LMSA Case Study

The Problem

LMSA issues trouble settling parties. Since general liability claims are distinctly different from workers' comp claims, the same MSA calculations based on medicals in workers' comp does not necessarily translate to the liability insurance context. The maze to navigate to an appropriate result seems overwhelming for those trying to comply in a liability case. Here's a case study based on an actual case to demonstrate how an LMSA can be calculated which fully complies with the MSP Act.

Facts of the Case

A driver (Plaintiff) is catastrophically injured in an auto accident. Plaintiff's lawyer obtains life care plan totaling $12m. Based on this, lawyer believes full case value is $49m. Case is settled for $2.625m. After attorney fees and derivative claims are paid, net to Plaintiff totals $1.3m. As a condition of settlement, parties agree to "fully fund" a LMSA. Defense hired a non-legal MSA vendor to review medicals and calculate the LMSA. That resulted in an LMSA of $973,122.67 or 74% of the Plaintiff's net award. Mr. Cattie helped Plaintiff review LMSA issue, resulting in LMSA of $95,708.10 based on equitable apportionment. Mr. Cattie took into account confounding factors to full recovery in order to determine how much defense was paying Plaintiff for future medicals. 

Equitable Apportionment v. Medical Review

When the Court was presented with these two diametrically opposed results, the Court sided with the Plaintiff and the $95,708.10 LMSA. In its opinion, "The Court finds that Mr. Cattie’s analysis is more credible in the liability context...The Court finds this amount to be reasonable and reliable...Additionally, the Court finds that on a third-party liability claim, forcing Plaintiff to allocate seventy-four percent (74%) of her net proceeds to a MSA, as [MSA Vendor]’s analysis suggests, is inequitable." Ultimately, the LMSA obligation was reduced by $877,414.57 or over 90% based on equitable apportionment. While these results are not indicative of results in every single case, applying equitable apportionment theory to LMSA issues yield real results for all parties addressing LMSA issues.