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Can One Protect Their Tax Refund During Bankruptcy?

Posted on Monday, January 22nd, 2018 at 11:53 am    

The following post is part of our Law Student Blog Writing Project, and is authored by Jessie Smith, a law student from the University of Kentucky.

Bankruptcy in Northern Kentucky Series

Taxation is something few think about during most of the year, absent the occasional article in the paper or segment on the news concerning the potential for tax reform. However, during the latter portion of the year, particularly between the New Year Holiday and April 15, otherwise known as “Tax Day,” taxes are a topic that come to the forefront of most working Americans’ minds. Although most do not look forward to the prospect of “filing taxes,” many can expect a refund for the amount they have overpaid through the year. For those in the midst of bankruptcy, or considering filing for bankruptcy, a natural concern that arises is what may happen to their tax refund. Although everyone’s circumstances vary, and those that find themselves in this position should seek out legal counsel, this blog post aims to provide a general answer to that question.

Can One’s Tax Refund Be Protected During Bankruptcy, Or Is It Subject To Seizure?

When an individual files for bankruptcy in Northern Kentucky, the vast majority of that person’s assets (the “non-exempt” assets) become part of what is referred to as the “bankruptcy estate.” The “bankruptcy estate” is defined by the U.S. Bankruptcy Code in 11 U.S.C. § 541. Section 541 defines the estate in sweeping terms, and, under most circumstances, one’s tax refund will be considered part of the bankruptcy estate. Whether one’s tax refund becomes part of the bankruptcy estate depends on a variety of factors, including the timing of the filing of bankruptcy, the year in which the income for which the refund is given was earned, and under what Chapter of bankruptcy one files, as well as how one chooses to utilize their “exemptions.”

The best way by which to illustrate the above is by way of example. Hypothetically, if a “debtor” were to file Chapter 7 bankruptcy in January of 2017, and were to subsequently receive a refund for the 2016 tax year, then that money will become part of the bankruptcy estate. Many may find this result somewhat confusing, since the tax refund is received after filing for bankruptcy. The underlying reasoning is grounded upon the period of time in which the money was earned and paid to the IRS; since the money was earned, and taxes on that income were to paid to the IRS, prior to bankruptcy, then the money one receives in the form of a tax refund as the result of any overpayment in taxes is viewed as though it was received throughout the previous tax year, as opposed to after filing for bankruptcy. As one source puts it, the way in which the law views this scenario is somewhat analogous to a savings account – the money overpaid in taxes for the 2016 tax year is “saved” by the IRS, just as one would place funds in savings, and the subsequent tax refund is similar to a “withdrawal.” Thus, under this hypothetical situation, although the debtor does not, in reality, receive the funds until after filing for bankruptcy, the money was earned and taxes paid prior to the filing, and will therefore likely be swept into the bankruptcy estate.

Another example arises when one files for bankruptcy and receives a tax refund for the same year. The following facts are illustrious of this hypothetical scenario: debtor files for bankruptcy in June of 2017, and subsequently receives a tax refund for the 2017 tax year in April of 2018. The question arises: does the tax refund get swept into the bankruptcy estate, as was the result under the immediately preceding set of facts? The answer is “yes” and “no.”

Here, the tax refund will be divided into two separate and distinct groups, the first being that portion of the refund attributable to income earned prior to filing for bankruptcy, and the second being that portion attributable to money made after the filing. The first group (that portion of the tax refund that is based on income earned before filing) is subject to being swept into the bankruptcy estate, while the second group (that portion of the tax refund that is based on income earned subsequent to filing) will likely escape the clutches of the estate. In other words, the amount of the tax refund that is calculated based on income earned prior to June of 2017 will become part of the estate, while the amount attributable to income earned subsequent to June of 2017 may be protected.

Another example provides some clarity with respect to a third, commonly seen situation. Assume debtor files for bankruptcy in December of 2016, and later receives a tax refund for the 2017 tax year. The concern that immediately comes to mind is whether the 2017 tax refund will be protected, or whether it will be subject to seizure. Here, the debtor will most likely get to retain the full amount of the tax refund, because all the income upon which the taxes were assessed was earned subsequent to filing for bankruptcy. In other words, the entire amount of taxes overpaid for the 2017 tax year were paid after filing for bankruptcy, and would thus generally escape being swept into the bankruptcy estate.

A final wrinkle that may be a concern for some is what happens to their tax refund in the context of a Chapter 13, as opposed to a Chapter 7, bankruptcy. The answer is largely grounded in the legal ramifications associated with filing for one type of bankruptcy over the other. When a debtor files bankruptcy under Chapter 7, the bankruptcy trustee takes possession of all of the debtor’s non-exempt property and/or assets, liquidates them (hence the term often used to refer to Chapter 7 bankruptcies, “Chapter 7 Liquidation”), and distributes the cash to the debtor’s creditors. Generally speaking, after the liquidation and subsequent distribution occurs, the debtor is “discharged” of all debts incurred prior to the bankruptcy filing. Under Chapter 13, on the other hand, a debtor repays their debts through utilization of their income, and may retain some of their assets. The period of time in which a debtor makes payments toward their debts is often referred to as a “repayment plan,” and typically lasts three to five years. Once the repayment plan is completed, the debtor’s debts are “discharged.” However, the critical difference between Chapter 7 and Chapter 13 bankruptcies in the context of retention of one’s tax refunds is centered around what is called “disposable income.” To put it in very general, broad terms, under a Chapter 13 plan, one’s “necessary and reasonable” expenses (i.e., generally, those expenses required to live, including, but not necessarily limited to, food, clothing, shelter, etc.) are subtracted from their regular income, and the resulting figure is known as the debtor’s “disposable income.” Most often, when a debtor files a Chapter 13 bankruptcy, and files a repayment plan with the court, tax refunds are not considered in the debtor’s income, and is thus not utilized in calculating the debtor’s necessary and reasonable expenses and disposable income. Thus, when a Chapter 13 debtor receives a tax refund, the amount received is most often considered “disposable income,” since the repayment plan accounts for the debtor’s regular income, regular expenses, etc., but does not factor in the additional funds a debtor will receive when given a tax refund. To put it more simply, the tax refund is, in a way, considered “extra money,” money that the debtor does not need to pay for their “necessary and reasonable” expenses; therefore, it is considered “disposable income,” and will be used to pay the debtor’s debts during the course of the repayment plan. Generally speaking, unless there is some “necessary and reasonable” expense that has not been taken into account by the repayment plan, then the chances of a debtor retaining their tax refund throughout the repayment plan period in a Chapter 13 bankruptcy is slim.

Are There Other Ways One Can Protect Their Tax Refund In The Midst Of Bankruptcy? Can Tax Refunds Be Utilized For The Payment Of Legal Fees Rendered In Filing Bankruptcy?

Although options are varied, many facing bankruptcy may think of paying legal fees through utilization of one’s tax refund as a means of protecting their refund during bankruptcy. For those considering such an option, it should be noted that others have pursued the same means of protecting their tax refund in the past. To determine the feasibility of this option, the following case law will be discussed.

In In re Hunter, the United States Bankruptcy Court for the District of Kansas was faced with the question of whether the assignment of a debtor’s tax refunds to their attorney as a method by which to pay legal fees would be protected, or swept into the bankruptcy estate. The particular circumstances are as follows: the debtors executed an assignment, operation of which allowed for their attorney to receive the pre-petition portion of their tax refunds as a flat-fee retainer in exchange for legal services rendered in filing for Chapter 7 bankruptcy. The bankruptcy trustees moved the court for an order forcing the pre-petition portion of the debtors’ tax refunds into the bankruptcy estate.

In support of their motion, the trustees made three primary arguments. The first argument the trustees set forth was predicated on 11 U.S.C. § 544(a), which, generally, provides for the avoidance of “any transfer of property of the debtor or any obligation incurred” under certain circumstances. Those particular circumstances in this case, and from the point of view of the trustees, was that the debtors could not “assign what [was] an essentially undivided and unliquidated expectant interest based upon a notional ‘accrual’ date.” Secondly, the trustees argued that the “debtors [were] required to marshal away from that part of the refund to which the estate [was] entitled.” Finally, the trustees were of the view that assign that portion of their tax refund attributable to pre-petition earnings “‘burden[ed]’ the creditors by effectively forcing them to pay the debtor’s attorneys’ fees and that this burdensome effect render[ed] the assignments fraudulent transfers done for the purpose of hindering or delaying the debtors’ creditors.” The debtors, on the other hand, made one simple argument: “an assignment of pre-petition tax refunds for payment of a flat fee is no different than a debtor paying an attorney a flat fee in cash; the result in either event is that the payment does not become property of the estate,” they argued.

The court largely agreed with the debtors. The court looked to statutory and case law in reaching its conclusion, drawing upon 11 U.S.C. § 330(a)(1), United States Trustee v. Lamie, In re Wagers, and In re Carson. Drawing upon all the previously identified law, the court determined that a “flat-fee retainer assigned for work done incident to filing a chapter 7 does not become property of the estate”; rather, “the assignment of an anticipated tax refund as part of or all of a flat-fee retainer is enforceable against the estate, at least to the extent of the amount of the flat fee.” The court finally concluded: “the benefits . . . to the debtors and to their creditors of having chapter 7 debtors well represented to outweigh the relatively small detriment that these assignments may work on the creditors. The assignments of these debtors’ expectancy interests in their tax refunds, limited as they are by the amount of the flat fees owed and by the amount of the refund that would be determined attributable to the estate are valid and enforceable. They do not significantly differ from a cash retainer payment that depletes the debtor’s resources before she files a case. So long as the fees are not fraudulent or excessive, there is no basis for the Trustees to recover them.”

It is important to keep in mind that different courts are held and bound to differing rules of law, depending on the jurisdiction. Although the results reached in In re Hunter may seem encouraging, the results reached there are not necessarily applicable in other jurisdictions. As always, it is important to speak to counsel regarding one’s own personal circumstances before coming to any determinations on how best to proceed.

Editor’s note: In the Covington Division of the Eastern District of Kentucky Federal Court, where all Northern Kentucky bankruptcies are heard, the Court and Trustees regularly allow debtors to use their tax refunds to pay for the bankruptcy attorney’s fees.

Conclusion

Depending on a variety of factors, some of which have been discussed above, a debtor facing the possibility of filing bankruptcy may have some options when it comes to possible retention of their anticipated tax refunds. However, there are a wide array of considerations that must be kept in mind when discussing bankruptcy. Although this post has focused primarily on what many consider to be the most common types of individual, consumer bankruptcies (that is, Chapter 7 and Chapter 13), one may consider Chapter 11 under certain circumstances, as well. Another consideration that was not addressed here involves whether one even qualifies for Chapter 7, or would be pushed into a Chapter 13. Such a determination is based on many factors, one of which is referred to in the bankruptcy arena as the “Means Test.” These considerations are briefly mentioned here to illustrate that the general overview provided above is by no means exhaustive or authoritative, to simply demonstrate that everyone’s circumstances vary, and, depending upon those circumstances, one option may be more appealing than another. Ultimately, however, certain debtors may feel somewhat more comfortable traversing the obstacles of bankruptcy with the knowledge that they may be able to, in one way or another, protect an anticipated tax refund.

If you’re considering using your tax refund to file a bankruptcy, call Lawrence & Associates! We’ve been helping people in Northern Kentucky keep their tax refunds for more than a decade. We’re Working Hard for the Working Class, and we want to help you!


Jingle Bells or Jingle Blues?

Posted on Tuesday, January 16th, 2018 at 12:31 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Thomas Rovito, who is pursuing his Juris Doctorate at the Ohio State University.

How Holiday Credit Card Debt Could Impact Your Kentucky Bankruptcy

The consumer advocate news outlet NerdWallet estimates that the average American will spend $660 for holiday gift transactions. Two other statistics to note include that the number of Americans in credit card debt after the holiday season has been increasing, from 48% of shoppers in 2015 to 56% of shoppers in 2016, and that 27% of Americans did not have a holiday shopping budget in 2016; of those who did have a budget, 24% exceeded it. These statistics beg the question on what would happen if a shopper stocks up on Christmas presents using his credit card, and then subsequently files for bankruptcy. Will those retail store creditors turn into the Grinch and seek the return of gifts from family and friends, or would something else happen?

The answer is in the Bankruptcy Code. But before jumping headlong into the primary source material, secondary sources can provide guidance on this topic. For instance, the Administrative Office of the United States Courts has provided an overview of Bankruptcy Basics to introduce lay people to the topic. The Ohio State Bar Association and the Kentucky Bar Association both have pamphlets on bankruptcy. In addition, third-party sites, such as Findlaw and Nolo, have easy-to-use resources.

While the Bankruptcy Code is full of legal terms of art and abstract legal concepts, they can be broken down to individual and applicable ideas. For instance, there are six different forms of bankruptcy, but in most cases only Chapter 7 Liquidation or Chapter 13 Adjustment of Debts of an Individual with Regular Income would apply to individual consumers with credit card debt. In Chapter 7 bankruptcy, which is means-tested to prevent abuse, a trustee liquidates the debtor’s assets for cash to pay creditors, unless the specific piece of property is exempt, to give the debtor a fresh start. In Chapter 13 bankruptcy, a debtor may retain valuable assets, such as his home or vehicle, and structure payments to creditors in accordance with his income. Chapter 7 bankruptcy is typically quicker, taking about four months to obtain discharge, to Chapter 13’s duration of three to five years. All Northern Kentucky bankruptcies are filed in federal court in Covington, Kentucky.

The objective of the debtor should be to obtain a discharge, which “releases the debtor from personal liability for certain specified types of debts.” But not all debts are created equal. There is also a material difference between secured debt (“[d]ebt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default,”) and unsecured debt (“debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay”). For more information on this distinction, please refer to 11 U.S.C. § 506. While most credit card debt is unsecured, it is important to note that some credit card companies and department store cards retain a security interest, or purchase money security interest, within their contracting agreement with the consumer, often in the fine print of the bottom of the credit card agreement. This security interest would act like collateral on outstanding transactions, and would give the credit card company or department store the right to repossess the property if it was not paid in full. While most credit card debt is unsecured, larger luxury purchases such as televisions, are likely covered by a security interest, and can be repossessed.

So how do these concepts apply to a consumer who builds up debt during the holidays? First, the consumer should look at the distinction between secured and unsecured debt. If the consumer has secured debt, or debt with collateral, then potential creditors could attach the property (like a home, car, or improvements on a vehicle) in the event of default. On the other hand, If the consumer has unsecured debt, which is the category of most consumer credit card purchases, then the creditor cannot attach the assets in event of default; however, the creditor may use a debt collector to compel payment, report the failure to credit agencies–reducing the debtor’s credit score and increasing the cost of future loans, or go to court to garnish the wages of the debtor. In addition, the ultimate disposition of the debtor’s credit card issues would also depend on whether the credit card company or department store retained a security interest in the property; if so, there is the possibility the property could be repossessed.

There is a matter of timing for debts to be considered dischargeable. Under 11 U.S.C. § 523(a)(2)(C), “debts owed to a single creditor and aggregating more than $675 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable.” In plain English, this means that debts to a single company that add up to more than $675 for goods not necessary for the support of the debtor (for example, food, water, shelter), are presumed to allow the creditor to collect against the debtor. Thus, if you exceed more than $675 in holiday credit card debt on luxuries, and not essentials, it may impact future bankruptcy proceedings.

In addition, it is important to note that the bankruptcy court may deny discharge in a case if there are fraudulent conveyances, or an attempt to shift assets from the debtor to third-parties for the purpose of avoiding paying creditors. To learn more about this topic, please see 11 U.S.C. § 727; Fed. R. Bankr. P. 4005. In addition, the trustee of the estate or a creditor may petition the bankruptcy court to revoke a discharge “if the discharge was obtained through fraud by the debtor.” See 11 U.S.C. § 727(d).

Ultimately, a decision to file for bankruptcy is serious, as it may place your assets in jeopardy and drastically impact your credit rating. On the other hand, if it is structured correctly, bankruptcy can provide you with relief from creditors, especially after the holidays with consumer credit card debt, while preserving your most precious assets, such as your home or car. It is important to note the distinction between secured debt (secured by collateral) and unsecured debt (that is not secured by collateral) before engaging in holiday transactions, in addition to determining whether your credit card company retains any security interest in your transactions by reading the fine print of the credit card agreement. This information, when coupled with sound budgeting, fiscal discipline, and adequate financial disclosure, can make the difference between jingle bells or jingle blues this holiday season.

Lawrence & Associates has offices in West Chester, Ohio and Fort Mitchell, Kentucky. We’re Working Hard for the Working Class, and we want to help you!


Demystifying Social Security Disability Insurance (SSDI): Calculating Benefits from Past Wages after the Finding of Disability

Posted on Monday, December 11th, 2017 at 2:19 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Thomas Rovito, who is pursuing his Juris Doctorate at the Ohio State University.

The Social Security Administration (SSA), which has local offices in Cincinnati, Ohio and Florence, Kentucky, publicized in its report Disability Benefits that “a 20-year-old worker has a 1-in-4 chance of becoming disabled before reaching full retirement age.” This imperative displays the need to demystify the byzantine process of the calculation of benefits from past wages after the finding of disability through the SSDI formula from 42 U.S.C. § 415. This article details SSA and third-party resources on calculating SSDI benefits, as well as the fundamentals of calculating SSDI benefits.

Fortunately, the SSA has created a benefit calculator to expedite the math. In addition, my Social Security provides online statements to “show” the SSA’s work. The Congressional Research Service has produced white papers on this topic. In addition, legal self-help companies and newspapers, such as Nolo and the Washington Post, have simplified the SSDI benefit process.

But for those wanting to explore the process further into the actuary tables and formulas from the Social Security Handbook, this guide is designed to provide an overview on the fundamentals of the SSA benefit calculation process for SSDI. Please note that this article concerns the Title II SSDI program (for workers who have paid into Social Security over the course of their career), and not the Title XVI Supplemental Security Income (SSI) program (for disabled persons with limited assets).

Much like a high school algebra problem, the SSDI program calculation requires several steps, and can be best illustrated through hypothetical problems. The first step is to multiply the beneficiary’s nominal earnings by the yearly index factors to determine the beneficiary’s indexed earnings. The index factor settles at the flat rate of 1.0000 when the beneficiary is eligible for benefits, with the same rate applying to the two years before the beneficiary claimed eligibility. To find the index factor for previous years, divide the Average Wage Indexing Series (AWI – or the average wage for the year) when the beneficiary turned sixty by the AWI of the year of employment. The beneficiary would then multiple his nominal earnings by the index series to obtain his yearly indexed earnings.

Social Security Administration, Average Wage Indexing Series Graph

These concepts can be vividly illustrated through a hypothetical question (similar to two hypothetical illustrations by the SSA). Beneficiary (B) is eligible for SSDI benefits in 2018 at age sixty-two; thus, a flat rate of 1.0000 would apply as his index factor for 2017 and 2016. For previous years of employment, he would take the AWI from when he turned sixty by the AWI for his year of employment. B would then multiply his nominal earnings by the index factor for each year to determine his indexed earnings.

B’s Earnings from 2017-2012 (with Subsequent Years Omitted)
Formula: Nominal Earnings x Index Factor = Index Earnings
Index Factor = AWI of B at 60 / AWI of Year of Employment

The next step would be to calculate the “average indexed monthly earnings” (AIME). This amount is computed from the top thirty-five years of indexed earnings added together, and then divided by the number of months within the thirty-five years, or four hundred and twenty months. If the beneficiary worked for more than thirty-five years, only the thirty-five largest indexed earnings would count, and the other years would drop off from the calculation.

Returning to B in the hypothetical, let’s say he worked for forty-five years before suffering his disability. Only the largest thirty-five years of indexed income would apply. The largest thirty-five indexed income rates would be summed. This amount would then be divided by four hundred and twenty to yield the AIME.

Formula: (Largest 35 Index Earning Summed) / 420 = AIME
420 came from 12 (months) x 35 (years)

The third step is to use the AIME figure to assess the beneficiary’s primary insurance amount (PIA). The PIA formula is a function of the AIME, which is contingent on the year of first eligibility. The PIA formula will consist of bend points. The amounts for 2018 are:

  1. 90 percent of the first $895 of his/her average indexed monthly earnings, plus
  2. 32 percent of his/her average indexed monthly earnings over $895 and through $5,397, plus
  3. 15 percent of his/her average indexed monthly earnings over $5,397.

Using the numbers from the another SSA hypothetical, B, who was eligible and retired in 2018, has a AIME of $4,059, with the 2018 first PIA bend point of $895, and the PIA second bend point of $5,397. Cost of Living Allowance (COLA) does not apply.

.9 (First PIA bend point of eligible year) + .32 (AIME – First PIA bend point of eligible year) = Gross Monthly SSDI Calculation (truncated to the next lowest dime)
.9 (895) + .32 (4059 – 895) = $1,817.90 (truncated from $1,817.98)

On the other hand (again, using the numbers from another SSA hypothetical, B2, who was eligible in 2014, but did not take until 2018, would have access to COLA adjustments from 2014 through 2018. In addition, if B2 had an AIME of $9,144, the first 2014 PIA bend point of $816, and the second 2014 PIA bend point of $4,917, the respective calculation would be:

9 (First PIA bend point of eligible year) + .32 (Second PIA bend point of eligible year – First PIA bend point) + .15 (AIME – Third PIA bend point of eligible year) = Gross Monthly SSDI Calculation (truncated to the next lowest dime)
.9 (816) + .32 (4,917 – 816) + .15 (9,144 – 4,917) = $2,680.70 (truncated from $2,680.77).
The COLAs of 2014 through 2017 apply (1.7%. 0.0%, 0.3%, and 2.0%), which yield $2,788.90.
COLA x Gross Monthly SSDI Calculation = Modified Monthly SSDI Calculation
.04 x 2,680.70 = 107.28
107.28 + 2,680.70 = $2,787.90 (truncated from $2,787.93)

While this calculation yields the Gross Monthly SSDI Calculation, several other factors may impact this determination. For instance, there will be a deduction is the beneficiary is disabled before the Full Retirement Age (FRA) to the Gross Monthly SSDI Calculation. If the beneficiary has dependents, the Maximum Family Benefit (MFB) may trigger. According to the SSA, the MFB is “is the maximum monthly amount that can be paid on a worker’s earnings record.” This amount may not exceed:

  1. 150 percent of the first $1,144 of the worker’s PIA, plus
  2. 272 percent of the worker’s PIA over $1,144 through $1,651, plus
  3. 134 percent of the worker’s PIA over $1,651 through $2,154, plus
  4. 175 percent of the worker’s PIA over $2,154.

In addition to the fourth step of adjusting for these extraneous factors, it also important to consider the broader implications of claiming SSDI, including its impact on the beneficiary’s federal taxes, and the ability of the beneficiary to claim Medicare or Medicaid coverage. Moreover, SSDI benefits may become modified if the beneficiary returns to work, leaves the United States, has a change in marital status, has additional dependents, is convicted of a crime, or has a material change in income.

While the SSDI calculation may appear to be complex on its face, it may be analyzed as several step-by-step formulas. While the SSA does provide online statements and a benefits calculator, knowing the nuances of the formula, such as what constitutes the indexed income, AIME, and PIA, can empower you, and your attorney at Lawrence & Associates to make an informed and personally tailored decision about your SSDI benefits.

Lawrence & Associates has offices in West Chester, Ohio and Fort Mitchell, Kentucky. We’re Working Hard for the Working Class, and we want to help you!


In the Cincinnati Hearing Office, Does Getting VA Disability Guarantee Success with Social Security Disability?

Posted on Thursday, December 7th, 2017 at 11:00 am    

The following post is part of our Law Student Blog Writing Project, and is authored by Raphael Jackson, a law student from the Chase School of Law.

In the Cincinnati Hearing Office, Does Getting VA Disability Guarantee Success with Social Security Disability?

The short answer is no. The common misperception among many, is that being granted VA Disability automatically renders you eligible for Social Security Disability. This misconception likely has its origins in the fact that in how the two disability processes were related in the past. In the past, attainment of full disability from the Veterans Administration weighed heavily in the favor of the applicant who applied for Social Security Disability. However, this is no longer the case, and many decisions from the Cincinnati hearing office have confirmed that no weight will be given to the VA Disability decision.

Social Security and Veterans disability are both forms of government based disability payout programs. However they are operated by two separate and independent governmental departments. Each department has established its own criteria for determining who is eligible for disability payments, what qualifies as a disability, and how much each recipient may receive.

To understand why veteran benefits no longer have such a meaningful effect of the outcome of your Social Security Disability, it is important to explain a short background about each agency and an explanation about how each individual agency determines the disability of the applicant.

While many different iterations of Veterans Benefits programs have existed since the time of the Civil War. The Veterans Bureau, the precursor to the Veterans Affairs Administration, was established by an act of Congress in 1919. While Social Security Disability Insurance, or SSDI, came into law in 1959. SSDI is available to all workers because it is funded by a payroll tax. This program, which is federally insured, is designed to provide income supplements for people who have been prevented from working due to a physical impairment.

What Is Veterans Administration disability?

VA disability is a monthly tax-free benefit paid to veterans who are at least 10% disabled due to injuries or illness incurred during active duty service. Active duty service includes active duty training. These injuries can be either physical such as a knee or back injury, or psychological such as Post Traumatic Stress Disorder. The VA measures disability on a percentage system and it is recorded in increments of 10% up to 100%. Those who have a compensation rate of P&T are considered 100% disabled.

P & T means permanently and totally “disabled”, which essentially means that the VA has considered the injury to be reasonably certain to continue throughout the life of the disabled veteran.
38 U.S.C.A. § 3501 (West)

How Do Cincinnati and Northern Kentucky People Get Social Security Disability?

As opposed to Veterans Disability, the majority of Americans who have worked for the past ten years – whether or not they are or have been military veterans – will qualify for Social Security Disability Insurance.

The official name of Social Security Disability is called Social Security Disability Insurance, or SSDI. You are eligible for disability benefits from Social Security only if you have been working for at least five of the last ten years. Unlike VA disability, SSDI is primarily concerned with “work credits,” i.e. how long you paid out into the system. The amount that you receive is calculated based upon your earnings history in your civilian occupation, as well as your military occupation if applicable.

The standard for receiving disability under the Social Security administration is:

  • The applicant is unable to do substantial work due to one or more medical condition(s);
  • The applicant’s medical condition is expected to last more than a year.

Social Security Disability is a monthly cash benefit which is granted to federal employees that have a disability that meets the Social Security Administrations definition of disability. There are 14 different general categories of disabilities that fall under the Social Security administrations definition of disability. These disabilities range from muscular skeletal disorder to auto immune disorders. The Social Security Administration calculates your monthly benefit payments by reviewing your previous income in your civilian and military jobs, as well as the date that your served. The maximum SSDI payment is $2639 per month in 2016.

In order to qualify for Social Security disability, you must have be working with a severe disability that lasts for more than a year, or a disability that can lead to death, or a disability that prevents you from working. If the recipient goes back the work the benefits will be terminated.

What Are the Differences in Social Security and Veterans Administration Disability Benefit Calculations?

Veterans Affairs calculates the applicants benefit payments based on the severity of the applicants’ disability. SSDI follows no such scheme. Another difference is that VA grants disabilities based on a percentage ratings system. Veterans who are partially disabled may receive VA benefits in proportion to their disability percentage rating. SSDI, on the other hand, will only grant an applicant benefits if they are fully disabled and unable to work as classified by either:

  1. The VA, in the that the applicant is a veteran; or
  2. By a professional from an SSDI review board in the case that the applicant is a civilian who is not a veteran.

How the Cincinnati Hearing Office Changes Priority Status

Even though receiving VA disability has no bearing on the outcome of your Social Security disability claim, the good news for Veterans is that as of March 17, 2017, being granted 100% P&T disability by the Veterans affairs Administration qualifies you to have your application for disability expedited by the Social Security Administration.

If you are 100% P&T then your application is considered high priority by the Social Security administration, and the application will be expedited.

Some veterans must wait as long as 125 days in order to receive a response from the VA to determine whether they are eligible to received disability. In addition to the long wait times, navigating the Veterans Affairs Disability process may prove to be a long and tedious process for many. Thus, is beneficial to seek the assistance of an experienced attorney when handling such cases. The waiting period for a Social Security Disability claim is even longer, and thus it makes sense to get an experienced attorney for these claims as well.


Eligibility Under Workers’ Comp and the Social Security Disability Insurance Program

Posted on Wednesday, November 8th, 2017 at 3:00 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Jessie Smith, a law student from the University of Kentucky.

A disabling injury or medical condition can strike anyone at any time. While rehabilitation and regaining one’s health is limited by the realities of modern medical science, maintaining economic security during these trying times is possible. Depending upon one’s personal circumstances, eligibility under a state’s workers’ compensation program or the federal government’s Social Security Disability Insurance program may provide the financial security blanket needed to guarantee one’s solvency, allowing one to remain focused on what matters most: healing.

Requirements for Eligibility Under Workers’ Comp Programs

Since workers’ compensation programs are administered by individual states, the specific requirements that must be fulfilled in order to be eligible for benefits of the program vary. As a general proposition, any injury or illness for which one seeks workers’ compensation must have been sustained on the job, or must have arisen out of work-related activities.

Additionally, an individual attempting to obtain workers’ compensation benefits must be classified as an “employee.” Some states also distinguish eligibility based upon the type of work that an employee performs. Finally, one’s employer must carry workers’ compensation insurance, or, alternatively, be required to do so by law.

As alluded to earlier, the above requirements are not universal, and may differ from state by state. Generally speaking, however, these requirements are common throughout the United States. It is important to note that there is a laundry list of exceptions to the general rules that may render an otherwise eligible “employee” ineligible. In order to get a better sense of individual states’ quirks, a brief review of some of the eligibility requirements of Kentucky and Ohio follow.

According to the National Federation of Independent Business (“NFIB”), in Kentucky, all employers that (employ one or more employees are required to carry workers’ compensation insurance. That said, sole proprietors, “qualified” partners of a partnership, and “qualified” members of a limited liability companies are excluded from workers’ compensation coverage. Officers of corporations, on the other hand, are considered “employees” by statute, and, thus, workers’ compensation insurance is required for such individuals.

Like Kentucky, Ohio requires all employers with one or more employees to carry workers’ compensation insurance coverage, according to the NFIB. Under Ohio workers’ compensation law, workers’ compensation coverage for sole proprietors, partners of a partnership, individuals that have incorporated themselves as a corporation, and others, is optional. In addition, and unlike Kentucky, the only option for most employers to obtain workers’ compensation coverage in Ohio is via Ohio state’s own program (as opposed to obtaining or maintaining coverage through a private or commercial insurer).

Clearly, the state-administered workers’ compensation programs are unique and can differ greatly between states. While the eligibility requirements and laws governing workers’ compensation can vary wildly throughout the nation, the federally administered Social Security Disability Insurance program applies universally. A brief overview of the eligibility requirements of the Social Security Disability Program follows.

Requirements for Eligibility Under the Social Security Disability Program

So long as the basic requirements are met, employees are eligible for workers’ compensation from their very first day of employment. While not a requirement per se, it is nevertheless important to note that, unlike workers’ compensation programs, Social Security Disability benefits are only available to those that have worked for a longer period of time. As a general rule, in order to qualify for Social Security Disability, one must have accumulated forty “credits,” twenty of which were earned in the past ten years. The number of credits required is determined by the claimant’s age at the time of disability. A younger individual will require less work credits than an older individual. One “credit,” according to the Social Security Administration, is earned for every $1,300 of wages an employee earns. An employee may earn only four credits per year; thus, once an individual earns $5,200 for the year, that individual has earned their maximum four credits for that year.

In addition to earning the requisite number of credits, a person must meet the Social Security Administration’s definition of “disabled” in order to qualify for disability benefits. “Disability” means that a person “cannot do work that [they] did before,” one’s “disability has lasted or is expected to last for at least a year or to result in death,” and the Social Security Administration determines that the one seeking benefits “cannot adjust to other work because of [their] medical condition(s).” If these three definitional elements are met by an applicant, they will be considered disabled, and will thus have satisfied one of the requirements to be eligible for disability benefits.

In addition to the above requirements, one must have “worked in jobs covered by social security.” The individual’s affliction must result in “long-term impairment” that “preclude[s] any gainful work.” Finally, the affliction must be so severe that the social security disability applicant is unable to perform their previous work; further, the applicant must be unable to engage in “any other type of substantial gainful work.”

While the above list of requirements is by no means exhaustive, it is illustrative of what an applicant would be required to do and show in order to qualify for Social Security Disability benefits. Clearly, the eligibility criteria for workers’ compensation programs differ substantially from disability benefits. Nonetheless, under some circumstances, one may qualify for both workers’ compensation benefits and Social Security Disability benefits. When such a situation arises, the issue of offsetting becomes a concern.

The Offsetting Effect of Workers’ Compensation on Social Security Disability Insurance

The Social Security Disability Insurance program requires that, when an individual is eligible for both workers’ compensation benefits and disability benefits, said individual’s disability benefits be reduced. This reduction must result in the combined benefits from the two separate programs being less than or equal to eighty percent of the individual’s “average current earnings.” “Average current earnings,” according to the Social Security Administration’s website, is defined as “the highest of the average monthly wage on which the unindexed disability primary insurance amount is based, the average monthly earnings from covered employment and self-employment during the highest five consecutive years after 1950, or the average monthly earnings in the calendar year of highest earnings from covered employment during the five years ending with the year in which disability began.”

The receipt of workers’ compensation benefits may have an offsetting effect on disability benefits under other circumstances, as well. For example, when a particular state’s workers’ compensation program allows for the possibility of a lump-sum payment being made to the recipient, thereby discharging the obligations of the insurer and/or employer, but simultaneously permits the payment of benefits in a more structured, periodic nature, said settlement is affected by the offset. More specifically, the lump-sum payment is “prorated to reflect the monthly rate that would have been paid had the lump-sum award not been made.”

There are a multitude of exclusions that apply to the offsetting rules. For instance, certain sums expended for medical purposes “in connection with” workers’ compensation are subject to exclusion in figuring the amount of the offset. Likewise, legal fees incurred by an individual “in connection with” workers’ compensation may be subject to exclusion. Finally, many other government benefits may be excluded from the offset, as well, including VA benefits and needs-based benefits, to mention a few.

What Should You Do If You Are Eligible for Workers’ Compensation and Social Security Disability?

When faced with a disabling medical condition or health-related emergency, many may find themselves in dire straits, financially speaking. Luckily, certain government programs, such as the state-administered workers’ compensation programs and the federally administered Social Security Disability Insurance program, exist and may be able to help those in need. While the eligibility requirements may change from jurisdiction to jurisdiction depending upon the program, and can oftentimes be strict, those that qualify may receive the financial security they need to get through some of the most difficult times in their lives.

If you have any further questions, call one of the attorneys at Lawrence & Associates for a free consultation. Lawrence & Associates has handled thousands of claims for injured and disabled men, women, and children. We’re Working Hard for the Working Class, and we want to help you!


The Difference Between Underinsured Coverage for Kentucky and Ohio Residents

Posted on Thursday, October 19th, 2017 at 7:29 am    

The following post is part of our Law Student Blog Writing Project, and is authored by Raphael Jackson, a law student from the Chase School of Law.

Being involved in an automobile accident can be a trying experience. Even long after the accident, negotiating with insurance providers is often a major source of stress for either party involved. Given the stress of the situation it is a common temptation for the insured to agree to a quick settlement, regardless of how unfavorable it might be, simply for the sake of moving forward. In order to prevent such a situation, it is important to be fully informed of your rights and responsibilities, as well as the rights and responsibilities of all parties involved.

Uninsured and Underinsured Motorist Coverage

According to a 2014 study conducted by the Insurance Research Council, one in eight drivers in the United States are uninsured.  In the Commonwealth of Kentucky, nearly 16% of all motorists are uninsured. In the state of Ohio, the number of uninsured drivers is approaching 14%. This means that if you are injured in an automobile accident in Kentucky or Ohio, you run a 14% and 16% chance, respectively, of having to deal with a party who is uninsured.  In order to protect themselves from such a scenario, many drivers purchase Uninsured Motorist coverage (UM). UM is offered as a standard on every insurance policy. It can, however, be waived by request.

Another scenario you may experience is being involved in an accident with a driver who has insurance but doesn’t have enough insurance to cover the property damage or personal injury caused to themselves or others. This category of insured drivers is commonly known as underinsured motorist coverage, or (UIM). Whenever a claimant makes a claim against her own insurance this is also known as a first party insurance claim.  Remember this important difference:  both an uninsured claim and an underinsured claim are claims made against your own insurance policy, but an uninsured claim is made when the at-fault driver had no insurance, while an underinsured claim is made when the at-fault driver didn’t have enough insurance.

Ohio vs. Kentucky Handle No-Fault Benefits Very Differently

Some states require insurance companies to compensate the injured for medical expenses and/or lost wages regardless of who was at fault in the accident. States which enforce this regulation are known as no-fault states. Other states follow an insurance arrangement in which one party is assigned most of the blame of the accident. The party to which the blame was assigned is then legally liable for the damages. This is known as a tort system.

Ohio follows the tort system, which operates on the theory of comparative negligence. Comparative Negligence, for insurance recovery purposes, means that if one party is more than 50% responsible for the accident then that party is not entitled to damages.

If you are involved in an automobile accident in Kentucky, you are not required to prove that the other driver was at fault in order for you to be compensated by your insurance company. In no fault states the portion of the insurance that covers the expenses is known as Personal Injury Protection or PIP. PIP covers motorists and pedestrians injured by motorists. Fault notwithstanding, basic PIP in Kentucky provides up to $10,000 per person per accident, for any “out of pocket” costs due to an injury. Any insurance policy that you purchase in Kentucky automatically comes with PIP coverage. Thus, all insured motor vehicles in Kentucky are required to have basic PIP coverage.

Basic Insurance Coverage Rules in Ohio

Ohio does not directly require a motorist to purchase automobile insurance, however Ohio requires all drivers to have “proof of financial responsibility,” which proves that they can pay for injuries or damages to others if they cause a car accident. Proof of financial responsibility can be, and is typically satisfied when the motorist purchases the minimally required Bodily Injury Liability coverage and Property Damage Liability coverage. The minimum bodily injury coverage in Ohio is $25,000 per injured, per accident, and $50,000 for all persons injured in any one accident. The required minimum for Property Damage Liability coverage is $25,000. In the event that the damage exceeds the minimum insurance coverage you can be held personally, legally responsible for any amount which exceeds your policy limits.

For the UIM insurance holder, any damages remaining in excess of the basic policy limit will trigger the UIM insurance, and the UIM will cover the difference between his or her UIM limits and the underinsured driver’s liability limits.  UIM insurance typically covers the driver along with his vehicle. The insured is entitled to this coverage whether she is involved in an accident as a driver, passenger, or pedestrian. The insurance policies may cover family members related through marriage and or legal adoption. However, the primary insured may not cover any other family members who have purchased their own insurance policies independent of the primary insured. Passengers can also be covered under the primary UIM insurance policy; the insured must review the specific language in order to determine how UIM coverage can be applied.

Basic Insurance Coverage Rules in Kentucky

The requisite insurance coverage for all ensured motor vehicles, with the exception of motorcycles, in the Commonwealth of Kentucky is PIP. PIP, or personal injury protection, offers up to $10,000 per insured per accident. In order for the injured party to recover any medical expenses, the medical treatment for the injuries they sustained must be in the excess of $1,000.

Assuming that both drivers, or driver and pedestrian, are both minimally insured, then the question arises is who is responsible for paying the PIP.  Regardless of whoever is at fault in the collision, if a pedestrian or a cyclist is struck by an automobile, then the PIP insurance from the automobile involved in the accident is also extended to that cyclist or pedestrian.  Kentucky Law provides that the statute of limitations for an action for PIP benefits is two years from the time the person suffers the loss of wages or incurred the medical bills caused by the accident.

As mentioned earlier, if you are involved in an automobile accident in Kentucky or Ohio you run a 14% and 16% chance, respectively, of having to deal with a party who is uninsured. In order to protect themselves from such a scenario, many drivers purchase Uninsured Motorist coverage (UM). UM is offered as a standard on every insurance policy. It can, however, be waived by written request.

Do You Need a Lawyer to Access Auto Insurance Coverage?

If you have been involved in an accident and are attempting to make a first party insurance claim, it may be wise to seek legal assistance in creating your claim. Although they theoretically exist to work for your benefit, insurance companies are ultimately profit seeking corporations. It should be of no surprise that minimizing their corporate expenses may take precedent over satisfying your claim in full. It is not uncommon for an insurance company to either deny a claim or attempt to make a quick settlement which may not cover all of your expenses. As mentioned earlier many people find that the stress of attempting to make an insurance claim, with an insurance company who is reluctant to fulfill their contractual obligations, more stressful than the actual accident that they have recently been involved in. This is why it is important to ensure that you can properly negotiate your options and receive the full amount you are entitled to. One way of ensuring this is to speak to an attorney. An experienced attorney will be able to navigate the complicated process and conduct favorable negotiations on your behalf.

Have you been injured in a car accident and need help?  We can provide the service and customer satisfaction you need.  Call one of our attorneys for a free consultation today.  We’re Working Hard for the Working Class, and we want to help you!


When can a business be held liable for an independent contractor’s negligence?

Posted on Friday, September 22nd, 2017 at 11:46 am    

The following post is part of our Law Student Blog Writing Project, and is authored by Sam Hoops, who is pursuing his Juris Doctorate at the University of Kentucky.

In Pusey v. Bator, the court wrestled with the issue of whether a business can be held liable for an independent contractor’s negligence. Although the general rule regarding employer liability for negligent acts of a contractor acknowledges that the employer should not be held vicariously liable, the court here relied on an exception to the rule stemming from the “nondelegable duty doctrine,” specifically the “inherently-dangerous-work” criteria. The majority ultimately determined that the corporation could be held liable should the jury find that the independent contractor acted negligently.

In Pusey, Greif Bros. Corp. (“Greif”), a steel drum manufacturer, owned and operated a manufacturing plant in Youngstown, OH. After several incidents of theft, Greif hired Youngstown Security Patrol (“YSP”) to “deter theft and vandalism.” Although the contract between Greif and YSP did not specify whether YSP guards would be armed or not, the superintendent of Greif had knowledge that YSP guards often carried a firearm while on the job. After several years of providing security for Greif, YSP hired a new security guard, Eric Bator (“Bator”), whom was not licensed to work as an armed guard, yet carried a firearm nonetheless while working the night shift.

The facts giving rise to the case at hand began at approximately 1:00am during which time Bator was the sole guard on duty. Upon noticing two individuals, later identified as Derrel Pusey (“Pusey”) and Charles Thomas (“Thomas”), walking through Greif’s parking lot, Bator questioned the men of their intentions and ultimately ordered them to lie down on the ground with their arms out to their sides. Although Thomas complied with Bator’s orders, Pusey, while lying on the ground, made a quick movement like he was reaching for something in his back pocket, wherein Bator discharged his firearm, fatally wounding Pusey. As such, Pusey’s mother (“Plaintiff”), instituted a wrongful death and survivorship action against Bator, YSP, and Greif. At the trial level, Greif moved for a directed verdict, which was granted and subsequently affirmed on appeal by the Seventh District Court of Appeals.

Plaintiff appealed this case to the Ohio Supreme Court wherein the general rule regarding a company’s liability for an independent contractor’s negligence was examined. The first question in determining the liability of a company for the negligent acts of an independent contract begins with the chief question of whether one is an employee or an independent contractor. In Bobik v. Indus. Comm., the court answered this question by positing that, should “the right to control the manner or means of performing the work” lie with the company, there is an employer-employee relationship, incurring vicarious liability upon the company. In the alternative, should this right lie with the one performing the work, the employer will be insulated from liability. The court then considered exceptions to the general rule regarding independent contractors, specifically those stemming from the “nondelegable duty doctrine,” which includes two separate categories: (1) “affirmative duties that are imposed on the employer by statute, contract, franchise, charter, or common law and; (2) duties imposed on the employer that arise out of the work itself because it creates danger to others, i.e., inherently dangerous work.”

Should the work assigned fall into one of the two above-listed categories, “the employer may delegate the work…., but he cannot delegate the duty,” i.e., the employer is not insulated from liability. To determine whether the work itself is inherently dangerous, it must create a peculiar risk of harm to others unless the company takes special precautions by ensuring that the work is done with reasonable care. For work to be considered inherently dangerous, “it is sufficient that the work involves a risk, recognizable in advance, of physical harm to others, which is inherent in the work itself.” Although the exception does not apply to a general anticipation of the possibility that an independent contractor will negligently cause harm to a third party, it will apply where the work creates special risks which would cause a reasonable person to recognize a necessity to take special precautions, i.e., the work must create a risk that is “not a normal, routine matter of customary human activity.”

Although Greif argued that hiring armed guards does not create a peculiar risk of harm to third parties, the court disagreed and stated that because YSP guards were instructed to “deter theft and vandalism,” the work contracted for anticipated a confrontation between armed guards and persons entering Greif’s property. Therefore, the work that YSP was hired to do created a foreseeable and peculiar risk of harm to third parties, which was not a normal, routine matter of human activity. As such, the case was remanded to the trial court for a determination of whether Bator acted with negligence in discharging his firearm. Pursuant to the Ohio Supreme Court’s holding, upon a showing of such negligence, Greif should be held liable for the death of Pusey.

In sum, a business may be held liable for the negligent acts of an independent contractor when the employer uses said contractor in a manner that most would consider inherently dangerous, i.e., there is a high chance that the contractor’s actions cause physical harm to others.

Note from Lawrence & Associates:  Most lawsuits related to injury or death are due to negligence, but this is not always the case.  Some lawsuits have layers, such as the instant case where a company’s negligence enabled the intentional act of another party, and these actions in combination got someone killed. If you are trying to figure out whether you should contact an attorney about filing a lawsuit, consider the fact that a good attorney can investigate your claim and will sometimes find issues not immediately obvious to you that indicate you should file a lawsuit related to your injury or the death of a loved one.  If you believe you may have an injury related lawsuit or insurance claim, don’t hesitate to call one of our attorneys for a free consultation.  We’re Working Hard for the Working Class, and we want to help you!


Will Student Loan Debt Cause the Next Financial Crisis?

Posted on Wednesday, August 30th, 2017 at 3:23 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Raphael Jackson, a law student from the Chase School of Law.

According to a recent New York Times article, at least $5 billion are at stake in a protracted legal dispute between student borrowers and creditors. At the center of this dispute is an organization called the National Student Loan Trust (NCT). The NCT is an umbrella organization of fifteen trusts. Having purchased nearly 800,000 student loans, the NCT is one of the largest owners of private student loan debt in the United States. The way the NCT works is that it buys private student loans then subcontracts to collection firms to file lawsuits in U.S. Courts.

Statistics from the student-loan financing website Make Lemonade indicate that 11% of students default on their student loan debt. Private lenders lack many of the powers afforded to federal lenders, such as interception of tax refunds, garnishing of social security benefits, or other seizures of federal income revenue. Therefore private lenders must rely almost exclusively on lawsuits in order to collect on debt. Although the NCT isn’t the only loan purchaser which takes its borrowers to court, NCT is considered to be the most litigious among them. According to the New York Times the NCT files an average of four lawsuits per day throughout the U.S.

Essentially NCT is in the business of purchasing debt, which is also known as securitization. Mass securitization is not an uncommon practice. However, because they purchased the loans in bulk from various private lenders, NCT often cannot provide an unbroken chain of title which links the borrower to the debt actually owed. As a result of this discrepancy, many judges are dismissing NCT cases in court.  Once a case is vacated in the court the borrower is no longer on the hook for the amount the creditor claims he or she owes.

What this means is that if you are one of the 800,000 former students whose student-loan debt is owned by the NCT, it is possible that your debt may be wiped clean.

How can you beat a law suit to collect on a student loan?

Transworld is the agency that NCT hires to collect their debt and take the consumers to court. According to a review conducted by the New York Times, the lawsuits brought about by the NCT/Transworld are failing in court due to their inability to prove ownership documents. This problem is similar to that which was caused by the ‘robo signing’ which plagued the subprime mortgage crisis of last decade. Attorney Robin Smith of the National Consumer Law Center commented “This is robosigning 2.0 with student loans...You have securitized loans in these large pools; you have sloppy record keeping,” as in the mortgage crisis.”

Federal loans afford a measure of protection to the consumer through income based payment plans, and the ability to discharge the loan in the event that the borrower’s school was closed down due to fraudulent dealings. Private loans on the other hand do not afford such protections to the consumer, furthermore the double digit interest rates, which balloon over time, can leave the borrower to pay hefty monthly sums which are unaffordable to most borrowers.

How do I know if I’m being sued for student debt?

You know you are being sued for the debt if you have received a summons and complaint in the mail. Once you received this summons and complaint from a court you have twenty days in Kentucky to answer it, or twenty-eight days in Ohio. If there are other defendants listed on the lawsuit they are probably your co-signers, who may be equally liable in court. To fail to respond to a summons within the thirty day time frame is to grant your lender a default judgment in court.

Traditionally many debt collectors relied on the default judgments they would receive by defendants’ who either ignored summons or quickly agreed to payment settlement terms. NCT typically puts out lawsuits within 6-12 months of the borrower’s default on the loan. Therefore, whether or not you intend on seeking professional assistance from an attorney be sure to mark your calendar. Once you receive the summons the clock on your lawsuit begins ticking.

Is it always in my best interests to quickly settle?

Some consumers arrange with law firms to make a settlement. What the debt collector is seeking is usually a “consent of judgment” along with an agreed upon monthly payment schedule. Keep in mind that once you sign you are consenting that you are legally liable for the debt. Before you have explored all of your legal options or verified the amount you actually owe, rushing into a settlement may not always be the best strategy. You may be one of the 800,000 consumers who has an affirmative defense. With the assistance of an attorney at the very least, with you may be able to work out a better settlement.

An affirmative defense is additional evidence which negates civil liability even if the initial charge can be proven. One typical affirmative defense is the statute of limitations. In the commonwealth of Kentucky, creditor’s generally take the position that the lawsuit must be filed within five years. In the state of Ohio, the statute of limitations on suing for student loan debt, or debt of any kind, is generally six years.

Finally, the NCT must show actual proof of the debt that you owe. This proof should be in the form of a loan agreement between you and the lender. Oftentimes in cases where the lender possesses some paper work evidence, the exact amount still may be in dispute.

If the collection agency has run the statute of limitations, they are still attempting to collect on the debt in spite of not having the proper documentation, this company may possibly be in violation of the Fair Debt Collections Act.

If you have been sued by your student loan provider, or you believe there is a discrepancy between the amount you owe and the amount that your lender is seeking to collect, contact an attorney as soon as possible for a free consultation.


I Want a Jury Trial for My Workers’ Compensation Claim.  How Can I Get There and What Can They Decide?

Posted on Wednesday, August 16th, 2017 at 1:54 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Jessie Smith, a law student from the University of Kentucky.

The Ohio Workers’ Compensation Code allows an injured worker to appeal a decision by the Industrial Commission to a regular Court of Common Pleas and have a jury trial.  But if a worker makes that kind of appeal, what issues is the jury allowed to hear?  This article will discuss the Ohio Supreme Court’s Opinion in Ward v. Kroger Co., where that question is answered.

On April 26, 2001, Howard Ward (hereinafter “Ward” or “plaintiff”), an employee of Kroger Company (hereinafter “Kroger” or “Defendant”), injured his right knee in the course of his employment. In the Workers’ Compensation claim that followed, Kroger certified the condition of “right knee sprain,” but would not certify the conditions of “medial meniscus tear” and “chondromalacia.” Throughout the administrative review process, a district hearing officer allowed plaintiff’s claim for “right knee sprain,” but disallowed the other claims, a decision that was affirmed by a staff hearing officer. These decisions were not disturbed, due to the Industrial Commission’s refusal to hear a further appeal.

In an effort to have his claims for “medial meniscus tear” and “chondromalacia” allowed, and to participate in the Workers’ Compensation Fund for those conditions, Ward appealed, pursuant to R.C. 4123.512 (an Ohio statute generally allowing for the appeal of certain decisions made by the Industrial Commission in Workers’ Compensation cases), the decisions made throughout the administrative process to the Jefferson County Court of Common Pleas. Shortly before the scheduled trial date, however, plaintiff filed a motion to amend his complaint to add the conditions of “aggravation of preexisting degenerative joint disease” and “aggravation of preexisting osteoarthritis.” Neither of these conditions had been presented to the administrative body.

The trial court granted the plaintiff’s motion to amend his complaint, and the plaintiff dismissed the “chondromalacia” claim. However, the case proceeded to trail by jury on the remaining claims (including the original “medial meniscus tear” condition, as well as the conditions of “aggravation of preexisting degenerative joint disease” and “aggravation of preexisting osteoarthritis” contained in the amended complaint). The jury returned a verdict against the plaintiff on the originally appealed condition (that is, “medial meniscus tear”), but found in favor of the plaintiff on the remaining claims.

Plaintiff’s victory at the trial court was appealed. On appeal, the Court of Appeals reversed the judgment of the trial court, holding that the trial court had “exceeded its jurisdiction by permitting the employee [Ward] to amend his complaint to add these two conditions, which were never presented to the administrative body” (emphasis added). Ultimately, the Court of Appeals held that, when an appeal is being made pursuant to R.C. 4123.512, “the scope of the trial is limited to the condition ruled upon below.” In other words, the trial court had erred in allowing the plaintiff to amend his complaint to add two new conditions (that is, the conditions of “aggravation of preexisting degenerative joint disease” and “aggravation of preexisting osteoarthritis”) because those conditions had never been ruled upon by the administrative body (that is, the district hearing officer, staff hearing officer, and Industrial Commission).

The Court of Appeals’ decision was appealed to the Ohio Supreme Court. The basic issue to be decided by the Court, as alluded to above, was the scope of a R.C. 4123.512 appeal. Specifically, the question to be addressed was whether such appeals were limited in scope to those conditions addressed by the administrative body – in other words, was it permissible for trial courts to allow a plaintiff to amend his or her complaint prior to trial to include conditions that were never presented to the administrative body below?

The Ohio Supreme Court began its analysis by making note of the dichotomy that existed between the district courts of appeals on this particular issue. Some courts were of the opinion that allowing a plaintiff to amend his or her complaint to include conditions not initially or originally presented to the administrative body was permissible. These courts rationalized this conclusion by pointing out that an appeal made pursuant to R.C. 4123.512 is subject to “de novo” review of law and fact, and that, therefore, a plaintiff is not limited to the record formed during the administrative process. In further support of this conclusion, these courts reasoned that R.C. 4123.512 “provides for the application of the Civil Rules, which freely permit amendment of issues and claims.” Additionally, these courts note that R.C. 4123.512 authorizes “the taking of depositions and other discovery,” implying that the General Assembly (Ohio’s legislative body) “contemplated that additional evidence might surface in the court of common pleas and intended, in the interest of judicial economy, to allow for the litigation of new conditions.”

As persuasive as the previous reasoning may be, the Ohio Supreme Court’s mindset was more aligned with the opposing view. Those courts that disagree with the foregoing reasoning hold that a plaintiff may not litigate a new or different condition at trial in the court of common pleas. These courts reason that, since the trial is characterized as “de novo,” only “new evidence may be presented with regard to the appealed condition” – “evidence of a new condition may [not] be presented for the first time on appeal.” Additionally, these courts “view the order appealed as framing the jurisdiction of the common pleas court” – in other words, the administrative body must first be presented with and review conditions set forth by the plaintiff before the court of common pleas can adjudicate the issue.

As noted, the Ohio Supreme Court is in agreement with the view that appeals made pursuant to R.C. 4123.512 are limited in scope to those conditions addressed by the administrative body. However, the Ohio Supreme Court, in their decision, expanded upon the reasoning provided by the lower courts. The Ohio Supreme Court reasoned that “allowing consideration of the right to participate for additional conditions to originate at the judicial level is inconsistent with [the] statutory scheme” because, in essence, it eliminates the need and purpose behind the administrative body’s existence in the first place. To put it a slightly different way, the entire reason the administrative body was put in to place was to allow for the introduction of claims and to provide a record upon which higher courts could rely during the appellate process; allowing a plaintiff to amend his or her complaint and introduce entirely new issues for litigation at the trial court would eliminate the need for the administrative body. If such were not the case, plaintiffs should logically initiate their workers’ compensation claims at the trial court itself, as opposed to the Industrial Commission or administrative body, because, under such a scheme, the trial court and the administrative body share the exact same authority to allow for the introduction and adjudication of new and initial claims.

Ultimately, the opinion rendered by the Ohio Supreme Court in this case is consistent with principles of judicial review that have always, and continue to, justify the existence of appellate practice in nearly every jurisdiction in this country. The appeals process is, in a very general sense, meant to ensure against the erroneous application of law by lower courts. Appellate courts do not exist to provide litigants with multiple opportunities to perpetually try the same case over and over again. If this were not the case, every justification provided for the existence of administrative bodies and/or trial courts would be eliminated, leaving litigants with one court, and one court only, to adjudicate their claims from beginning to end. Such a system would result in the eradication of procedural safeguards, the multiplication of incorrect applications of law, and the destruction of all available means of recourse for litigants.


Can I Sue for Being Exposed to Mold in Ohio? A Case Study of Terry v. Caputo

Posted on Wednesday, August 9th, 2017 at 4:15 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Ian Fasnacht, a law student from Ohio State University Moritz College of Law.

There is only a genuine issue of material fact in mold exposure if the plaintiff is able to demonstrate through expert testimony that mold exposure generally causes the type of injury the plaintiff experienced and the exposure to mold caused the plaintiff’s specific injury. In Terry v. Caputo, the Ohio Supreme Court adopted the above test and reversed the case because the plaintiff failed to demonstrate with medical experts that exposure to mold caused the specific injury at issue.

The Facts of Terry v. Caputo

Ottawa County Board of MRDD leased several suites from W.W. Emerson, and shortly after its employees began to experience headaches and physical ailments. The Ottawa County Board of MRDD conducted a building inspection and found mold in several locations. The employees’ ailments were attributed to the damp conditions in the building, which was subsequently cleaned. The symptoms eased but returned shortly. Further testing revealed several mold spores, including a type of mold that can cause the symptoms the employees experienced.

At trial, the plaintiffs’ medical expert had not personally examined the employees during their exposure to mold, but reviewed their medical records and concluded that the plaintiffs’ symptoms were caused by mold, mildew, and poor ventilation.

The trial court granted summary judgment for the defendant – summary judgment is when a court decides if either or both of the parties are able to present evidence regarding each essential element of a claim – because the plaintiffs failed to present medical evidence that their symptoms were directly caused by the mold. The court found the plaintiffs’ medical expert’s conclusions were broad and correlative rather than specific to the plaintiffs.

The appellate court overturned the trial courts decision to exclude the plaintiffs’ medical expert’s testimony with respect to general causation. However, the appellate court affirmed that the medical testimony did not prove specific causation because the expert relied too heavily on a temporal relationship. The appellate court reversed the grant of summary judgment because the plaintiffs could still demonstrate specific causation through additional evidence.

The Ohio Supreme Court’s Reasoning – How Do You Prove Mold Caused Your Illness?

Prior to this case, the Ohio Supreme Court had yet to rule on this specific issue. The court acknowledged the issue had been frequently considered in federal courts and adopted the test outlined in Knight v. Kirby, which required the plaintiff to demonstrate both general and specific causation. Step one of the Knight test is to prove the plaintiff was exposed to a type of mold (or other toxic substance) that can cause the particular injury experienced. The second step is satisfied if the plaintiff is able to demonstrate the mold, in fact, caused the specific injury in dispute.

To establish both general and specific causation, a plaintiff must present an expert witness. Expert testimony is governed by Evidence Rule 702, which requires, in part, that an expert witness base his or her testimony on reliable, scientific, technical, or specialized knowledge and the expert’s theory must be objectively verifiable or validly derived from widely accepted knowledge, facts, or principles.

In determining if expert testimony should be admitted trial courts are privileged with the role of “gatekeeper,” which gives trial courts discretion to analyze the reliability and relevance of the expert’s testimony. Appellate courts should only overturn the trial court’s determination if the trial court has abused its discretion in deciding the expert testimony was not reliable or relevant.

Expert testimony is reliable if the methodology has been subject to peer review, if the methodology is not known to have a high error rate, and if the methodology is generally accepted in the scientific community. Courts should only be evaluating the reliability of the methodology, not the results. In addition, expert testimony is considered relevant if it advances the matter at hand, which means there is a connection between the scientific research and the test results. This two-step inquiry has been described by a federal court as determining the scientific validity of a particular theory and analyzing the reliability of the expert’s application of the tested principles.

Finally, the Ohio Supreme Court relied on two Virginia cases in which motions for summary judgment were granted and upheld because the expert’s medical testimony was unable to prove the particular type of mold that caused the ailment and the expert was unable to rule out other causes of the plaintiff’s symptoms. When both cases were appealed, the California appellate courts held that the trial courts acted properly in their role as a gatekeeper because the trial courts had determined the expert testimony was not reliable or relevant and was too heavily on temporal correlations.

The Ohio Supreme Court ruled that the appellate court properly held that the plaintiffs’ expert testimony was sufficient to establish a generally connection between the type of symptoms exhibited by the plaintiffs and the type of mold that was discovered at their workplace. The court also held that the appellate court properly determined that the medical evidence was insufficient to establish that the mold was the specific cause of the plaintiffs’ symptoms. However, the court held that the trial courts summary judgment should have been upheld because the plaintiffs’ failed to establish that the mold was the specific cause of the ailments. As a result, the Ohio Supreme Court upheld the appellate court’s test but reversed and granted summary judgment.

Pfeifer Dissent

Justice Pfeifer was the lone dissenter who argued that the majority’s test was correct, but not its application. Pfeifer argued that the prior case law, which the majority relied upon, involved the plaintiff’s expert testimony at trial, but in the present case, the court was only deciding if summary judgment should or should not be granted. In other words, was there a genuine issue of material fact that the mold caused the specific type of symptoms exhibited by the plaintiffs? Pfeifer argued that general medical causation is sufficient to overcome the low burden of summary judgment.

What Does This Mean for My Mold Exposure Claim?

A motion for summary judgment occurs relatively early in the litigation process and the court’s holding in Terry v. Caputo establishes what evidence the parties must be able to demonstrate in mold or toxic exposure cases to successfully survive the motion. If the parties are unable to demonstrate both general and specific causation the parties will see their cases dismissed before trial. Obviously, these are complex issues, and it may be wise to talk to an attorney well before filing a lawsuit or insurance claim to ensure your case is handled correctly.

If you have a personal injury claim, don’t go it alone! Lawrence & Associates may be able to help! Our attorneys offer free consultations, or can refer you to another credible firm. Call us today – We’re Working Hard for the Working Class, and we want to help you!

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