Releases, also known as “settlement agreements”, discuss the terms under which you settle your case. You will not get paid on your case, until you sign a release; because release terms will be strictly enforced, you need to know what is in the release. At the very least, your lawyer should know.
Release terms are strictly enforced in Michigan, particularly when appellate courts can construe those terms, to deny you hard-fought and negotiated-for settlements. It should not be that way, but it is. Because this topic has come up recently among my colleagues, I thought it might be worth discussing the pitfalls, and how I deal with them at The Frank Law Firm, PC.
For most of the previous 15 years, there have been two main pitfalls. The first I call “release of all the world” provisions; the second I call “indemnity/hold harmless” provisions”. More recently, a new potential pitfall has been created in the settlement of no-fault matters. Let’s deal with them in order.
“Release of All The World”
Back in 1999, the Michigan Court of Appeals issued a decision called Romska v Opper, 234 Mich App 512; 594 NW2d 853 (1999), holding that release terms are strictly enforced.
The Romska case involved a man (Mr. Romska) injured when his car was struck by an oncoming vehicle which crossed the yellow line, causing a collision. That vehicle was owned by a man we will call Mr. Owner, and was driven by Mr. Driver. Another man, Mr. Opper (his real name; look at the case title), was sued for having caused the accident; it is unclear how he allegedly did so.
In any event, Mr. Romska settled quickly with Mr. Driver’s insurance company. He was unable to settle with Mr. Opper’s insurance company.
The “Romska-Driver” release contained language releasing “… Mr. Owner, Mr. Driver, their successors, and all other parties, firms, or corporations who are or might be liable...”
Remember that Mr. Opper’s insurance company refused to settle (as was their right). However, after receiving a copy of the signed release, Mr. Opper’s insurance company claimed that the release language quoted above, got them and Mr. Opper off the hook. They argued that they were among the class of “….all other parties, firms, or corporations who are or might be liable…” Even though everyone involved in that case knew that Opper and his insurance company refused to settle.
Opper and his insurer filed a motion to dismiss (called a “Motion for Summary Disposition” in Michigan), arguing that they were released in the “Romska-Driver” release. The trial court GRANTED that motion.
If it seems underhanded, that is because it is underhanded. If it seems that any appellate judge upholding a ruling like that, is biased and agenda-driven, that is because the appellate judge upholding that ruling IS biased and agenda-driven. He also now sits on the Michigan State Supreme Court.
So, to protect my clients, I review the release once I settle a case, to make sure it is appropriate for my client’s signature. I make sure that “release of all the world” language is removed.
The insurers and parties paying the settlements are the ones entitled to the full peace and release offered by a settlement. Not others.
When might this come up in your case? If you and I are proceeding against both an at-fault driver (or multiple at-fault parties), and a no-fault insurer, I review the release to make sure that there is no way on God’s green earth, it can be construed to release parties not paying for the release.
Your case deserves this type of detailed attention from start to finish. You get that attention to detail, from Jon Frank and The Frank Law Firm, PC.
Indemnity/Hold Harmless Provisions
These are terms written into releases, in which insurers try to get the injured person to agree to indemnify (i.e., pay) the insurer, in the event that insurer or its customer are sued by anyone else, in connection with the same accident. A “hold harmless” provision is one in which the person agreeing to this, agrees to defend (i.e., provide a lawyer) to defend against such a claim.
The concept behind a release/settlement agreement is that it buys peace for all parties to that release. By exposing the releasing party (usually, the injured plaintiff) to further litigation and costs, “indemnity/hold harmless” provisions buy little if any peace. As a result, unless there is a “lien” issue involved, I try to get those provisions out of the releases.
When we buy insurance, we are buying a promise that, in exchange for insurance premiums, the insurance company will pay any damage award resulting from an insured event (like an accidental injury). This promise to pay is called “indemnity”.
When we buy insurance, we are buying a promise that, in exchange for insurance premiums, the insurance company will “hold us harmless”, which in English, means they will provide an attorney, at no further expense to the insured customer.
Rarely, if ever, are these “indemnity/hold harmless” provisions, the subject of negotiation; typically, insurance companies bring it up for the first time, in the release language. Insurance companies get paid for THEIR “indemnity/hold harmless” promises in their insurance policies. Thus, I suggest that the insurance company pay for that promise, just as they want us to pay for the similar promise (to pay and defend) that they make, when they sell insurance. Usually, that gets the offending provision out of the release.
However, I may agree to such provisions, where there is a Medicare/Medicaid lien (more about that in another article), or where there are potentially threatening private liens. In those instances, it might well be appropriate to defend and indemnify, particularly if the settlement includes a promise to pay those lienholders.
Settlement of “All Medical Billings” in PIP Cases
In March 2015, the Michigan Court of Appeals has created yet another potential trap, in its Clark v Progressive Mutual Insurance Company decision, a no-fault case; remember, appellate court decisions can, and often do, have the force of law.
In Clark, an accident victim and her lawyer settled “all medical bills” for $78,000.00, an amount they believed sufficient to pay the outstanding bills; they learned shortly afterward, of another $29,000.00 bill, that was not incorporated into the original settlement. Accordingly, the Plaintiff and her attorney tried to unwind the settlement, in order to address this outstanding bill.
Even though the no-fault insurance carrier was evidently aware of this additional bill, and did not bring up the issue in negotiations, the Court of Appeals held in Clark, that this bill was the exclusive responsibility of the Plaintiff and her attorney. The Court enforced the settlement, putting the Plaintiff and her attorney at a significant loss; again, it appears that the insurance company knew about this, but remained silent, during negotiations.
It is debatable whether the insurance company acted honorably, or whether the Plaintiff did (perhaps in not informing her attorney of this additional provider with $29,000.00 in billings). One thing is for sure: this is a situation that we will need to address, when it comes time for us to settle your case. We will need to be crystal clear on which providers you saw, and to which providers you still owe money. We may need to address this, by putting your settlement “on the record”, meaning that there will be a court transcript, documenting the parties’ understandings.
The Bottom Line: you need a lawyer who is careful, and keeps up with new developments that can affect how many dollars go into your pocket. That is the careful attention you will receive from Jon Frank and The Frank Law Firm, PC.
Lawyers owe their clients the duty to “flyspeck” these releases, and to make sure that they are not exposing their clients to potential traps, buried in obscure release language “legalese”. Clark makes clear that this duty exists, even when insurance companies do not necessarily deal honorably, or in good faith
The Frank Law Firm, PC, takes this duty seriously, and as with all other communications, keeps clients “in the loop” as to all developments in case progress, negotiation, settlement and resolution. Call Jon Frank at The Frank Law Firm, PC today.