Tuesday, January 19, 2016

Pennsylvania Case Reminds of Documentation and Explanation

A recent case in Pennsylvania dealt with settlement of a workers' compensation case, and the repercussions that followed. It is a good discussion for review of issues regarding how parties are prepared for negotiations and potential case closure. 

WorkCompCentral reported last December that the Pennsylvania Supreme Court rejected a petition for review, bringing to a close the malpractice litigation by an injured worker's against his own attorney. The representation and ensuing case spanned ten years. The injured worker, Mr. Silvagni, was injured in 2005. In 2008 his case was settled. In 2011, he sued his attorney for malpractice, and in 2015 the Supreme Court's dismissal, or rejection, ended the saga. Four of the ten years of this relationship, 40%, was the malpractice case. 
  
Mr. Silvagni alleged that only after the settlement was approved did he learn that the $60,000 payment would "terminate his entitlement to future benefits or medical payments that stemmed from the accident." He claimed that if he had know that his future benefits would cease, he "would not have agreed to the terms of the settlement." 

Often in workers' compensation cases there are claims pending for determination by a judge, commission or board. The injured worker may believe that benefits such as medical care or lost earnings should have been paid after an injury. As a claim or petition for these benefits works through the system, there may be discussions, negotiations, and sometimes mediations. It is usually possible to settle those claimed benefits, in other words stop the litigation over these "past benefits," in exchange for some payment or other compromise. 

It is also possible in most states to settle any potential entitlement to benefits that have not yet become due, and which may never become due. These are "future benefits." They may be harder to place a value upon, less certain, less predictable. 

It is even possible that a settlement might resolve more rights and responsibilities than are covered by the workers' compensation statute. I have heard of workers' compensation settlements paralleled by "side agreements," which are expressed in a "general release," on such issues as unemployment compensation, wrongful discharge allegations, discrimination allegations, the Americans with Disabilities Act, the Family Medical Leave Act and more. 

Mr. Silvagni sued his attorney for legal malpractice in 2011, three years after the workers' compensation settlement. The Philadelphia County Court granted summary judgement, dismissing his claim. The injured worker appealed, and the Superior Court affirmed. Mr. Silvagni then petitioned the Pennsylvania Supreme Court to review the case, and in December 2015 the Court declined. The litigation against the attorney spanned four years in three courts.

That timeline is interesting. A 2005 injury followed by a 2008 settlement is not necessarily out of the ordinary. But the malpractice suit was filed in 2011 and four years later, the injured worker's former attorney can finally close and store the file. Today's client could be part of an attorney's life for the next ten years (2005-2015); from a different perspective, a malpractice case beginning today could be part of an attorney's life for the next four years?

I have noted before that Agreements Matter. They matter when they are made, and they matter thereafter. Certainly there are exceptions to the rule. When agreements are reached due to fraud, misrepresentation or duress, then there may be litigation and eventually relief from agreements. But, the law favors agreements. So, an issue may be what parties to the settlement knew, when they knew, and whether their information was accurate. 

It is critical in this regard to know what the terms of any agreement are. There are good questions to ask about agreements, like "will this settlement terminate my 'entitlement to future benefits or medical payments that stemmed from the accident?'" However, the time to ask those questions is before any agreement is reached, In some instances even verbal agreements can be enforced. Reading and thinking and questioning before signing is important, but being similarly careful about verbal agreements is advisable as well. 

In Florida, all workers' compensation settlements used to require approval of a judge. Every settlement was documented in an extensive document (called "Joint Petitions"). "Extensive," usually meant at least 20 pages, but I have seen them much longer. Contingencies and questions were discussed, injury(ies) and medical care were described, work history and future work expectations were described. The documents included a fair amount of "form" or "boilerplate" language, but there was also a fair amount of specific and detail about the case. 

The Florida law changed in 2001 for injured workers that are represented by attorneys. Settlements with unrepresented injured workers still require the extensive, detailed "Joint Petition." But settlements involving a worker represented by an attorneys do not require that documentation any longer. Florida settlements with represented workers only require judicial approval regarding the amount of attorney fees and the allocation of settlement proceeds for any past-due child support. The assigned judge is not going to inquire further in most represented settlements. 

This statutory change made a significant change in judicial workload. Those Joint Petitions, often 25-35 pages of detail and explanation, took significant time to read, digest and approve. The post-2001 Motion for Approval of Attorney Fees and Child Support Allocation for a represented worker takes far less judicial time, and results in a less detailed order. 

Work and responsibility do not exist in a vacuum. When the statutory change relieved judicial workload, that work does not evaporate, it must still be done but is done by someone else. The responsibility of making sure the settlement is in the best interest of the injured workers did not evaporate, it moved from the judge to the attorney representing the injured worker. This is logical, because the settlement of cases involving unrepresented workers are still subject to that extensive judicial review. 

Settlements for represented injured workers may now be accomplished more simply, more quickly. But with no requirement for judicial oversight or approval, attorneys should document and explain more thoroughly. The explanation should be sufficient that the injured worker understands clearly what she or he is getting ($60,000) and what she or he is giving up in return ("terminate his entitlement to future benefits or medical payments"). Regardless of whether a judge will approve the settlement, or whether the law requires a finding on this exchange being understood, it should be clearly spelled out somewhere in writing. 

Attorneys need to explain the concept of settlement in advance f any negotiations. A client needs to understand that the attorney will be acting on her/his behalf and that the attorney may make agreements that can effect the client. A client needs to understand whether or not verbal agreements can be enforced. A client needs to understand what she/he will receive in any compromise, and precisely what she/he will give up in return. 

There are periodically cases in which the injured worker contacts the Office of Judges of Compensation Claims to complain that the amount received is not what was expected. Various explanations exist, but a recurring theme in these situations seems to be a lack of clear explanation having been provided to the client during the negotiation or settlement process. 

In the Pennsylvania case, the attorney spent four years defending a former client's malpractice claim. Years ago, I had a professor who repeatedly stressed "we construe the better to construct." That is, we look at how situations or litigation have occurred and we change our practices to prevent similar situations in the future. Attorneys would do well to think about how their practices and processes inform the client about the effects of compromise, stipulations or settlements. 

And finally, when a settlement is submitted, the attorney should take a fairly simple step, Read the order. Even when the client fully understands the intended and documented deal, the end result may be different. More child support may be designated for payment in that approval order than was anticipated or expected. The distribution that was proposed may or may not be the distribution that is ultimately ordered. Before making assumptions, and certainly before disbursing funds, the attorney is well advised to read the order. Then, any difference should be explained to the client. 

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