If you have been injured by a defective product you probably already know all the ways that the injury has impacted your life. Maybe you see a fast and easy settlement as the quickest route to getting your life back together after the injury. Whether you have been approached with an offer of settlement by one of the parties responsible for your injury, or are thinking about approaching that party to demand compensation, you should be aware of complications that can arise in settling your products liability claim. Moreover, you should consult with an experienced attorney before proceeding.
While some cases are resolved only after a trial, many product liability claims can be settled by agreement between the parties.
What is a Products Liability Claim and What do I Need to Know About Settling One?
Products liability law requires that the manufacturer, distributor, and/or seller of a product bear responsibility for injuries caused by that product if the product is defective in its design, manufacture, or marketing. A product can be defective in a number of ways. If a product is marketed with inadequate instructions or warnings as to foreseeable risks it is defective. If a product is manufactured with a flaw, but the design and marketing of the product are fine, it is called a manufacturing defect. If a product is designed in such way that it is foreseeable that injury could result, and if the risk of injury could have been reduced by an alternative design, then a product is said to be defective in its design.
When looking at alternative designs, the court will look at the costs associated with the alternative designs, whether the proposed alternative would in fact have reduced the foreseeable risks of harm associated with the product, and whether the failure to use the alternative design made the product unreasonably unsafe at the time it was manufactured. If a product is defective in the way that it was marketed, manufactured, or designed, and someone is injured as a result of that defect, then the manufacturer, distributor and/or seller of the product are usually liable, or responsible for the consequences of the defect. If you are considering settling your products liability claim, you need to think about three general issues: liability, damages, and subrogation. Each of these issues has a particular impact when settling your claim.
When we speak of liability we are really talking about who is going to take responsibility for the product that injured you. As you might imagine, a products liability case can include not only the manufacturer, distributor, and/or seller of a product but also the manufacturer, distributor and/or seller of component parts which were defective and which contributed to the injury. Before discussing settlement with any of the parties, you need to identify all of the parties that might bear some responsibility for your injury. Identifying the manufacturer might be as easy as looking at the product label. You probably also will know who you purchased the product from. But what happens if these companies are no longer in existence? You may find, for example, that one of the potential defendants in your case has been sold, merged into another company, spun off, dissolved, or gone into bankruptcy. In the case of mergers, sales or spin offs, you will need to determine who the corporate successor is. In the case of dissolution or bankruptcy, you will need to determine whether there is any way that you can still file your claim.
It is important to identify and include all the responsible parties still in existence because settling with just one defendant may operate to release all of the other possible defendants. Many states have laws which are known generally as "joint and several" liability laws. Under these laws all the defendants are responsible for all of the damage. The way that these laws work varies from state to state, but basically, if there are four potential defendants in a case and one of those potential defendants is no longer in existence or is in bankruptcy, the other three must pay for the missing defendant's share of damages. Also, when settling your claim with one defendant, you need to word your release of liability as to that defendant carefully in order to preserve the joint and several liability of the other defendants.
Once you have identified all the parties who bear some responsibility for your injury, you need to determine what your damages are. This is not as simple as adding up your medical bills and time lost from work. Most states have specifically identified damages that are allowed in cases of personal injury due to product defect. Generally, these damages can include past and future medical and nursing bills, past and future wage loss, past and future pain and suffering, past and future emotional distress and embarrassment, past and future loss of consortium, as well as past and future expenses associated with the injury such as having to hire work done that you can no longer do. Some of these damages require proof from an expert. For example, usually you will need a doctor to say that you are likely to incur future medical expenses. The doctor will also need to outline the nature and frequency of those expenses. Similarly, with respect to wage loss, you may need to have a doctor say that you are permanently disabled and an economist to demonstrate what you lost in wages and benefits.
When an injury from a defective product results in death, the damages may be limited by statute to those items considered monetary in nature. The reason for this is that the wrongful death claim is considered a claim on behalf of the heirs and next of kin of the deceased rather than the deceased himself. Thus, the pain and suffering of the decedent may not be considered relevant for purposes of settlement in some states. In addition, many states require the appointment of a personal representative who will represent the heirs and next of kin in the settlement negotiations. Once the settlement is made it often needs court approval in order to be effective. Finally, usually the court will require the filing of a petition for the distribution of the wrongful death proceeds. A claim on behalf of a minor is similar to a wrongful death claim in that it too requires the appointment of a representative, generally known as a guardian, and the filing of a petition for approval and distribution of minor settlement proceeds.
As noted above, the items of damages for which you may claim compensation include medical expenses and lost wages. Perhaps you are wondering whether you really need to be concerned about those items since your medical bills are paid by your insurance company or employer and your lost wages were paid by your employer through workers' compensation. The answer is yes, and the reason is, in a word, subrogation. In essence, subrogation means that if an insurance company or your employer has paid for a portion of your damages, then the insurance company or employer is entitled to receive that money back when you settle. The idea is that it is unfair for you to get money to pay medical bills that have already been paid by someone else, namely your insurance company.
As a practical matter, the way that subrogation works is that the insurance company that pays your bills files a subrogation claim against your case. The claim states the amount of money paid for lost wages or medical bills. The insurance company knows about the claim because you are supposed to send a notice of your claim to all the potentially interested parties, such as your medical or disability insurer and your employer. The notice allows the insurance company or employer to attend the settlement negotiations so that it can protect its interests. It is ver important to understand what subrogation interests exist and to make sure those interests are taken into consideration when concluding settlement of your claim. As a general rule, the settlement you make is considered a full, final and complete settlement of all aspects of your claim. Courts are reluctant to undo a settlement you have made, absent a showing of fraud. If your injury is very extensive or your injury is such that the full extent of your injury is not yet ascertainable, you may be asked to consider a structured settlement, a partial settlement with a reservation of rights, or both. For example, if you are exposed to a toxic substance such as asbestos, you may presently have fibrosis in your lungs but also be at an increased risk for getting cancer. In this type of situation, you may be offered a settlement based on your existing medical condition, the fibrosis, with a reservation of the right to come back at later time and seek additional compensation if you develop cancer. In the case of severe injuries involving extensive and ongoing medical care, you may be asked to consider a settlement that will pay out over a long period of time. In such a situation you may be offered more money if you agree to a longer pay out period.
Conclusion
Settling a products liability claim is more complicated than it might appear at first glance. The companies you are seeking compensation from will have experienced attorneys helping them during the negotiations. Because your settlement will likely be a full, final and complete settlement of your claim, you need to ensure that the settlement you make is appropriate. An experienced attorney can help to guide you through the negotiation and settlement process. Further, an attorney experienced in products liability law can help you identify the companies responsible for manufacturing, distributing and/or selling the product or product components that injured you. If some of those companies have changed identities by virtue of being sold, merged, or spun off, your attorney can identify the successor that would bear the responsibility for the injurious product. If some of the companies have entered bankruptcy or are in dissolution, your attorney can file the appropriate petitions or claims with the court.
Your attorney can also assist you in determining all of the damages arising out of your injury. Where necessary, your attorney can secure testimony or other proof from medical providers and economists to demonstrate the extent of your loss. When the injury results in death or the injury involves a minor, your attorney can draft the papers necessary to have a personal representative or guardian appointed and can also prepare the petition required by most courts for the approval and distribution of settlement proceeds. Your attorney can also determine whether there are any potential subrogation claims in your case, what notices need to be sent to those holding subrogation interests, and how to best settle your case given the subrogation interests in your case. Finally, your attorney can help you determine whether offers of structured and/or partial settlement are appropriate for your situation.
*article courtesy of Mercy, Carter & Elliott, www.mercylawfirm.com