment.
Prior to settlement, you should determine whether any Medicare, Medicaid, Workers’ Compensation, self-funded ERISA, State Health Plan, or other lien or third party may have a right to reimbursement.
Our personal injury attorneys can help ascertain liens and third party claims, prior to settlement, signing of any general release or CNEJ, and prior to any UIM demands, so that our clients can calculate their true take home from any settlement or award for their injury claim. Tien Law Firm’s personal injury attorneys handle all paperwork and settlement documentation for our clients and welcome any questions they may have.
For more information on personal injury settlement releases, Covenant Not to Enforce Judgment, or UIM claims, contact our auto accident attorneys today.