Catastrophically injured people are faced with very difficult financial consequences, one of which can be the loss of eligibility for public benefits if they receive a recovery in a personal injury action. Often, the achievable recovery falls short of what would fairly compensate them, especially when their injuries are permanent, such as significant traumatic brain injury (“TBI”) or amputation of a limb; still, their recovery may disqualify them from certain pubic benefits, such as Medi-Cal for their health needs, until their recovery from the personal injury action is exhausted. Public benefits such as Medi-Cal are limited in what is covered, and do not cover essential items such as a specialized lift on van for a person unable to transfer themselves due to traumatic amputation of a leg or limb. In order to legitimately preserve such a person’s eligibility for public benefits, without completely exhausting their limited recovery and leaving them at the poverty level, a special needs trust can be used to protect the injured person’s limited assets.
In such circumstances, a 3rd Party Supplemental Needs Trust can be prepared which protects the injured person. Such a trust allows for that person to qualify for Supplemental Security Income and Medi-Cal benefits without having to spend down the entire proceeds of the litigation which produced the recovery. A recent case handled by Jansen Malloy LLP partner Michael Crowley illustrates the issue. Our client was permanently injured as a passenger in a truck driven by an intoxicated driver (who himself died when the truck collided with a tree at a high rate of speed). Our client suffered a TBI and leg injuries requiring a below knee amputation, amongst other serious orthopedic fractures and needed surgeries. There were four passengers in the vehicle, one of whom also suffered similar permanent injuries. The auto liability policy proceeds of the decedent driver had to be apportioned amongst the four injured claimants, and our client, while receiving proportionally the largest recovery out of the underlying and excess liability policy proceeds, was left far short of being compensated fully given the permanent nature of this injuries.
In order to avoid our client having to “spend down” his net recovery to exhaustion in order to be eligible for public benefits, a special needs trust is being prepared to preserve his right to such benefits. Many of the essential needs of a catastrophically injured person are not covered by Medi-Cal, and the trust assets can be used to provide for services and medical equipment that are not covered. The preparation and use of a special needs trust is part of the tool kit for properly representing and protecting clients, and the attorneys at Janssen Malloy LLP are experienced in steering our clients’ cases through the litigation process, looking not to just winning the case, but protecting our clients’ futures.