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Structured Settlements

In cases in which a medical malpractice patient has suffered a catastrophic injury, plaintiff's lawyers must be careful to ensure that the damages awarded will be available to the plaintiff throughout his or her lifetime. To protect against plaintiffs and their families spending a large settlement before the need for medical care has ended, many plaintiff attorneys advise their clients to enter into a structured settlement. A structured settlement provides for more than one periodic payment during a plaintiff's lifetime or some other specified period.

Structured settlements are commonly used for awards to infants and children. Also, when the main provider for the family is injured by medical malpractice, structured settlements are valuable to ensure a steady income stream to the family. Also, structured settlement annuity payments for personal physical injuries are income tax-free to the recipient.

In general, a structured settlement consists of an initial up-front lump sum. The amount of the lump sum will vary based on the needs of the plaintiff and the size of the overall verdict. The initial lump sum can allow plaintiffs to cover unpaid medical bills. Also, the lump sum may be used to provide special equipment such as a motorized wheelchair that the plaintiff needs as a result of the malpractice.

After the initial lump sum is paid, the plaintiff can decide to take periodic deferred payments generally based upon monthly or annual payments, deferred lump sum payments, and/or lump sum or periodic payment for attorney fees. Structured settlements can be arranged in a variety of ways and should be negotiated with the assistance of a lawyer.

In most states, judges are required to sign off on a structured settlement before it will be final. The judge looks to ensure that the plaintiff's best interests are taken into account. Some states even required structured settlements in certain cases. Examples of cases in which structured settlements may be required are brain injury patients, comatose patients, and cases involving children.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.