Resolving The Personal Injury Claims Of Minors

Many of our clients are minors who have been injured.  And those cases (at least in Texas) are treated a little bit differently.

The first difference is how the case is settled.  For an adult’s claim, the adult simply agrees to the settlement and signs the settlement agreement.  The lawsuit, if any, is then dismissed.

But minors can’t sign contracts.  To remedy that, the Courts have long used the guardian ad litem and friendly suit process.  In some cases, lawsuits are already on file, but if not, the parties would file a “friendly suit,” a lawsuit between the parties solely to get in front of the judge.  At that point, the judge appoints a guardian ad litem, who is a lawyer tasked solely with looking out for the interests of the minor.  The guardian ad litem would do some initial investigation, which includes reviewing the facts of the incident, reviewing medical records or other documents relating to the minor’s injuries, and talking to the minor’s parents to get a feel for the minor’s condition.  The parties would then have a “prove-up” hearing.  At the hearing, the minor’s parent or guardian tells the judge about the incident, the harm to the minor, and the minor’s prognosis.  The guardian ad litem then reports to the judge on whether the the guardian ad litem approves or disapproves of the settlement.  The judge then makes a decision to approve or disapprove of the proposed settlement.

Because this is a long (and sometimes expensive) process, insurance companies sometimes try to circumvent it.  Instead of going through the hearing, they will ask for a settlement that includes the parents’ indemnification for future claims.  What does that mean?  Without the prove-up process, the minor maintains the right to sue because minors can’t enter into contracts.  In order to protect themselves, insurance companies ask the minor’s parents to sign an agreement saying that the parents are settling the case and that, in exchange for settling the case, the parents agree that if the minor comes back at a later time and sues the defendant or the insurance company, then the parents will reimburse the insurance company and the defendant for attorneys’ fees, costs of court and for any amounts the companies had to pay.  Thus, the case is over, but the parents are taking the risk that the child later chooses to sue.

The other way personal injury cases for minors are different is determining where the money goes.  In a typical case with an adult, we’ll get settlement proceeds and simply write a check to the adult.  That doesn’t happen in cases with minors.

If the minor’s personal injury case goes through the lawsuit/prove-up process, the money can be deposited in the registry of the court, and the minor can’t withdraw it until the minor turns 18.  Alternatively, the money can be used to purchase a structured settlement — an annuity that pays the minor in periodic payments after the minor’s 18th birthday.  If economically feasible, most clients prefer a structured settlement.  The return on the investment is usually a little higher, but more importantly, some parents just don’t think it’s a good idea to give a child a reasonable chunk of money on their 18th birthday.

If the insurance company settles outside the lawsuit/prove-up process, then the lawyer needs to make clear to the parents that the money belongs to the minor and should be kept in an a separtae account for the minor.

Perlmutter & Schuelke, PLLC maintains offices in Austin, Texas. However, our attorneys and lawyers represent clients throughout the state of Texas, including Dallas, Houston, San Antonio, Forth Worth, El Paso, New Braunfels, San Marcos, Kyle, Buda, Round Rock, Georgetown, Lockhart, Bastrop, Elgin, Manor, Brenham, Cedar Park, Burnet, Marble Falls, Temple and Killeen. By Brooks Schuelke


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