blog home Personal Injury What comes out of my compensation after a personal injury settlement?

What comes out of my compensation after a personal injury settlement?

By John Singleton on September 20, 2023

Most people who are seriously injured in an accident don’t have the financial resources to pursue compensation from an insurance company on their own. And when accident victims don’t seek legal recourse against a negligent party, they are at the mercy of the insurance company, which is free to offer any amount they choose or to deny your claim altogether.

A contingency fee arrangement with a law firm levels the playing field. Under this type of arrangement, a personal injury lawyer agrees to represent you. At GibsonSingleton, we will only collect a fee if your case is successful. If we do not win you a settlement or a judgment, you won’t owe us any legal fee. Under a contingency fee arrangement, we collect a predetermined percentage of your settlement.

But, in addition to your attorney, others may have the right to collect money out of your settlement, including some private and government healthcare agencies, tax collectors, and people who hold a lien against you.

Federal law and Virginia law determine who is allowed to claim funds from your settlement and how much they can take. Your personal injury lawyer will keep you informed about any liens that have been placed on your settlement. Your attorney may be able to negotiate down the cost of a lien, and we will challenge illegitimate efforts to remove money from your settlement.

What types of costs would GibsonSingleton charge from my settlement?

At GibsonSingleton Virginia Injury Attorneys, your initial consultation is always free. If your case is successful, we will charge for the following types of services, which are spelled out in the agreement you sign with us:

  • Attorney costs for case expenses during the investigation, negotiation, and trial of your case (if a trial is necessary).
  • Discovery costs. Discovery lets your attorney know in advance of a trial which witnesses and evidence the other side will be presenting. Discovery costs include fees for court reporters and videographers at depositions, costs for deposition transcripts and document production, and copying costs.
  • Court filing fees typically range from $48 to more than $350 for a personal injury lawsuit in Virginia. The total amount of these fees depends on which court will be hearing your case, the number of defendants, the amount of damages sought, the type of case, and if you wish to have defendants served by a Virginia Sheriff or high constable.
  • Expert witness fees. Experts provide an independent opinion based on their professional experience, knowledge, and education. This may include medical, accident reconstruction, engineering, economics, forensics, manufacturing, chemical, and vocational expertise.
  • Investigation expenses include collecting police reports, making phone calls, interviewing witnesses, and collecting physical and accident scene photos.
  • Document retrieval, including medical records and legal documents.

How can medical and other liens affect my compensation?

A lien is a third party’s legally enforceable right to be paid the funds they’re due before the plaintiff gets any of the proceeds of a settlement. A lien that is filed against your personal injury settlement is most likely the result of health care expenses, but other types of liens may be placed on your personal injury settlement, such as money owed for child support.

If you received medical attention for your injuries, subrogation claims may be filed against your settlement. Subrogation is the health insurance company’s right to seek reimbursement from your personal injury settlement for the bills the insurer paid on your behalf that it would not have to pay but for your injury due to someone’s fault. Virginia has anti-subrogation laws that prevent some private insurance companies from seeking reimbursement from a personal injury settlement. However, if your healthcare policy was entered into in a state where subrogation is allowed or pursuant to the insurance policy, a private insurance carrier could have the right to make a claim against your personal injury settlement.

Federal law allows for subrogation for federally backed health insurance plans. Unfortunately, Virginia’s anti-subrogation laws are trumped in these cases, and the following healthcare plans are allowed to collect reimbursement from a personal injury lawsuit that is filed in Virginia:

  • Workers’ Compensation
  • Tricare
  • Medicaid
  • Medicare
  • Federal Employees Health Benefits (FEHBA)
  • Indian Health Service (IHS) program
  • Children’s Health Insurance Program (SCHIP)
  • Private policies covered by ERISA (Employees Retirement Income Security Act)

In addition to health insurance companies that are exempt from Virginia’s anti-subrogation laws, medical providers may place a lien on a personal injury settlement to recover the amount they charged for the injured person’s medical care. This may include costs such as ambulance fees or a visit to an emergency room that wasn’t covered by health insurance. Fortunately, Virginia law provides caps on these expenses:

  • $2,500 for hospital or nursing home visits
  • $750 for each physician, nurse, physical therapist, or pharmacy that served the patient
  • $200 per ambulance ride

Are some parts of my settlement taxable?

For the most part, your personal injury settlement is exempt from state and federal taxes, but in some cases, a portion of the settlement may be subject to federal and state income taxes. If your case is about lost wages, the recovery may be taxable. You will want to consult with the IRS and the Virginia Department of Taxation for a definitive answer regarding the tax liability from your personal injury settlement.

Whether the settlement is taxable depends on the nature of the damages received. For example, compensation for physical injuries and medical expenses is generally not taxable by the IRS or the Virginia Department of Taxation. This includes physical injuries, wrongful death, and emotional distress in cases where the victim was physically injured.

Settlement funds that may be taxable include:

  • Punitive damages
  • Deductible medical expenses
  • Interest earned on your settlement
  • Medical expenses that were already deducted in a previous year

Who can help me after I have been injured in an accident?

If you were injured due to the carelessness or wrongdoing of someone else, we at GibsonSingleton Virginia Injury Attorneys are here to help.

We provide our “big city experience, small town care” approach to all our clients. We consider it a calling to help people who have been senselessly harmed in an accident. In fact, my partner Ken Gibson and I have firsthand knowledge of what it’s like to be an injury victim.

We will always treat you and your family with respect and compassion, and we are here to take your call at any time if you have any questions or concerns. When you put your trust in GibsonSingleton Virginia Injury Attorneys, you don’t pay anything unless we win your case. We call it our Zero Fee Guarantee.

Reach out to us at (804) 413-6777 or toll-free at (855) 781-6777 to schedule your free consultation. We’re here to fight for you.

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Community service

Prevention, empathy, and diligence are hallmarks of everything we do at GibsonSingleton Virginia Injury Attorneys. Our community can see these ideals lived out in our work to prevent personal injuries from happening.

  • Safety Education
    GibsonSingleton launches a “Texts=Wrecks” campaign to reduce the number of people injured or killed by distracted drivers.
  • Annual Coat Drive
    During the fall, our team works to distribute coats to people in need in our community.
  • Hands-on Service
    John and Ken join the Gloucester Point Rotary Club in cleaning up the community.
  • Supporting Local Schools
    The Gibson family participates in Gloucester’s Botetourt Elementary Shuffle fundraiser.