When Surgery is Needed Now and Litigation is Pending
Mark Bello, of Lawsuit Financial Corp, Farmington Hills, Michigan has been a trial lawyer for 35 years, spending the past 13 of those operating a full service legal finance company which funds injured plaintiffs waiting for their case to go to trial or be settled. Funding a case removes a desperate plaintiff’s incentive to settle the case prematurely and for less than full value, providing needed “cash now” to the injury victim. Bello says that strategy often enhances case revenues.
Disclosure: Editor, Jane Akre met Mr. Bello years ago when she worked at Injuryboard where he is a member. They have no financial arrangement.
Editor’s Note *I thought Mark Bello may be able to enlighten readers about how a legal finance company gets involved in cases where there is an immediate need for funds for mesh removal surgery and a settlement or trial outcome is months, if not years, away. This is not intended to be an advertisement for Mr. Bello or his services but rather informational. I’ve heard of too many people waiting patiently for surgery because they cannot afford it on their own and waiting may not be in their best interest. You can contact Mr. Bello directly or post a question below.
MDND: Let’s say you are a woman or man who does not have insurance but you do have synthetic mesh and your symptoms match that of complications. You need to see a doctor for a confirmation and possibly a mesh removal. You may need funds to cover surgery. Can you get that money from a company like Lawsuit Financial and how does that work?
MB: “Yes, a company like mine could fund the surgery contingent on the outcome of the case assuming that the person has a private attorney who will control the funds and after a positive evaluation of liability and potential damages.
“For example, if the surgery cost $15,000, we could provide a factored amount to the doctor, who gets paid immediately, without risk, at a discounted rate, and wait for full payment ($15,000, hopefully), at risk, out of the proceeds of the litigation. If the litigation does well, we hope to be paid in full; if the litigation fails, we lose our money. If the lawsuit is successful, but not as successful as predicted, a compromise would be made and we would restrict our principal and profit recovery to no more than one-third of the settled value of the case.
“What you’re trying to do is predict a level of success. You have a conversation with the lawyer, hopefully who specializes in obtaining recoveries in TVM cases; has he established a certain reputation in that specialty? We have a conversation and he provides the criteria necessary for a plaintiff to qualify for compensation. Once I am clear on the liability criteria, I need to inquire about her level of injury. Does she need surgery? More than one? What is the recovery time for each surgery? What level of treatment does this person require? How much does it cost? And what will the doctor accept?”
Q: How do you know how much to fund?
MB: “Let’s assume the plaintiff is not insured, but that the doctor accepts Blue Cross maximum payments for his/her insured patients. The funder would attempt to negotiate and pay the doctor, up front, a number consistent with what he would normally accept from Blue Cross. The funder would be paid, much later, out of settlement proceeds, the gross cost of the surgery, assuming that the cost is reasonable and customary in that geographic location. In our $15,000 surgery example, the doctor would accept immediate payment of $5,000 and the funder would wait for the conclusion of the litigation to collect, hopefully, the $15,000.00. With litigation, there can be many possible outcomes, so there are many shades of gray. What you are trying to do is negotiate a number with the doctor that he will accept as full payment up front. Hopefully, there will be enough $15,000 repayments to offset losses and compromised repayments made necessary by less than optimum results. The service makes the surgery possible, gets the doctor paid immediately, and the case is made stronger by the performance of the surgery.”
MDND: So it’s a numbers game?
MB: “Yes, and ultimately it is very risky for me. Assuming our mythical surgery cost of $15,000 – if I fund ten of these and I invest $15,000 in each one, I have invested $150,000. If I lose four, I lose $60,000. The patient loses nothing, I’m out $60,000. I have to make significant profit on the other six to stay in business; this is the reason for the significant factor. It has to account for time and loss. The patient is paying the reasonable and customary non-insured rate thus, funding costs the plaintiff nothing and, hopefully, surgery improves her condition and the expenditure increasing the value of her case.”
MDND: But who is paying the 300 percent? The patient? Elaborate on what this could ultimately cost the plaintiff.
MB: “Because the doctor accepted a substantial discount in exchange for not having to accept the risk of time and case loss, the amount that the patient has to repay is consistent with what she would have had to pay the doctor if he was willing to do the surgery contingent upon recovery in the case. Funding doesn’t cost the patient anything and it has resulted in her getting badly needed surgery and enhanced case value.
“In a $100,000 case, I would not want to overburden a case and would probably fund no more than $10,000-$15,000. If those attorneys handling these types of cases can help me gain an understanding of what these cases are worth, we can fund accordingly. You also must get a solid estimate of how long these types of cases will take to resolve. Is it a class action? Multidistrict litigation? Or is it an independent lawsuit? Often these cases are settled on tiers of damage levels. If the level of injury is more severe for one patient over another, that patient could receive a different, perhaps higher, value.
“If a person has the higher level of treatment and associated costs, how much is the case worth? Is liability established or yet to be proven? Are the liability facts favorable? What symptoms is the patient presenting that could subject the manufacturer to potential liability? What is the likelihood of success? If certain criteria are met, funding is likely at a range of numbers. I always try to fund the smallest number possible so that the plaintiff can keep the majority of her settlement. The funder wants to fund an amount that comfortably fits into estimated case value; we do not want to overfund. I’m comfortable, for instance, funding $5,000 into a case, with a potential maximum repayment of $15,000, assuming a reasonable case value of $100,000. Keep in mind, if a client settles a case, I have a 100 percent chance of getting ‘some’ money back. If the case is tried, I have, historically, less than a 50 percent chance of getting any money back because wins and losses at trial are, historically, a 50/50 proposition.”
MDND: The Kugel mesh settlement had some injured patients offered $4,500 even though they are suffering life-altering complications. How does someone know they will have nothing at the end of the case AND owe you money? In other words, what will it cost the plaintiff or the injured person?
MB: “I wouldn’t fund a case with a potential $4,500 result. It could not qualify for surgery funding. An attorney would have to make the case that the surgery is likely to increase the result enough to justify funding. If, after, funding our sample case at $5,000, a $4,500 settlement resulted, I would receive the amount remaining after the attorney took his/her fees and costs (next to nothing) and the client would get the benefit of a $15,000 surgery, but no liquid proceeds.
“The better question is “If the funder makes possible a $15,000 surgical procedure in a case with good liability, how much would the performance of this surgery enhance the settlement value of the case”? Strategic lawsuit funding in cases like this should pay for itself by the additional settlement proceeds it makes possible. If the case fails or resolves for less than the amount the funder invested, the patient has no increased debt because the funding was provided non-recourse, contingent on case outcome. The funder may take as repayment what little is left, but the balance of the obligation is completely excused; no debt results to the plaintiff on behalf of the funder.” #
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