In some personal injury cases, the insurance company or defendant is going to require the settlement terms remain confidential. Some people hate them. Others are okay with them. Here are a few pros and cons regarding confidential settlements.
From the defendant's perspective this is what I hear:
- We don't want people thinking that we are an easy mark, it will subject us to more frivolous lawsuits.
- We dispute that we are at fault for the accident but we are settling the case for closure and to limit potential risk.
- We don't want the injured person blogging or posting the terms of the agreement on social media because it could impact our brand or business.
From the injured person's perspective this is what I hear:
- I don't want to sweep this under the rug – there may be other people in the public that need to know about the problem with the corporation or product.
- The defendant should have to answer to what they did.
The typical terms of a confidentiality agreement that I see in practice are:
- The parties are not to disclose the amount of settlement except required to do so under contract or by law. For instance, if there is a subrogation lien, the insurance carrier may require the amount of the settlement. The same is true when dealing with Medicare or Medicaid.
- The parties will not publicize, speak with reporters, or post on social media anything about the case.
- If the parties are asked about the case, they are to respond that the “matter was amicably resolved between the parties.”
Another thing that we have to deal with regarding confidentiality agreements is the specific consideration or amount specifically paid for the confidentiality statement. If this is not accounted for, arguably the settlement may become taxable under a ruling on a case involving Ex-Chicago Bull Dennis Rodman.
Courts take these confidentiality agreements seriously
In May 2014 Florida's Third District Court of Appeal took away a plaintiff's settlement because of a breach of the confidentiality agreement. In the case, a plaintiff settled a discrimination case against his former employer for $80,000. The settlement was subject to a confidentiality clause. The plaintiff's daughter posted this one Facebook.
Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.
The Third District said:
Snay violated the agreement by doing exactly what he had promised not to do. His daughter then did precisely what the confidentiality agreement was designed to prevent, advertising to the Gulliver community that Snay had been successful in his age discrimination and retaliation case against the school.Based on the clear and unambiguous language of the parties' agreement and Snay's testimony confirming his breach of its terms, we reverse the order entered below granting the Snays' motion to enforce the agreement.
My perspective regarding confidentiality agreements
It is the client's case. If the defendant has agreed to pay an amount of money that the client wants to take and a confidentiality agreement is part of the settlement terms, the client will have to sign the agreement.
If other things like getting the information out into the public is more important to the client than the settlement offer than the case may have to go to trial. If a jury renders a verdict against the defendant at trial the verdict will not be confidential and the client is free to publicize it as much as they want.
Confidentiality agreements are contracts that are usually negotiated during settlement discussions, and like the Third District, courts look at them as contracts, and if you breach the agreement, you could lose the settlement or be sued for return of the proceeds.
If you have any questions about confidentiality agreements, give me a call at (219) 690-8997.
Photo Attribution: Image courtesy of Stuart Miles at FreeDigitalPhotos.net
Guy DiMartino Law
1411 S. Woodland Ave. Suite D
Michigan City, IN 46360