Plaintiffs Gain Ground in Courts and Charity

Personal injury plaintiffs are gaining ground on several fronts. They were hit hard between 2018-2022. In 2018, tax legislation created a “plaintiff double tax.” And in 2019, court closures for COVID stalled most of their cases.

But 2023 brought a real comeback. Courts have re-opened. Interest rates are making “structured settlements” particularly valuable. A new trust arrangement allows plaintiffs to avoid the “double tax.” And a new charity empowers plaintiffs to raise medical funds from their local communities.

The Return of Settlements and Structures

Court closures at the beginning of COVID decimated plaintiffs’ ability to recover for their injuries. Defendants and casualty carriers knew that they wouldn’t face trials for many months, even years. And personal injury verdicts generally don’t award pre-judgment interest, which can incentivize early settlement.

But courts have reopened, playing catch-up and handling new cases. And while many courts prioritized criminal trials, civil dockets are catching up to a pre-COVID pace.

As cases started moving, rising interest rates have helped as well. Plaintiffs are uniquely eligible to use flexible and tax-advantaged annuities through “structured settlements.” Rather than accepting a lump sum settlement, plaintiffs gain significantly by receiving their recovery over many years. And with interest rates at a current high, plaintiffs today are consistently “structuring.” Structured settlement premiums in the first two quarters of 2023 are up 75% over 2022.

New Arrangements to Solve New Problems

Plaintiffs and their advisors have been creating solutions for decades. The structured settlement is a great example, providing plaintiffs a way to increase the value of any settlement amount. The Medicare Set-Aside Account is another, preserving plaintiffs’ eligibility for public benefits to supplement their settlement.

A new problem struck in 2018 as plaintiffs lost their ability to deduct legal fees in many cases. Congress disallowed many types of deductions so that all taxpayers could increase their “standard deduction.” As a result, many plaintiffs pay a double tax, a tax on the legal fee portion of their recovery, even though their lawyers pay tax on the same amount. Professionals in the settlement industry addressed this with another innovative solution, the Plaintiff Recovery Trust.

A Plaintiff Charity to Meet Medical Needs

Plaintiffs often need more than what they get at settlement, even with the help of public benefits. And medical debt is particularly troubling. In fact, statistics show that “medical debt is the largest single cause of bankruptcy in America.”

You’ve probably seen requests for donations to medical fundraisers. Unfortunately, recipients don’t realize that donations might risk their eligibility for Medicaid, a terrible result.

Starting in January of 2024 plaintiffs will have a new solution. The settlement planning community has created the Plaintiff Fund, partnering with 501(c)(3) charity Help Hope Live to give personal injury plaintiffs a safe and effective way to raise medical funds from their church, school, and community. Help Hope Live has a long track record of amazing work, having raised nearly $200 million for over 20,000 families since 1983.

The Plaintiff Fund will provide plaintiffs (1) support in creating a medical fundraising campaign, (2) $1,000 toward their medical expenses, and (3) a national resource network of medical service and product providers to consider working with.

Support for this timely and needed solution has come from many sources, including leadership and members of the three national settlement planning associations. The Plaintiff Fund Committee includes the President of the Society of Settlement Planners (SSP) and a Co-Chair of the Legal Committee for the National Structured Settlements Trade Association (NSSTA). In fact, the Plaintiff Fund’s Organizer and expert advisor serves on the Legal Committees of the SSP, NSSTA, and the American Association of Settlement Consultants (AASC). Defense professionals and organizations are contributing as well, showing support for personal injury victims. Even a trailblazing legal-travel company and clinical psychologist have backed the Fund.

A Promising Future for Plaintiffs

We’re seeing other work on plaintiff issues too. Much of it led by those at the Association for American Justice and the three settlement planning associations. Personal injury plaintiffs come from all walks of life, and from all across the country. From car accidents to medical malpractice, from workplace harassment to wrongful imprisonment.

With progress and projects to maximize their recoveries, plaintiffs are receiving more support than ever from the professionals behind them.