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Does Cash Assistance Affect Your Injury Settlement?

Posted May 12, 2015 | Personal Injury

Liens against personal injury settlements and awards have become increasingly popular in recent years. This includes a rise in liens asserted by federal and state governments, in part because of recent legislation which requires an individual with a personal injury claim to notify government lien holders. The following article will address how the receipt of cash assistance from the Pennsylvania Department of Welfare (DPW) can affect your injury settlement or award.

Can the Pa Department of Welfare Assert a Lien for Cash Assistance Against a Personal Injury Award?

To the dismay of many accident victims in Pennsylvania, if you receive public assistance during the time you have a personal injury lawsuit, the Commonwealth is entitled to get its money back. Pursuant to 23 Pa.C.S.A. §4601, the Pennsylvania Department of Public Welfare (DPW) can assert a lien against your injury settlement or award for cash assistance received by the claimant, his spouse or unemancipated children.

However, the time period for which DPW can assert a lien against your claim is limited to the time that the cause of action existed.  DPW cannot assert a lien for cash assistance provided to you before your claim arose.

In addition, Pennsylvania law requires that DPW make a pro-rata contribution toward costs and attorney’s fees. Pennsylvania courts have held that DPW cannot “piggy back” off the injured party’s recovery efforts. Instead, DPW must make “equitable” deductions for the cost of reasonable litigation expenses and attorney’s fees.

Will a Personal Injury Settlement/Award affect my Eligibility for Public Assistance?

It is likely that if you receive a large cash award for a personal injury case that it will affect your welfare benefits. In Pennsylvania, your financial resources are a condition of eligibility for public assistance benefits. Windfalls including money from a personal injury settlement or award is considered lump sum income. Under the lump sum income rule, if you receive lump sum income in excess of your calculated standard of need you will be ineligible for public assistance. Thus, if you prevail in a claim for injuries sustained in a car accident you will likely be disqualified from receiving future public assistance benefits for a period of time.

The period of ineligibility may be shortened under some circumstances. If you obtain a lump-sum settlement, you can be eligible for public assistance the following month if the funds are properly spent down to the appropriate resource limit. See 55 Pa. Code section 183.105. Increases in Income.

If you have suffered a physical or mental disability it may be possible to shield lump sum income, and maintain public assistance, through the creation of a “special needs trust.” A special needs trust holds funds for the benefit of a disabled individual. It allows for the use of those funds on certain items and services to improve the quality of the individual’s life. If you receive a lump sum settlement in your personal injury case, a special needs trust can prevent you from being disqualified from public assistance for having too many assets. An experienced Pennsylvania lawyer can help guide you through this process.

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Brent Wieand is a trial attorney who practices law in Pennsylvania and New Jersey. Brent regularly handles cases involving vehicle accidents, nursing home abuse, medical malpractice, premises liability and defective products. He can be reached at 1(877) 654-3887 or through the online contact form.

Disclaimer: The above article is not legal advice. Pennsylvania law is constantly changing and this article may become outdated. If you were seriously injured due to an accident or malpractice, you should consult with an experienced injury attorney who can help you address your individual circumstances and legal needs.