What would you do with nearly $50 million? A young Virginian found out in 2022 after sustaining major injuries in a 2019 motor vehicle collision. The personal injury settlement of $47.5 million is believed to be the largest amount ever recovered by a Virginia personal injury plaintiff. If you have won a personal injury settlement, is your spouse entitled to all or part of it in Virginia divorce?

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Personal Injury Lawsuits

As information overwhelms us, we often do not get a full picture of the sensational news of the day. We often miss the details beneath the screaming headlines.

Consider the 1994 “Hot Coffee” personal injury lawsuit pitting 79-year-old Stella Liebeck against fast-food giant McDonald’s. While in a parked car, Liebeck accidentally spilled the 180–190°F McDonald’s coffee on her lap. (McDonald’s required and still requires such high temperatures, despite a long history of customer complaints about burns from scalding hot McDonald’s coffee.)

The dangerously hot coffee caused horrific third degree burns to Liebeck. She initially asked only for $20,000 from McDonald’s, to cover incurred and anticipated expenses.

McDonald’s answered with an offer of $800.

Liebeck then hired an attorney, who asked for a settlement of $300,000. A mediator suggested $225,000.

McDonald’s refused both offers.

A 12-person jury found McDonald’s 80 percent liable for Liebeck’s injuries and awarded her $200,000 in compensatory damages and $2.7 million in punitive damages. In the face of the verdict, McDonald’s settled out of court for an undisclosed amount.

Why did we go through such a lengthy rehash? 

Because Liebeck became the undeserving poster child for so-called “frivolous” lawsuits. Lost amid the tsk-tsking of people who knew almost nothing about the case is McDonald’s cavalier, insulting, and dismissive attitude regarding their coffee’s dangerous temperature.

The initial settlement offer of $800 and the corporation’s repeated refusal to take Liebeck seriously show the company’s callous indifference to the pain and suffering its customer suffered.

We learn about personal injury settlements every day and often dismiss them, saying things like, “Wish I could get my foot run over and live like a king the rest of my life.” Liebeck suffered from her injuries every day until her passing 12 years later.

If you have suffered a personal injury and been able to recover some settlement, you rightly feel you deserve it. Monetary settlements from personal injury lawsuits reflect two things:

  1. A civil punishment to discourage repetition of misbehavior
  2. An attempt to right a wrong

Injury Compensation and Punishment

Almost all personal injury lawsuits ask for two awards to the injured party:

  1. Compensation for pain, suffering, lost work hours, medical expenses, and future expenses
  2. Punitive damages to punish the liable party for willful, malicious or fraudulent behavior

The lawsuit is brought forth with an expectation that a jury of Virginians will hear and determine liability.

Often, the two disputing parties (the plaintiff, declaring the injury, and the defendant, the party alleged to have caused the injury) will choose to avoid a jury trial. They will settle out of court.

Many personal injury lawsuits are settled out of court to minimize the financial exposure of the defendant and speed up the monetary award for the plaintiff.

If both parties agree on a settlement amount, even in the midst of the trial or (as with McDonald’s and Liebeck) after a verdict, the money passes to the plaintiff and the plaintiff’s attorneys.

The two parties are not required to tell anyone details about the settlement.

The award money does not have to be earmarked as “$X in compensation and $X in punitive damages.”

Most defendants will attempt to avoid accepting blame by settling without admitting error. Therefore, the money awarded is usually just compensation for damages. It is not identified as “punitive.”

Damages in Personal Injury Awards

Two categories of damages in personal injury awards are significant for a Virginia divorce:

  • Economic damages — These are known financial burdens, such as already incurred medical bills, payments for nursing care, purchased medical devices, lost wages, travel expenses, and repairs to property.
  • Noneconomic damages — These are unknown, future, or intangible burdens, such as pain and suffering; loss of enjoyment of ordinary activities, humiliation, mental anguish, emotional distress, loss of reputation, future medical expenses, and future lost wages.

In divorce, Virginia allows a judge (or the disputing parties through negotiation) to distribute assets and liabilities equitably, not equally. Two of the three categories of property to be distributed equitably are separate property and marital property.

Personal injury settlement money is both separate and marital property. And, since the disputing parties usually do not assign dollar values to the settlement, a Circuit Court judge is left to determine what is separate property and what is marital property.

Applying Separate and Marital Property to Personal Injury Settlements

Property settlement agreements in Virginia divorce are guided by the Code of Virginia, § 20-107.3. A Circuit Court judge uses the various metrics within the Code to determine which spouse gets what (from real property to furnishings, from retirement funds to personal injury settlement money).

Ideally, of course, the two attorneys representing you and your spouse will have a property settlement agreement ready for the judge’s review. If the two sides cannot agree on equitable distribution, though, the judge decides.

The judge determines which assets and debts are separate and which are marital. Marital assets and debts get equitably divided while separate assets and debts remain with the person owning them.

Personal injury settlement money falls into both categories because some of the money can be viewed as funds to restore the marriage and some of the money is meant to deal with the personal injury itself:

  • Marital property (to be divided between you and your spouse) includes settlement money to cover lost wages, medical expenses, travel expenses, and damage to your marital property (home, vehicles, furnishings). Whatever insurance — health or property insurance — does not make whole in the marriage, the settlement money is there.
  • Separate property (to remain yours alone) include money for your pain and suffering, compensation for disfigurement, incapacitation, disability, future lost wages, and other noneconomic damages.

This can become a very thorny mathematics problem for a Circuit Court judge. In general, the “noneconomic” damages will remain with the injured person as separate property, since the divorce will be completed before future wages are lost, ongoing psychic damage is felt, and future medical expenses are incurred.

Reserving the Issue

Issues the two sides cannot settle before the divorce hearing can be reserved in a property settlement agreement. This indicates that a judge can resolve the issue or the issue can be reexamined at a later date. Distribution of money from a personal injury settlement could be reserved, though for the injured person that may not help matters.

You and your attorney have to make decisions based on your needs:

  • Your ongoing medical issues require regular infusions of cash to pay for nursing, doctors, medical devices, prescriptions, and the like.
  • You may need to set aside money for future stays in medical or therapeutic facilities.
  • Your ability to earn a living may be uncertain.

Your divorce attorney can make valid arguments that your future “noneconomic” needs cannot be known for certain, meaning a judge or opposing counsel should allow a significant portion of a settlement to be deemed separate property.

How Expensive is Acrimony?

You and your attorney may need to think strategically in weighing two issues:

  • The total lifetime value of a personal injury settlement
  • The immediate and possibly limited costs such as spousal support (alimony) and child support (which can end when the child turns 18)

The most expensive element in a divorce is acrimony — the bitterness and ill feelings that come when you and your spouse contest every aspect of the divorce.

A wiser path than constant conflict may be to give up some areas of disagreement, such as child support and spousal support, in order to gain a larger share of the settlement funds.

The Firm For Men focuses on helping Virginia’s men in all aspects of family and criminal law. We work diligently to safeguard your financial future after divorce, and that can include helping you retain compensation you’ve received for a personal injury. Contact us online today or call our Virginia Beach offices at (757) 383-9184.