Future Medical Cost Projections: A Valuable Tool for Settlement Negotiations

By: Gregory Lisowski of MSA Services, LLC

Anyone who handles personal injury or workers’ compensation cases knows that future medical costs have a direct and significant impact on the overall settlement value of a case. Being able to accurately estimate future medical costs is crucial for achieving a favorable settlement. While a Life Care Plan can be an appropriate tool for claims involving individuals with catastrophic injuries such as paralysis and traumatic brain injuries, they can be quite expensive for a claim involving lesser injuries. Future Medical Cost Projections on the other hand can also provide valuable insights on future medical specials at a more cost-effective price point, making it a powerful tool for settlement negotiations. Understanding the distinction between these two options and the methodologies involved is essential for attorneys and claims adjusters.

WHY ACCURATE FUTURE MEDICAL COST PROJECTIONS MATTER:
Future Medical Cost Projections estimate the medical expenses a claimant is likely to incur over their lifetime due to their injuries. These projections require careful consideration of the claimant’s current medical condition, anticipated future treatment, and the ever-rising costs of healthcare. Here’s why they are so vital:
1) Foundation for Favorable Negotiations: Accurate projections form the bedrock of fair and productive settlement discussions. Without a clear understanding of future medical needs, claimants or their counsel may inadvertently settle for an amount that falls short of covering their long-term care. Conversely, inflated projections can hinder settlement agreements and cause opposing counsel to walk away from negotiations. A well-supported projection provides a realistic basis for negotiation, ensuring both parties can make informed decisions and find common ground.
2) Demonstrating the True Cost of Injury: A comprehensive future medical cost projection clearly articulates the long-term financial impact of the injury including medical care, surgery, long term care, durable medical equipment and prescription drug costs. This is particularly important in cases involving severe or chronic conditions, where the costs of ongoing treatment, rehabilitation, and specialized care can be substantial. The projection serves as compelling evidence of the claimant’s actual needs, strengthening their position at the negotiating table.
3) Facilitating Mediation: In mediation, a neutral third party helps both sides reach a mutually agreeable settlement. A well-prepared future medical cost projection can be invaluable in this context. It provides the mediator with an objective assessment of the claimant’s future medical needs, helping to guide the discussion and bridge the gap between the parties’ positions. It allows the mediator to focus on the key issues in dispute, such as the appropriate amount of compensation for future medical care.
4) Justifying Settlement Demands: A detailed future medical cost projection provides concrete evidence to support settlement demands. It demonstrates that the requested amount is not arbitrary but is based on a realistic assessment of the claimant’s future medical expenses. This can be particularly persuasive when dealing with insurance companies or other parties who may be reluctant to offer a fair settlement.
5) Maximizing Settlement Value: By clearly outlining the extent of future medical needs, these projections help maximize the overall settlement value of a case. They ensure that the claimant receives adequate compensation for all anticipated medical expenses, preventing them from having to bear these costs themselves.
6) Refuting Future Medicals Costs Listed in Demands: A detailed future medical cost projection can also be beneficial to defense counsel and adjusters by providing objective evidence to refute unsupported future medical costs listed in settlement demands. It can demonstrate that the demanded amount is arbitrary and not based on a realistic assessment of the claimant’s future medical expenses.
7) Setting Reserves and Justifying an Offer: Another use for adjusters and defense counsel is to assist in the reserving process. Accurately defining the likely future medical costs can ensure that an adjuster has the appropriate amount reserved on a file. It can also provide support when requesting settlement authority from clients and/or claim managers.

THE DIFFERENCE BETWEEN A FUTURE MEDICAL COST PROJECTION AND A LIFE CARE PLAN:
While Future Medical Cost Projections and Life Care Plans both aim to project future medical costs, they differ in scope and detail. A Life Care Plan is a more comprehensive, multi-disciplinary assessment of all aspects of a person’s life impacted by their injury, including future medical needs, but also vocational needs, lost earnings, and other related expenses. It’s often used in cases with catastrophic injuries requiring complex, long-term care. A Future Medical Cost Projection, on the other hand, focuses specifically on projecting future medical expenses. While Future Medical Cost Projections are not as comprehensive as a Life Care Plan they can still provide crucial information for settlement negotiations.

COST EFFECTIVENESS:
A key advantage of a Future Medical Cost Projection is its cost-effectiveness. Life Care Plans, due to their comprehensive nature, can be quite expensive. For cases where the primary focus is on future medical costs, a Future Medical Cost Projection can provide the necessary information at a significantly lower cost. This makes it a valuable tool for cases where budget is a concern or where the injuries, while significant, do not necessitate the full scope of a Life Care Plan.

THE IMPORTANCE OF USING A QUALIFIED EXPERT TO ASSIST WITH SETTLEMENT:
Developing accurate future medical cost projections requires specialized knowledge and expertise. This is why engaging qualified professionals, such as medical economists and other healthcare experts, is essential. These experts possess the skills and experience to: a) Objectively assess the claimant’s medical condition and needs, b) Apply appropriate methodologies to develop realistic projections and c) Access the most current and accurate medical pricing.

CONCLUSION:
Accurate future medical cost projections are a cornerstone of successful settlement negotiations. They protect the claimant’s interests by ensuring their future medical needs are met, while also providing a solid foundation for favorable settlements. A Future Medical Cost Projection offers a cost-effective alternative to a Life Care Plan, providing valuable information for settlement discussions. Engaging qualified experts and utilizing appropriate methodologies are critical for developing reliable projections that serve the best interests of all parties involved.
For more information about how a Future Medical Cost Projection can bolster your settlement value, please contact MSA Services LLC at (866) 306-9423 or via email at glisowski@msaservicesllc.com.