Custom suite of financing solutions adds value for PI clients
By AdvocateDaily.com Staff
While litigation funding often adds value to a personal injury client’s file by making up for the shortfall when an insurer terminates benefits, one recent case shows that a number of financing arrangements can also be used together at a reasonable cost to tailor a comprehensive solution, says Dawn Simons, client relations manager at CaseMark Financial.
In one recent file, Simons tells AdvocateDaily.com, CaseMark funded monthly living expenses, a motel stay, treatment, attendant care, and an income replacement benefit for an applicant in his 40s who was injured in a motorcycle accident. The individual required extensive medical care and rehabilitation and was left unable to work or resume his daily activities after suffering orthopaedic and brain injuries.
“While a client will typically require one or two types of financing from CaseMark, this particular client ended up utilizing most of our funding options at various stages of his claim,” says Simons.
The financing, he says, ultimately led to a number of positive outcomes for the individual — from funding his treatment and attendant care to allowing his lawyer more time to advance the case.
CaseMark’s involvement in the matter began early on, when it provided two loan facilities upon the man's discharge from hospital, after being approached by his lawyer.
“The insurance company started their denials and difficulties while he was still in the hospital, effectively cutting off benefits prior to discharge,” says Simons.
“Upon discharge, the client was not able to return home because his home was not accessible and he had to live in a motel. The insurer would not pay for the motel stay, and there were some attendant care requirements,” she adds.
As Simons explains, CaseMark set up a loan facility for the motel stay, including a small lump sum and a monthly amount.
“We can set that up where we pay the facility directly — there's no administrative task, there's no risk of the funds being used for something else.”
CaseMark also created a staged program to help with the individual’s monthly attendant care expenses.
Four months after the accident, however, the man was not improving and required 24-hour care, says Simons, for which the insurer was paying $3,000 a month.
“He was recommended to go into a convalescent home, and the cost of that was significantly higher. Technically, it probably should have been the insurer's obligation but things take time with the insurer. So, CaseMark was again approached, and we provided the gap between the insurer's approved $3,000 and the shortfall. We paid that on a direct basis to the home.
So he was looked after 24-hours a day, and the client began to experience some marked improvements from a rehabilitative perspective. But as the file progressed, the client's income replacement benefits were also terminated.”
As the individual also had a child with special needs and other financial obligations, CaseMark arranged a monthly living program to provide him with cash flow.
At the same time, the man's lawyer was also seeking a catastrophic impairment (CAT) designation, to open up access to a larger pool of accident benefits.
“As is often the case, there was a bit of a time gap between the insurer setting up their assessments — there are typically a few months that can go by where a client has exhausted med-rehab, and they're not yet CAT — they find themselves in this limbo where he's got a brain injury, significant orthopaedic injuries and he doesn't get the rehabilitation and treatment,” says Simons.
CaseMark was approached to fund treatment, which it did for a number of months before the individual was deemed CAT, opening up benefits to the catastrophic level.
As Simons notes, another benefit to treatment financing is that it provides the plaintiff’s lawyers with the extra time they need to advance the case.
Indeed, she adds, when litigation funding is used responsibly in the later stages of a personal injury file, it has the potential to significantly increase the outcome or resolution of the case.
“When used appropriately, litigation funding can significantly increase resolution outcomes, and this is very different than when clients who have financial issues predating an accident borrow money early on. Some clients see litigation funding as an ATM, and they think that this is like a lottery for them. They've had an accident — there's a pot of money, and they can borrow now. But that's not the real beneficial use for it,” says Simons.
In this case, for example, shortly after the individual was deemed CAT, Simons says the insurer offered to settle for $250,000.
“The client was worn out and exhausted by this point. There was a marked improvement, but the situation was such that he had all the difficulties that a person could have — some were predating the accident, in terms of a child with special needs, et cetera, he just wanted whatever money he could get, and the insurer was aware of that.”
“Without access to funding, he would have accepted that offer, from what we were told, in a heartbeat. But the lawyer advised him that he viewed the case to be worth significantly more.”
CaseMark provided another month of living expenses, which amounted to a few thousand dollars.
“Within 10 weeks, the lawyer got the offer up to $650,000 from $250,000. And the client accepted the offer as it was approaching year-end, and he just wanted it behind him.”
Ultimately, says Simons, the cost of litigation funding in a personal injury matter is insignificant when compared to the price of losing a home, the implications of declaring bankruptcy, or the cost of accepting a ‘lowball’ settlement.
On the loans provided between the first offer and the final offer of $650,000 in this case, for example, Simons says total interest payable to CaseMark was under $3,000, a nominal and perhaps negligible cost in light of a $400,000 improvement.
“You have lawyers who recommend that a client files a consumer proposal bankruptcy, sell a home, max out a credit card. These are all actions that have very long-lasting effects, and they may seem like a rational thing to do at the time. But they make very little sense when litigation funding is available because the funding typically comes in and is structured with the litigation.”