Auto Accident Attorney Settlement Negotiations 2 — Questions and Answers
Question 1: What is a 'time-limit demand' or 'Stowers demand' in auto accident insurance cases?
- A demand to settle within policy limits by a set deadline; refusal can expose the insurer to liability for excess verdicts (Correct answer)
- A demand that the claimant respond within 30 days or lose the right to sue
- A state-mandated timeline for insurance companies to pay claims
- A demand that applies only in commercial truck accident cases
Correct answer: A demand to settle within policy limits by a set deadline; refusal can expose the insurer to liability for excess verdicts
Under Stowers doctrine (recognized in many states), an insurer that unreasonably refuses a reasonable policy limits demand within a time limit may be held liable for the full verdict amount.
Question 2: What is a 'Medicare Secondary Payer' (MSP) lien and how does it affect auto accident settlements?
- A federal obligation requiring Medicare to be reimbursed from settlement proceeds for accident-related medical expenses it paid (Correct answer)
- A program where Medicare pays secondary to the defendant's insurance
- A lien that only affects settlements over $1 million
- A claim filed by Medicaid, not Medicare, against settlement proceeds
Correct answer: A federal obligation requiring Medicare to be reimbursed from settlement proceeds for accident-related medical expenses it paid
Federal MSP laws require accident settlement proceeds to reimburse Medicare for any accident-related medical expenses paid, with strict penalties for non-compliance.
Question 3: What is a 'high-low agreement' in auto accident trial negotiations?
- An agreement that guarantees the plaintiff a minimum recovery and caps the defendant's maximum payment regardless of the jury verdict (Correct answer)
- An agreement between attorneys about the range of acceptable voir dire questions
- A pricing structure for structured settlement annuities
- An agreement where the highest bidder among insurers pays the claim
Correct answer: An agreement that guarantees the plaintiff a minimum recovery and caps the defendant's maximum payment regardless of the jury verdict
A high-low agreement sets a floor and ceiling on the verdict — the plaintiff receives at least the low amount and at most the high amount regardless of what the jury decides.
Question 4: What is 'nuisance value' in auto accident settlement negotiations?
- A small settlement amount paid to make a weak or frivolous claim go away even when liability is disputed (Correct answer)
- The estimated cost of repairing minor vehicle damage
- A penalty for filing meritless insurance claims
- The settlement value for non-serious soft tissue injuries only
Correct answer: A small settlement amount paid to make a weak or frivolous claim go away even when liability is disputed
Insurers sometimes pay nuisance value settlements to dispose of claims that would cost more to defend than to settle, even if the insurer believes it would win at trial.
Question 5: What is 'allocation' and why does it matter in auto accident cases involving multiple claims?
- Distributing a settlement amount among multiple injured parties or among different types of damages, which can affect taxes and liens (Correct answer)
- The process of dividing attorney fees in class action cases
- Allocating blame between multiple defendants before settlement
- The division of property damage and personal injury into separate cases
Correct answer: Distributing a settlement amount among multiple injured parties or among different types of damages, which can affect taxes and liens
Proper allocation of settlement funds between economic damages, pain and suffering, and physical injuries affects tax treatment and satisfaction of medical liens.
Question 6: What is a 'confidential settlement' and what are its limitations in auto accident cases?
- A settlement that includes a non-disclosure agreement preventing parties from discussing terms; limited by public policy in some states for dangerous defendants (Correct answer)
- A settlement where the amount is sealed by court order without party agreement
- A settlement that is confidential only from opposing counsel
- Any settlement reached before a lawsuit is filed
Correct answer: A settlement that includes a non-disclosure agreement preventing parties from discussing terms; limited by public policy in some states for dangerous defendants
Confidential settlements prevent disclosure of settlement terms but some states limit confidentiality when public safety is at stake, such as with defective vehicle products.
Auto Accident Attorney Settlement Negotiations 2
What is a 'time-limit demand' or 'Stowers demand' in auto accident insurance cases?