Worker's Comp Settlement - How would a CA find it?

[Anonymous]

I have a friend who is disabled and has been fighting worker's comp for several years for a back injury.  He's already had surgery and it didn't really help.  He's also been struggling with getting SS payments.  I don't know all the details or even really how it works, but he's running out of pain meds and money left in the Disability bucket of money, so he's going to be cut off soon.  He's in way too much pain to be able to work, he can't sit or stand for too long, so there's zero money coming in.  His GF has been supporting him for years and she barely makes enough money to comfortably support herself.

He's been offered a settlement by WC, if he takes it he'll be cut off  and completely on his own, no doctor visits or pain meds covered in the future.  The settlement is supposed to be enough to not only reimburse him for the past 5 years of loss of work, but also pretty much the rest of his life.  He doesn't have insurance so he'll be paying out of pocket for his future medical care until they can get married (no date in sight, although that's the plan).  He doesn't have a bank account.  He's concerned about taking the settlement, opening a bank account to deposit it (or being added to his GF's account), and CA's coming out of the woodwork to sue him for it.  I know they're coming up on SOL for some of them, but not all.  I'm also concerned that if they put it in a joint account and they get married, can HER CA's come after it too?  She's unfortunately in a bad place financially because she's been supporting him.

They're in California.

Thank you very much for reading this and for any feedback you can give me.  I really appreciate it.

[MattH]

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@Anonymous wrote:

I have a friend who is disabled and has been fighting worker's comp for several years for a back injury.  He's already had surgery and it didn't really help.  He's also been struggling with getting SS payments.  I don't know all the details or even really how it works, but he's running out of pain meds and money left in the Disability bucket of money, so he's going to be cut off soon.  He's in way too much pain to be able to work, he can't sit or stand for too long, so there's zero money coming in.  His GF has been supporting him for years and she barely makes enough money to comfortably support herself.

He's been offered a settlement by WC, if he takes it he'll be cut off  and completely on his own, no doctor visits or pain meds covered in the future.  The settlement is supposed to be enough to not only reimburse him for the past 5 years of loss of work, but also pretty much the rest of his life.  He doesn't have insurance so he'll be paying out of pocket for his future medical care until they can get married (no date in sight, although that's the plan).  He doesn't have a bank account.  He's concerned about taking the settlement, opening a bank account to deposit it (or being added to his GF's account), and CA's coming out of the woodwork to sue him for it.  I know they're coming up on SOL for some of them, but not all.  I'm also concerned that if they put it in a joint account and they get married, can HER CA's come after it too?  She's unfortunately in a bad place financially because she's been supporting him.

They're in California.

Thank you very much for reading this and for any feedback you can give me.  I really appreciate it.

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I think these questions need to be discussed with expert(s) rather than on an Internet forum.  You need to talk either with one person who is BOTH an excellent lawyer AND an excellent financial planner, or more likely with at least two people, one being a lawyer and one being an excellent financial planner.  The lawyer needs to advise your friend about (1) how to best protect that settlement from creditors and (2) whether that settlement offer really is close to what could be obtained by going all the way to court.  The financial planner needs to advise your friend about how to manage that settlement to maximize risk-adjusted lifetime income derived from that lump sum.  It is criticality one for your friend to get both the legal and investment parts of this right, because getting it wrong could lead to big problems.  Not getting the legal part right could mean your friend loses money to judgements.  Taking too much risk with investments could mean your friend loses principal.  Getting an insufficient return on investments means not keeping up with inflation.  If you have some money you can afford to spend on helping your friend, one of the best ways you could use that money would be helping your friend obtain expert advice.

[Imhotrodcrazy]

While I am certainly not an expert in the field, and I would consult a workers comp attorney,  I was told by an attorney that a persons income from workers comp, retirement benefits, social security benefits, etc.  can not be  taken from you in a court of law to satisfy a judgment  by a creditor.  I also live in Calif.

You might also want to "google"....." California Civil Judgments", or "Judgment proof" articles.

Good luck to you. 

Message Edited by Imhotrodcrazy on 07-13-2009 07:33 PM

[MattH]

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@Imhotrodcrazy wrote:
While I am certainly not an expert in the field, and I would consult a workers comp attorney,  I was told by an attorney that a persons income from workers comp, retirement benefits, social security benefits, etc.  can not be  taken from you in a court of law to satisfy a judgment  by a creditor.  I also live in Calif.

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I believe this is correct, that most States do protect workers' comp and pensions from lawsuits.  However, it is extremely important that protected money be deposited into a dedicated account and that the bank or other company keeping that account be notified that the money is protected money, so they will know to reject attempts to attach the funds and inadvertently mingling protected funds with funds that are not protected can put all the funds at risk.  One of the reasons for hiring a good lawyer is to make sure every "t" gets crossed and every "i" gets dotted in the relevant paperwork.  Another key question with a lump sum like this one is, how to protect the investment earnings derived from it from creditors!

[Imhotrodcrazy]

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@MattH wrote:

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I believe this is correct, that most States do protect workers' comp and pensions from lawsuits.  However, it is extremely important that protected money be deposited into a dedicated account and that the bank or other company keeping that account be notified that the money is protected money, so they will know to reject attempts to attach the funds and inadvertently mingling protected funds with funds that are not protected can put all the funds at risk.  One of the reasons for hiring a good lawyer is to make sure every "t" gets crossed and every "i" gets dotted in the relevant paperwork.  Another key question with a lump sum like this one is, how to protect the investment earnings derived from it from creditors!

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Matt,  I agree with you entirely.  You can not be too careful in this situation.  The hard part of this is, finding an attorney who you can trust.  The way it use to be is, that the attorney did not charge you unless he won your case in court. If he did win, ( in calif is all I can speak for ), he/she received a max of 15% of the total amount awarded.  Even at 15%, this could be a substantial amount for the attorney involved. I am not sure how the workers comp works now under the new laws.  In addition, a good attorney will make sure that the injured party will have life time medical care in addition to the monitory award. 

[Anonymous]

Thank you so much for all of your responses.  I will be having a long talk with my friend.