Personal injury claims can be stressful because you’re dealing with injuries, medical bills, lost wages, insurance adjusters, lawyers, and how much compensation you’ll actually receive. There are several steps involved before you receive your personal injury settlement. If you’re in Tennessee, understanding how the settlement payment process works can help you set realistic expectations and know what to expect before your funds are distributed.
What is the Personal Injury Claim Settlement Process in Tennessee?
The process takes some time because each step is there to finalize the agreement and make sure everything is paid (i.e. your attorney and medical bills).
Signing the Release & Settlement Agreement
Once your attorney and the at-fault party’s insurance company agree on a settlement amount, there are a few steps that need to be completed before you get your settlement check. First, your attorney will prepare formal documentation. This includes a settlement agreement outlining the terms and a release of liability. The release is particularly important in Tennessee because it’s a legally binding document where you agree to give up your right to pursue any future claims related to the incident in exchange for the settlement funds.
Your attorney will carefully review these documents to ensure the terms match what was negotiated and your rights are protected. You should never sign a settlement agreement or release without fully understanding what you’re agreeing to and going through the documents with your attorney.
Issuing the Settlement Check
In Tennessee, insurance companies typically have specific timeframes for issuing settlement checks, though these can vary by type of claim, insurer, and policy type. The settlement check is sent to your attorney’s office instead of directly to you. This is so your lawyer can take care of any outstanding expenses or obligations before you receive your settlement.
Depositing the Settlement Check into a Trust Account
When your attorney gets the settlement check, Tennessee ethics rules require them to place it in a special client trust account, also known as an Interest on Lawyers’ Trust Account (IOLTA). The money must remain in this trust account until the check officially clears the bank, which can take several days before the funds are disbursed to cover any outstanding fees before you receive the check.
Resolving Any Outstanding Liens
Before you receive your settlement check, your attorney will take care of any liens that need to be paid from the settlement. In Tennessee, there are several kinds of liens that can legally be placed on a personal injury settlement. Common liens in personal injury cases include:
- Medical Liens⎯Medical liens that could be owed are to hospitals, doctors, and other healthcare providers who treated your injuries. Tennessee hospitals can file liens under Tennessee Code § 29-22-101 to secure payment for medical services provided.
- Health Insurance Subrogation⎯If your health insurance paid for your medical bills, they may have a right to be reimbursed from your settlement under Tennessee’s subrogation laws.
- Government Liens⎯Under federal law, Medicare and Medicaid have subrogation rights that take precedence over state law. If either of these insurances paid for any injury-related treatment, they must be reimbursed from your settlement. The Tennessee Department of Labor and Workers’ Compensation may also have liens if you received workers’ compensation benefits related to your injury.
At Wettermark Keith, our personal injury attorneys work directly with lienholders to negotiate reductions whenever possible. This helps lower the amount you’re required to pay back, so you get the most out of your settlement. Our goal is to help you keep as much of your settlement as possible by managing the complexity of liens on your behalf.
Deducting Attorney’s Fees
Our Tennessee personal injury attorneys work on a contingency fee basis, meaning we only get paid if you win your case or reach a settlement. In addition to attorney fees, any case-related costs your attorney covered on your behalf will also be deducted. These could include court filing fees, costs of obtaining medical records, expert witness fees, deposition costs, and investigation expenses.
Receiving Your Settlement Check
Once all liens, attorney fees, and case-related costs have been paid, your attorney will prepare a final settlement statement detailing how the funds were distributed. This itemized breakdown ensures complete transparency, so you can see exactly where the money from your settlement was allocated. Then, you’ll receive a check for the remaining balance which is your net settlement amount. Your attorney will arrange secure delivery of your settlement funds, which may require your signature upon receipt.
Lump Sum vs. Structured Settlement
In Tennessee, personal injury settlements are typically paid in either a lump sum or a structured settlement.
Lump Sum Payout
A lump sum payment is the most common type of payment for a personal injury claim. You can get a check for the entire settlement amount in one single payment so you can immediately access these funds.
Structured Settlement
A structured settlement is a series of payments over an extended period rather than a single payout. These payments can be scheduled monthly, quarterly, or annually for a set number of years or even for the rest of your life. Compensation for physical injuries is generally not taxable under federal law, though tax treatment can vary depending on the type of damages involved. It’s always advisable to consult a tax professional regarding your specific situation.
Structured settlements offer several advantages under Tennessee law because they are tax-free income (federal and state) for personal injury cases when a person is seriously harmed, or when the victim is a minor.
Personal Injury Settlements for Minors in Tennessee
Tennessee Code § 29-34-104 requires court approval for personal injury settlement involving minors. The court reviews the settlement to ensure it’s in the child’s best interest, and then the funds are usually placed in a restricted account or structured settlement that they can’t access until they’re 18. The court can approve partial payments for the child’s medical care, education, or daily needs, but typically keeps the settlement principal preserved for the child’s benefit until they’re an adult.
Why You Should Hire a Tennessee Personal Injury Attorney if You’ve Been in an Accident
Wettermark Keith’s experienced personal injury attorneys in Chattanooga and Knoxville, Tennessee will fight to get you the maximum compensation you deserve, protect your rights, manage the entire settlement process, handle all negotiations with lienholders, and ensure every legal requirement is met. Contact our Tennessee injury attorneys for a free case consultation by calling (877) 455-0401 or filling out our online form.
