Steps in a Car Crash Case

The collision between two motor vehicles is a crash, not an accident. The term accident signifies a goof, an “Oops! I’m sorry!” However, most car crashes are far more serious than an accident. They result in deaths, in lost limbs, in traumatic brain injuries, in life-altering damage and injury. It minimizes these injuries to refer to them as “accidents.” We call them crashes.

A person injured in the crash calls to make an appointment. At the appointment, the attorney meets with the person, gathers necessary information, and executes a contract to represent the person. The person signs various forms enabling the attorney to gather his or her medical and other pertinent records. Normally, in exchange for legal services, the attorney collects a percentage of the amount he or she is able to recover in the case and does not charge the client “by the hour,” or out of pocket. This arrangement is called a “Contingency Fee Agreement.”

Generally, car crash clients were driving in their own cars when their vehicle was struck by another person’s vehicle. The legal theory underlying the driver’s action is negligence. The at-fault driver possessed a (1) duty to exercise reasonable care, (2) breached it, and the breach was the (3) proximate cause of the client’s (4) injury. In some cases, a car crash client was a passenger in a vehicle involved in a crash. In general, a vehicle passenger can recover from the driver of any of the vehicles involved in a crash, depending upon who was at fault. A passenger cannot recover damages, however, if the passenger knowingly rode in a vehicle with a reckless or intoxicated driver.


Most car crashes are, fortunately, minor, and as a result, most car-crash injuries are minor and resolve within a short period of time. This is not to minimize the suffering car-crash victims endure, nor to minimize the human toll of car crashes in general. The statement refers instead to the realities of automobile insurance and the manner in which cases are valued by auto insurance companies. In North Carolina, all drivers of motor vehicles are required to carry a policy of liability insurance insuring any vehicle operated on a public roadway. The minimum limits (or the most an insurance carrier can be required to pay as a result of a crash) under a North Carolina policy are $30,000.00 per person and $60,000.00 per crash. This means if GEICO insured the vehicle that hit you on a 30/60 policy, the most GEICO has to pay you is $30,000.00. If multiple people were injured in the crash, the most GEICO has to pay is $60,000.00. What if five (5) people were injured in a crash, and their medical bills total $100,000.00? The most GEICO has to pay is, still, $60,000.00. How can the injured persons make up the difference, i.e. recover enough money to even pay their medical bills?

The simple answer to this question is: sue the at-fault driver. Under N.C. Gen. Stat. § 1-52, a person has three (3) years to bring a lawsuit against an at-fault driver in a car crash in North Carolina. If a person has been killed in a crash, however, a lawsuit must be brought within two (2) years of the person’s death. If a person is injured in a crash such that he or she passes away more than two (2) years afterward, the statute of limitations is three (3) years. N.C. Gen. Stat. § 1-53.

Using the damages above, the injured parties sue the at-fault driver, who is found to have been negligent and ordered to pay $100,000.00. The parties now have a $100,000.00 judgment against the at-fault driver. His insurer, GEICO, pays the $60,000.00 it is obligated to pay under the liability insurance policy, which brings us back to the remaining $40,000.00. How is that collected?

Now the parties are judgment creditors of the at-fault driver, possessing a $40,000.00 judgment. Collecting this sum from the at-fault driver would proceed in the same manner as any legal collections case. If the at-fault driver possesses significant, identifiable assets or property, an order can be obtained directing the sheriff to seize the property, sell it at auction, and pay the proceeds to the judgment creditors. If the at-fault driver owns a house, the judgment creditors can foreclose, sell the house, and use the proceeds to pay the judgment.

These strategies are rarely employed because it is extremely rare that a Defendant in a car crash case possesses significant, unencumbered assets that can be seized to pay a judgment. In most cases, the most money any injured person can recover can be determined by adding up the limits of applicable insurance policies. However, more policies than the at-fault driver’s liability policy can be accessed by a person injured in a car crash.

In North Carolina, in addition to a policy of liability insurance, drivers who purchase a policy with minimum limits at or above $50,000.00 per person and $100,000.00 per crash (50/100) must also purchase a policy of uninsured/underinsured motorist coverage in the same or in a greater amount, or at or above $50,000.00 per person and $100,000.00 per crash. Uninsured motorist coverage is coverage that protects a driver from crashes caused by uninsured drivers. If an uninsured driver crashes into your vehicle, you can make a claim under your own uninsured motorist policy for damages. Uninsured motorist coverage also covers drivers who are victims in hit-and-run crashes.

Underinsured motorist coverage protects innocent drivers and passengers from financially irresponsible motorists. An example of a financially irresponsible motorist is the at-fault driver described above, who had a 30/60 liability policy but caused a crash resulting in damages of $100,000.00.

Let’s say the at-fault Mustang driver with the 30/60 policy caused a crash resulting in $100,000.00 in damages to a Camaro driver and one passenger. The Camaro driver and passenger each have damages of $50,000.00. Each recovers $30,000.00 from the Mustang driver.

The Camaro driver has an underinsured motorist policy of $50,000.00 per person, $100,000.00 per crash. The Camaro driver and passenger each make a claim against the Camaro driver’s underinsured motorist coverage. The underinsured motorist (UIM) carrier is entitled to a credit for any money paid by any liability carrier. Since GEICO paid $60,000.00 in liability coverage, the UIM carrier gets a credit of $60,000.00, and has to pay the remaining amount of per-crash UIM coverage: $40,000.00. This is divided between the Camaro driver and passenger, and they have now been fully compensated for their injuries. The applicability of UIM and credits is set out in N.C. Gen. Stat. § 20-279.21(d)(4). Changing the facts slightly, let’s say the damages to the Camaro driver and passenger were $500,000.00, and the at-fault Mustang driver had both a liability and UIM policy of 50/100. The Camaro driver and passenger recover all of the $100,000.00 of the at-fault Mustang driver’s per-crash liability policy, leaving $400,000.00 in unpaid damages. The Camaro driver and passenger now want to make a claim against any applicable UIM policies to maximize their recovery. The Camaro driver can “stack” his own per-crash UIM policy with the at-fault Mustang driver’s per-crash UIM policy, for total UIM coverage of $200,000.00. The UIM carriers are entitled to a credit for the liability coverage paid, or $100,000.00.

Say, changing the facts further, the passenger in the Camaro driver’s vehicle possesses her own auto insurance policy on another vehicle not involved in the crash with 50/100 UIM coverage. This coverage also can be stacked with the Camaro driver’s UIM coverage and with the at-fault Mustang driver’s UIM coverage, for a total of $300,000.00 in UIM coverage, before the $100,000.00 credit.

Let’s say, also, that the Camaro passenger’s mother, who lives in her same household, has a 100/300 UIM policy on another vehicle. This UIM coverage also can be stacked on the Camaro passenger’s UIM coverage, the Camaro driver’s UIM coverage, and on the at-fault Mustang driver’s coverage, for total UIM coverage of $600,000.00, before the credit.

The UIM policies described above are known as “family” policies. In general, a driver or passenger injured in a crash and who is not at fault can stack UIM policies owned by any person who lives in the injured person’s household.

The Camaro passenger may not make a claim against the at-fault Mustang driver’s UIM coverage unless the Camaro passenger possesses her own UIM coverage. The law in this area is extremely complicated and continually evolving. It is critical when evaluating a claim to identify all injured parties, all drivers and passengers in every vehicle, all household members of drivers and passengers, and all auto insurance policies possessed by all persons identified.

As to a client’s own auto insurance policy and the policy of an at-fault driver, a client may be able to recover from the “medical payments coverage” portion of one or more policies. This type of coverage is designed specifically to cover a claimant’s medical bills incurred as the result of an at-fault driver’s negligence. Typically, little more than the forwarding applicable medical bills and the crash report is necessary to secure these funds. An attorney fee cannot be deducted from medical payments coverage funds.


Whether a claim is resolved amicably via settlement before a lawsuit is brought, or whether a claim is litigated in a jury trial, the nature and extent of an injured person’s damage must be established. When a person is injured as a result of another person’s negligence, he or she is entitled to payment for his or her medical treatment. It is rare that a liability insurer in a car crash or other negligence case pays a person’s medical bills as the same are incurred. Instead, most often a person pays for treatment using one’s own health insurance, pays out of pocket, or defers payment until the resolution of a case.

Most insurers will not “pay as one goes,” so to speak, because they do not agree that the medical treatment an injured person is receiving is related to injuries caused by the person they insured. They either dispute that their insured caused the crash, they assert that the injured person is exaggerating the symptoms, or they argue that the person’s injuries were present before the crash. Even where liability is admitted, the amount of damages is nearly always contested.

In North Carolina, a person is entitled to payment for reasonable medical expenses incurred in treating injuries caused by another person’s negligence. An injured party is entitled to damages for “pain and suffering” associated with the injury, to damages for emotional distress caused by the injury, to damages for any wages lost as a result of the injury, and to reimbursement for out-of-pocket expenses including medical mileage. A person is entitled to a separate category of damages for any permanent scarring or disfigurement.

If a lawsuit is brought, a party establishes the nature and extent of one’s damages by introducing evidence in the form of records and testimony that establishes the amount of medical bills paid, due and owing; the amount of out-of-pocket expenses; the amount of lost wages; and the nature of a person’s suffering from physical pain and emotional distress. The latter of these—pain and suffering and emotional distress—are in great part up to the discretion of the jury, using common sense. In the end, the amount of damages to which a person is entitled in a case is the amount of a jury award. Even in the pre-lawsuit context, damage estimates are based upon what parties think a jury will award.


As noted above, it is most common for a person injured in a negligence case to pay for medical treatment using one’s own health insurance. In a car crash case, the at-fault driver is responsible for the injured person’s need for treatment. Therefore, the injured person’s health insurance company is entitled to be reimbursed for medical expenses caused by the at-fault driver. The health insurer will assert its right to reimbursement through a claim of lien, usually a letter setting out the amount it claims it is due. This process—an insurer recouping money it paid for which it was not legally responsible—is called subrogation.

In general, health insurance companies cannot subrogate in North Carolina. It is forbidden by state law. However, a federal law called the Employee Retirement Income Security Act of 1974 (ERISA) does allow for subrogation. Under the concept of “Federalism” described above, federal law is superior to state law and, where they differ, federal law generally controls. Thus, even though subrogation by health insurance companies is prohibited in North Carolina, if an injured party’s health insurance plan is a “self-funded ERISA plan” as defined under federal law, the health insurance company can subrogate. Many health insurance companies hire companies to handle their subrogation claims. Oftentimes, these companies take the position that the health insurer possesses a lien, when it does not. Thus, it is important in every case in which a health plan has paid for a client’s treatment to obtain the IRS Form 5500 and a “Summary Plan Description” (SPD) from the health insurer. Along with other documents, these will show whether the plan is, or is not, a self-funded ERISA plan.

Aside from ERISA liens, medical providers (i.e. doctors, hospitals, chiropractors, etc.) who render treatment to an injured person are entitled to liens for the value of the services they render, under N.C. Gen. Stat. §§ 44-49 and 44-50. In order to “perfect” a medical lien, a provider must do two things: (1) it must provide its medical records to an attorney or injured person free of charge, and; (2) it must put the attorney or injured person on notice of its lien claim in writing. Medical providers who are paid by a client’s health insurer do not make these kinds of lien claims, since they have already been paid by the client’s insurer.

Other liens may attach to the proceeds a client receives as the result of a settlement or judgment in a personal injury claim. In general, the responsibility of the attorney for the injured person is to collect all monies, subtract out of the total the attorney fee, subtract out of the total expenses the attorney has incurred in pursuing the claim, subtract and pay to lienholders the liens, and provide the balance to the client. The attorney is not obligated to pay medical bills or expenses the client has incurred that are not liens. As to these bills, the attorney must do as directed by the client, i.e. either pay the bills or give the money to the client.

The attorney can negotiate liens and bill balances down. That is a common service that Arnold & Smith, PLLC provides to clients, as sometimes given the dynamics of a case, the settlement amount is not enough to cover outstanding liens or bills. ERISA liens must be negotiated. These, along with Medicare and Medicaid liens, are “super liens.” They must be paid, and unlike other liens, these entities may be entitled to a greater share of proceeds in a personal injury case than state law would allow, for instance, in general medical liens perfected under N.C. Gen. Stat. §§ 44-49 and 44-50. ERISA plans, Medicare, and Medicaid are generally easy to work with and, in general, lien reductions are obtained that help maximize the amount of proceeds received by an injured claimant.

As to medical-provider liens, N.C. Gen. Stat. §§ 44-49 and 44-50 provide that in no event shall an injured claimant receive less than half of a settlement or judgment, less the attorney’s fee. Say, for instance, a claimant wins a jury verdict of $10,000.00, and the medical liens are $20,000.00. The attorney fee is $4,000.00. The client must receive half of the remaining proceeds, or $3,000.00. The remaining $3,000.00 is divided on a pro rata basis between lienholders. The lienholders can still pursue the client for the balances left over after payment of the pro rata share of proceeds, but their lien rights are extinguished.

Contributory Negligence

A dynamic commonly present in cases in North Carolina that drives down case value is the defense of “contributory negligence.” In North Carolina, if a person is partly at fault for one’s injury, the person’s case is subject to dismissal as a matter of law. In practical terms, that means a judge can dismiss the case before it ever reaches the jury.

The most common factual scenario in which the defense of “contributory negligence” is pled is the slip-and-fall or trip-and-fall injury sustained while on the property of another. A person possesses a duty to exercise reasonable care while walking, to watch one’s step, to be on the lookout for danger and to avoid it. Many—perhaps most—slip-and-fall or trip-and-fall cases in North Carolina may feature the defense of contributory negligence. In such a case, no one really knows for sure what a judge will do unless and until a Motion is brought before the judge seeking summary judgment on the issue. Thus, negotiations about settlement include the risk that a judge will dismiss the case and an injured claimant will receive nothing.

As a result, in a slip-and-fall case, a client may have incurred $20,000.00 in medical bills as the result of a fall. The client may elect to accept $10,000.00 to settle the case, because the client believes it is too risky to proceed with litigation, which may result in the client losing the case and getting nothing. In this fashion, the mere specter of the contributory negligence defense drives down the value of a case.

The defense of contributory negligence is pled in other kinds of cases, particularly in car crash cases in which a claimant was a passenger in a vehicle operated by a known incompetent driver.

About Arnold & Smith, PLLC

Spread across three offices in uptown Charlotte, at Lake Norman, and in Monroe, Arnold & Smith, PLLC’s attorneys and paralegals employ a team approach to developing and litigating personal injury cases. The approach enables the firm’s personnel to handle a wide variety of cases, from simple rear-end bumper bust-ups to complex medical malpractice cases involving thousands of documentary exhibits and testimony from numerous expert witnesses. Mindful that each client’s claims, damages, and needs are unique, the attorneys and paralegals at Arnold & Smith, PLLC work to obtain the best solution for each client. For a free consultation, call 855.370.2828 or fill out our online form.

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