Articles Posted in Settlement

When do statements by counsel to a Tennessee judge in open court give rise to a binding settlement between the parties?

In Harvey v. Turner, No. M2014-00368-COA-R3-CV (Tenn. Ct. App. March 26, 2014), three parties had been involved in protracted litigation regarding property issues for six years. The matter finally went to trial, and after three days of testimony, the trial went on a short hiatus. During that time, counsel for all the parties exchanged emails and phone calls and eventually came to an agreement in principle. When the trial resumed, the attorneys appeared to announce the settlement to the court. By agreement, the parties themselves did not attend. The attorneys announced the terms to the court and affirmed to the court that their parties had agreed to the settlement, the parties agreed that the trial court would retain jurisdiction to enforce the settlement, and the court accepted the settlement.

Subsequently, the parties were unable to come to an agreement on a final written settlement document, so a hearing was held. The defendant asserted that a sewer line was supposed to be included in the agreement, but the trial court disagreed. The trial court found that “there was a meeting of the minds and that that issue was not part of it.” The trial court held that there was an enforceable settlement agreement, and defendant appealed.

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In most if not all states, the settlement of a minor’s personal injury claim must be approved by the Court.  This is certainly true in Tennessee – the applicable statute is T.C.A.  Section 29-34-105.

The Alabama Supreme Court recently decided a case in which the minor died after a settlement was reached with the defendant’s insurer and the plaintiff’s uninsured motorist carrier but before state court approval could be obtained. The death occurred as a result of a subsequent unrelated automobile accident . The insurance company then attempted to have the settlement declared void in a declaratory judgment action filed in federal court.

The federal court certified this question to the Alabama Supreme Court:  "Under Alabama law, is an insurance company bound to a settlement agreement negotiated on behalf of an injured minor, if that minor dies before the scheduling of a pro ami hearing which was intended by both sides to obtain approval of the settlement?"

Herman Cain has been accused of sexual harassment.   He denies the allegations.

What about the women who asserted the claims?  The ones who allegedly received money from the National Restaurant Association, Mr. Cain’s employer at the time?  What do they say?

Apparently, they aren’t saying anything because as a condition of the settlements they were required to sign confidentiality agreements.  In other words, they agreed not to discuss the settlement or the allegations as a condition of the settlement.

The Fourth District Court of Appeals for Florida has ruled that a non-settling defendant cannot obtain a court order forcing disclosure of confidential settlements between the plaintiff and settling defendants.

Plaintiffs were involved in an auto accident that was allegedly caused  by tire  failure.   They sued  the car manufacturer,  the  tire manufacturer,  the  car  dealer,  and   Wal-Mart  (the tire dealer and installer).  Three  of  the  defendants  entered  separate confidential  settlement  agreements after a mediation.   Wal-Mart  did not settle and sought discovery of the confidential settlement agreements.  The trial court denied the request, saying that given the fact that joint and several liability had been abolished in Florida the settlement amounts were not relevant.
The Court of Appeals affirmed, saying

Mediation is an important part of personal injury and wrongful death litigation.  Indeed, my only significant quarrel with mediation is that defendants often refuse to engage in any settlement negotiations in significant cases without a formal mediation.  I still remember the days where lawyers could actually engage in settlement negotiations without having to pay for the services of a mediator.

Karen Koehler, a personal injury lawyer in Seattle, writes a blog called "The Velvet Hammer."  Here is an interesting post she has written about mediation:  "Tips for Attorneys:  Mediation Meanderings."

An excerpt:

A defense lawyer and I were having a drink the other day and he told me that from time to time he has difficulty getting cases settled at mediation because plaintiff’s lawyers don’t have information about subrogation interests.  Here are some tips to avoid such problems:

  1. At the initial client meeting, as you help you client understand his or her rights and go through the outline of the types of damages he or she can recover if the case is successful, explain the law of subrogation.  To do so you have to ask whether any insurance company or governmental entity  paid the outstanding medical bills.  Then, explain that usually it will be necessary to re-pay  the entity that paid these bills monies from the proceeds of any settlement or judgment.  This not only informs the client of his or her obligation to re-pay the bills but also sets client expectations at an appropriate level.
  2. If the bills are paid by a private entity get a copy of the applicable insurance policy or summary plan description to determine if a right of subrogation or reimbursement exists and if the plan is an ERISA plan. 
  3. If the bills were paid by a governmental entity (in Tennessee this usually means either Tenncare or Medicare) you need to either know the law of subrogation or look it up.  The bottom line:   government payors have a right to be re-paid and it is your obligation, as a lawyer,  to help them get re-paid.  If you don’t do so you (the lawyer) will be on the hook to re-pay these bills, so it is in your best interest to understand this law and help your client fulfill their  obligation.
  4. Remember that your client’s medical bills may have been paid by worker’s compensation.  If so, the payor has a statutory right of subrogation.  Ignore it at your peril.
  5. Gather all of the medical bills and determine who paid them.  Your client may not have given you accurate information about the entity that made the payments on the bills.  For instance, sometimes a client receives both Medicare and Tenncare benefits.  You need to know each entity that paid bills.   It is also possible that your client’s auto insurance carriers paid some of the bills under a medical payments provision in the policy.  Get a copy of the policy to be sure, but auto insurance carriers almost certainly have a subrogation right for any such payments.
  6. Private health  insurers routinely send letters asserting subrogation interests.  Tell your client that they may be receiving such letters and make sure you get them.
  7. Ascertain the amount paid by each third-party before the mediation of the case.  This can be difficult, especially with Medicare, but start early and keep at it.  Do not accept numbers over the phone – try to get the payment amounts in writing.  If you get a total-payment figure over the phone confirm the number in an email or letter.   Do not wait until the day or even the week before the mediation to do this – you will not get the information you need before the mediation.
  8. You will need to check the claimed subrogation interest versus the amount actually owed.  Sometimes insurers include bills for care unrelated to the incident.  Thus, you must get a print-out of who the insurer paid and the date of service for that payment and compare it with your client’s medical records.
  9. Get the name and telephone number of a contact person at the third-party payor that you can contact during a mediation.  Make sure you understand if their office is on Central time, Eastern time, or some other time – you need to know how late you can reach them.   Advise them that you have a mediation on a given day and that you will need to be able to reach them during the mediation.  
  10. Some payors will reduce the subrogation amount if the client is not "made-whole" even if they have no legal obligation to do so.  A version of the  made-whole doctrine is statutory for Tenncare payments and the common law made-whole doctrine applies to med-pay and non-ERISA health insurance policies in Tennessee.  Understand the law applicable to each third-party payor before the mediation.  
  11. In the days or weeks before the mediation as you explain the process to your client remind them once again of the need to re-pay the entities that paid the medical bills.  By doing so  you are reminding them of their legal obligation and at the same time setting a reasonable level of expectation of what will occur at the mediation.
  12. Have the relevant contact information and the claimed subrogation amounts with you at the mediation.  How often you contact the payor during the mediation is subject to many factors, but generally speaking as want to call them as the settlement appears to be coming together.  You can often negotiate the amount due, but be armed with the facts that will help you do so.  The best fact to use to negotiate a reduction is a liability insurance policy that is totally inadequate given the injuries and the lack of any assets from the defendant.   There are a multitude of other factors, such as immunity for one or more defendants, a damage cap for a governmental entity, very difficulty liability facts, etc.  If the made-whole doctrine is applicable all arguments must be marshaled and presented.  Some carriers are willing to cut their subrogation amount if you demonstrate a willingness to help get a difficult case resolved by reducing your fee.  Confirm any deals made in writing or by email.
  13. Try to have the subrogation issues resolved before you leave the mediation.  If that is impossible, then attempt to make the settlement subject to a satisfactory resolution of subrogation interests in the next few days.  Be sure the language of the agreement with the defendant provides that it is you (and your client) that must be satisfied with the resolution of the subrogation interests.
  14. As I mentioned above, it is difficult to get a straight, final answer out of Medicare.  Start early, and write to them often.  Try to get the name and number of  a human being.  If you cannot get an answer out of Medicare before the subrogation, you will be forced to estimate the amount of their subrogation interest.  You will usually be safe if you assume that Medicare paid 40 cents on each dollar charged by a health care provider.  In other words, if the hospital bill shows $10,000 you can assume that Medicare paid $4000.  It will usually be less.  However, this will help your client understand his or her "net" recovery and will help you negotiate with reasonable comfort.

Why should you care about all of this?  If you do not have a knowledge of subrogation law it will be more difficult to settle your client’s case because your client will not be able to understand the "net" recovery.  If the client thinks that he or she is going to receive "X" and then finds out that "X" has to be reduced by a subrogation payment, he or she going to be upset.  If the subrogation interest is one that imposes an obligation of the lawyer to protect, you risk financial loss and/or disciplinary action for failure to fulfill that obligation.

In summary, part of being a plaintiff’s lawyer is having a good grasp on the contractual and statutory rights of those who have paid your client’s medical bills.  Another part of being a plaintiff’s lawyer is addressing such matters directly in a manner consistent with the law, with both the payor and the client, to avoid future unpleasantness.

Plaintiff settled his sexual harassment and retaliation  lawsuit against defendants and this provision was included in the settlement agreement:  "The parties agree that the terms of this settlement shall be held confidential and that no disclosure of the terms of the settlement, other than the fact of the settlement itself, shall be disclosed or disseminated to anyone who is not a party to this Release, except to the extent required by law. Further, the parties agree that neither shall disparage or discredit the other."

Plaintiff then alleged that certain of the Defendants made statements to the press in violation of this provision.  Some samples:  one defendant said "’he thought they “had a really good case,’and ‘had beaten this guy all the way through’”; and that  he "’was very frustrated that he did not get a chance to fight the lawsuit in court. He  . . . felt the county had a strong case, but the risk pool did not want to spend the money to go through the court process’” .  Another defendant allegedly said "that she did not know the exact amount of the settlement, but “’it wasn’t very much.’”

Plaintiff sued for violation of the terms of the non-disclosure and anti-disparagement clause.