Settlement of your Compensation Claim

Settlement of your Compensation Claim

Article by Tyla Leo and Ivan Baxter

When does Settlement Occur?

Once your injuries have stabilised, your claim will start to progress through 3 ‘stages’.  Claims may settle at various stages:

• Stage 1: at a Compulsory Conference or shortly after.
• Stage 2: at a Pre-Trial Mediation, or shortly after the Pre-Trial Mediation.
• Stage 3: if your matter proceeds to a court hearing, settlement may occur any time leading up to the hearing.

Alternatively, a claim will finalise at the end of Stage 3, after the court hearing is complete and you have received a decision/judgement from the judge who heard your case. (It could take between 4 – 18 months for the judge to deliver a decision/judgement.)

Considering a Settlement Offer – or Making a Settlement Offer

Whenever a settlement offer is received from the other side, it is communicated and discussed with you. Similarly, there will be times when it is appropriate for you to make an offer of settlement to the other side. This of course, will always be discussed with you so you can make an informed decision based on our advice.

The decision to accept a settlement offer will always be given thorough consideration as proceeding to ‘the next stage’ will incur more costs. Notwithstanding this, it may be prudent to reject an offer. However, a reasonable offer needs to be carefully considered. Proceeding to a court hearing usually involves some risk, as a Judge may choose to believe the ‘other side’s’ evidence over yours.

Accepting or making a settlement offer needs to be considered in the context of:

• The value of your claim
• The evidence to support your claim  
• The likelihood of success if it went to a court hearing
• The likely Judgement amount
• Potential recovery of costs
• Legal fees and outlays required to progress your claim to later stages.

There are many things to consider.

We give thorough advice based on our knowledge of the laws that apply to your situation, and the hundreds of claims we have settled over the years. Ultimately, our lawyers will guide you to make a commercially sensible decision when deciding to:

• Accept or reject a settlement offer.
• Make a settlement offer.

Costs

Often a settlement offer is ‘inclusive of costs’. What can be claimed from the other side for your legal costs is complicated and, in many instances, the costs you can recover from the other side is quite limited.

We will advise you on the rules applicable to your situation in the lead up to any settlement. (Read more about costs below.)

Fees and Outlays

Many hours will have been spent by lawyers progressing your case. Also, considerable money will have been spent obtaining evidence (expert medical reports, expert liability reports) to support your claim.

As all fees and outlays come out of your settlement money, whenever a settlement offer is made and being considered, we will:

• Advise you of the amount owing to your litigation lender. If you have had expert reports (etc) funded by a litigation lender, these amounts and interest will be payable on settlement money being received.
• If a barrister has been involved in your case, we will advise of their fee.
• Advise you about our fees and any outlays we have incurred. (We will have recorded all the time spent on your matter and any outlays we have incurred on your behalf.)

Accepting an Offer

Once you know all fees and outlays that have been incurred on your matter, you will have clarity around how much you will receive in your hand from the settlement money if you accept.

This, along with consideration of all other factors surrounding your claim, will inform your decision to accept an offer or not.

We will be as accurate as possible and work this through with you at the time an offer is made.

There are occasions where, in addition to legal fees and outlays, people have compulsory charges that must be refunded and paid out of their settlement amount. We have no control over these refunds/charges as they are government mandated. We will usually be able to estimate relatively accurately, the amount of these refunds or charges. They may include:

• Centrelink benefits paid during your claim
• Debts owed to the Child Support Agency
• NDIS
• Your private health fund
• Or to the Department of Veterans Affairs (if you are a veteran in receipt of a DVA pension.)

Once Your Claim is Settled

Your lawyer will have told you at the time of accepting an offer, the approximate amount of settlement money you will receive in your hand.

The money you will receive from your settlement amount will usually come from:

1. Our Trust account - shortly after settlement money has been paid,
2. Medicare – when the refund to you has been processed,
3. And IF costs need to be determined after settlement or Court Judgment, you may receive a further amount from our Trust account after costs have been negotiated or assessed and settled and paid to us.

Money to our Trust Account

Settlement money is paid by ‘the other side’ to our Trust Account six to eight weeks after settlement. Medicare (the government) takes 10% of the settlement amount and once they are satisfied no health claims made throughout the duration of your claim are related to your claim, they then ‘refund’ the money back to you. (more on this below).

The amount paid to our Trust Account is therefore, less that the settlement amount.

Medicare

When settlement money is paid to us, in most cases, Medicare will have been paid an advance payment which is usually 10% of your claim. We have no control over this as it is government mandated.

What comes out of your Settlement Money?

Centrelink, Child Support, Private Health Fund, NDIS, DVA

If you have been in receipt of Centrelink benefits during your claim, there may be charges from Centrelink to be ‘repaid’. Centrelink will issue a Notice of Charge, and this amount will have been paid (or ‘refunded’) to Centrelink from your settlement amount. This also applies to any debts owing to the Child Support Agency. We have no control over this as it is government mandated.

Similarly, if you are a veteran in receipt of a DVA pension, this may have been refunded from your settlement amount.

There may also be charges from NDIS or your private health fund that have been refunded to them from your settlement amount. Again, we have no control over this.

Fees and Outlays

There will be invoices to be paid for fees and outlays incurred to progress and complete your claim. There will be invoices from:

• The litigation lender who financed most of your outlays/disbursements (medical reports, flights, accommodation, mediators’ fees, etc.).They will provide a payout figure for their loan balance, including interest.
• Your Barrister, and
• Us - OSheaDyer Solicitors. We will provide you with our itemised invoice for all fees and any outlays we incurred on your matter.

The balance in Trust is then paid to you.

This amount (the balance in Trust after all fees and outlays have been paid) along with the refund you receive from Medicare a couple of months down the track, makes up the total amount you will receive in your hand.

This is the amount your lawyer would have indicated you would receive at the time of settling your claim.

Often settlements are inclusive of costs. Sometimes costs are to be negotiated and settled after settlement. If that is the case, their will be a further payment to you once the issue of costs has been resolved and paid.

Costs

Are any of my Legal Costs (fees and outlays) Paid for by the Other Side?

Recovering costs is complicated. There are many rules and legislation that apply to this area of law. In some situations, legislation prevents recovery of any costs from the other side or limits those costs.

We will always seek costs where the rules allow.

Motor Vehicle Claims and Public Liability Claims

Once your matter progresses to a Compulsory Conference (Stage 1), or a Pre-trial Mediation (Stage 2), recovering costs from the other side becomes relevant.

If your matter is settled and your settlement is more than approximately $83,000* legislation applies to ensure that standard costs are paid by the insurer. This usually means you will recover around half of your total fees and outlays (total legal costs).

If you go to a Court Hearing and you win the case, you will usually get an order that the insurer pays your standard costs.

However, IF after commencing proceedings in Court, you have served an offer to settle on the other side, and the matter goes to a Court Hearing and the Judge makes an order that is equal to or more than your offer, you will recover standard costs up to the date of the offer and indemnity costs from the date of the offer to the completion of the matter (which could be Judgement or settlement prior to the Court hearing).

(*This amount can vary slightly depending on the date of your accident.)

Workers Compensation Claims

In a workers’ compensation claim, because of rules and legislation, it is rare to recover any costs from the other side.

However, if your matter is not settled at the Compulsory Conference (Stage 1), Mandatory Final Offers (MFO’s) must be exchanged.

IF the matter then goes to a court hearing and the judge awards an amount equal to or more than your MFO, you are entitled to your standard costs from the date of the MFO through to the conclusion of the hearing. EG. If costs (fees and outlays) incurred between the Compulsory Conference and the end of the court hearing are $100,000, you would expect to recover approximately half, so $50,000.

This is generally the only situation in which you are entitled to recover any costs from Workcover.

If your matter is settled before any court proceedings are commenced, legislation prevents you from recovering any costs from the other side.