An interesting recent case has illustrated (again) that the merits of a settlement, can often involve more than just a question of the overall total settlement sum agreed to be paid.

Upon settlement of medical negligence (and other personal injury) claims, there are a series of standard potential deductions from our client’s total settlement figure, which must always be borne in mind (and appropriately calculated or estimated ahead of time if possible). These include:

1) medical expenses for extra treatment due to the negligent medical care. Refunds will often be required to Medicare + any private health insurer (Medibank Private etc). Calculation of such recovery figure(s) can be very uncertain and complex.

2) Centrelink. If benefits have been claimed because of incapacity due to the negligent medical care, refund will often be required. Importantly, depending on the circumstances and particularly the scale of the settlement, there may often also be an effect on future receipt of benefits.

The recent case I have handled, illustrated another consequence, applicable at least in Western Australia. This is the fact that if the client is sufficiently disabled as to have qualified for public housing assistance, a strict means test applies in relation to eligibility for such assistance. In most cases, this is about $50 – 100,000.00 in assets.

In my case my client, who had suffered disability following a sub-arachnoid haemorrhage, was in receipt of such housing assistance for her family.

In the circumstances of her case, it was not in her view (understandably) in her best interests to receive a settlement in the order of $250 – $500,000 because this would render her ineligible for ongoing housing assistance and require that she vacate the family home. She therefore was prepared to accept a settlement offered by the insurer which would result in a net payment to her of just under $100,000.00 because she felt better off receiving this lesser sum and maintaining her home eligibility, rather than seeking a higher figure, but then being required to seek alternate accomodation.

As I say, a timely reminder that the total damages paid in a settlement in some cases is not the measure of how beneficial it is. The settlement’s impact upon receipt of government benefits should be carefully assessed, if clients are to be best served by their advisors/representatives.