Catastrophic injury claims
A catastrophic injury claim is a different exercise from an ordinary one. The bills to date are almost irrelevant. What matters is a defensible projection of what the rest of a life will cost, and whether enough insurance exists to pay it.
What makes an injury catastrophic
Not a legal term of art so much as a practical one: an injury that permanently changes what someone can do, requires care or adaptation indefinitely, or removes their ability to earn as they did.
- Spinal cord injury — paraplegia, tetraplegia, or incomplete injury with lasting deficit
- Moderate to severe traumatic brain injury, including hypoxic injury after drowning or cardiac arrest
- Amputation and limb loss, traumatic or surgical
- Severe burns requiring grafting
- Multiple orthopedic trauma with permanent functional loss
- Blindness, deafness, or loss of speech
- Internal organ damage requiring ongoing management or transplant
The life care plan
This is the single most important document in a catastrophic case, and most people have never heard of it.
A life care plan is prepared by a qualified planner, usually a rehabilitation nurse or physician, working from the treating doctors' opinions. It itemises everything the injury will require for the rest of the person's life, year by year, costed at local rates and then reduced to present value by an economist.
- Attendant and nursing care, hour by hour, with the cost of agency staffing
- Surgeries and procedures reasonably expected in future — hardware removal, revisions, shunt replacements
- Durable medical equipment on replacement cycles: a wheelchair is not bought once
- Prosthetics, which are replaced every few years for life
- Home modification — ramps, doorways, bathroom, lifts — and vehicle modification
- Medication, therapy, case management, transport to appointments
- Treatment of predictable secondary complications
Alongside it sits a vocational assessment and an economist's report on lost earning capacity, which asks not what you earned last year but what your working life would have produced.
Finding enough insurance
In a catastrophic case the limiting factor is almost never liability. It is money. A plan showing $9 million of future need against a $30,000 policy is an arithmetic problem, and the work is finding every layer that exists.
- The primary liability policy, and every other person or entity who might share fault
- Umbrella and excess policies sitting above it, which are frequently not disclosed unless asked for directly
- Employer and commercial policies, if the at-fault person was working
- Your own underinsured motorist coverage, and that of any household policy you may be covered under
- A product manufacturer, a contractor, a premises owner, or a public entity as an additional defendant
- Bad-faith exposure where an insurer unreasonably refuses a reasonable within-limits demand, which can open up recovery beyond the policy
Structures, trusts and benefits
How a large recovery is received matters nearly as much as its size. A lump sum paid directly to someone receiving Medi-Cal or SSI can disqualify them from the benefits paying for their care — the worst possible outcome.
A special needs trust preserves means-tested benefits while making funds available for everything those benefits do not cover. A structured settlement can provide guaranteed periodic payments, often with tax advantages, instead of a sum that has to last fifty years. These decisions are made before signing, not afterwards, and they should involve someone who does this work specifically.
Questions people ask
They have offered a large amount already. Should we take it?
Not before there is a life care plan. An offer that looks enormous against the bills so far can be a fraction of lifetime cost, and a settlement cannot be reopened when the care need changes. The purpose of the plan is to turn 'a lot of money' into a number that can be tested.
What if their insurance is nowhere near enough?
Then the work is finding more: umbrella and excess layers, additional defendants who share responsibility, employer or commercial policies, your own underinsured motorist coverage, and in some circumstances exposure beyond the policy where an insurer has unreasonably refused a reasonable demand. It is often the most valuable work in the case.
My relative cannot make decisions for themselves. What happens?
A conservatorship or guardian ad litem will generally be needed so someone has legal authority to bring and settle the claim, and court approval of any settlement will be required. It adds a step and it exists to protect the injured person.
Will a settlement affect their Medi-Cal or SSI?
It can, severely, if it is received the wrong way. A special needs trust is the usual answer: it preserves means-tested benefits while making the money available for what those benefits do not cover. This has to be planned before the settlement is signed.
Related
Reviewed October 2026 by Simon Aziz Budhwani, Esq., the attorney responsible for this site. Legal statements here name the California code section they rely on, so you can check them rather than trust them. This is information about the law in general, not advice about your situation.
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