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Settlements and Confidentiality
The following article examines the issue of confidentiality agreements. Although written with reference to Massachusetts law, much of this material is relevant to the decision to enter into such agreements regardless of jurisdiction. However, before taking any legal actions concerning this or any other agreement, ALWAYS CONSULT A LAWYER!
You have started your lawsuit against the psychotherapist who engaged in significant boundary violations and caused you serious damage. The attorneys, following arduous and lengthy negotiations, have finally arrived at a dollar settlement amount satisfactory to you. But, then, the attorney for the psychiatrist (psychologist, social worker or counselor) insists that the settlement and all underlying facts related to the failed therapy must be kept confidential.
"What?" you ask in anger. "I can’t talk about this with anybody? This is outrageous!"
Is it? What are the vices and advantages associated with confidentiality agreements?
It is all and well good to condemn confidentiality agreements as against public policy. As a policy matter, there are certainly valid arguments against the use of settlement provisions of this type.
You never have to accept confidentiality or secrecy in a settlement!
First, it is ALWAYS the victim's prerogative to reject a proffered settlement, with or without confidentiality, and proceed to trial. No attorney can or should enter into such a settlement, any settlement of any kind, without the client's full prior understanding of its terms and unconditional consent. This is both a matter of legal ethics and client right.
Go to the licensing board! Check with a professional society or organization!
Second, prior to even considering confidentiality, the victim always has the right to complain to a licensing board and seek disciplinary action against an offending therapist. The victim may also seek redress, where available, from professional associations or societies to which the therapist belongs. Or, the victim can inform friends, colleagues, victims' groups, legislators and the media through oral and written communications of the past abuse and the identity of the abuser.
There may be good reasons not to take one or more of these actions (e.g. potential impact on subsequent litigation, impeding settlement, possible defamation liability). Talk to your attorney about potential consequences before proceeding!
Sometimes, the settlement is not so secret anyway!Third, there are already certain regulatory limitations, which either mandate exposure of wrongful conduct or protect disclosure of abuse in certain instances. For example, in Massachusetts, G.L.c. 112, section 5C provides:
Every insurer or risk management organization which provides professional
liability insurance to a registered physician shall report to the board any
claim or action for damages for personal injuries alleged to have been caused by
error, omission, or negligence in the performance of such physician's
professional services where such claim resulted in:(a) A final judgment in any amount,
(b) A settlement in any amount, or
(c) A final disposition not resulting in payment on behalf of the insured.Reports shall be filed with the board no later than thirty days following the
occurrence of any event listed in paragraph (a) , (b) , or (c) .Such reports shall be in writing on a form prescribed by the board and shall
contain the following information:(a) the name, address, specialty coverage, and policy number of the physician
against whom the claim is made; and
(b) name, address and age of the claimant or plaintiff; and
(c) nature and substance of the claim; and
(d) date when and place at which the claim arose; and
(e) the amounts paid, if any, and the date and manner of disposition,
judgment, settlement, or otherwise; and
(f) the date and reason for final disposition, if no judgment or
settlement; and
(g) such additional information as the board shall require. No insurer or its
agents or employees shall be liable in any cause of action arising from
reporting to the board as required in this section.
Similarly, Massachusetts. Ann. Laws ch. 112, @ 5E states:
Any registered physician who does not possess professional liability
insurance shall report to the board every settlement or arbitration award of a
claim or action for damages for death or personal injury caused by negligence,
error or omission in practice, or the unauthorized rendering of professional
services by such physician. Such report shall be made within thirty days after
any such settlement agreement has been reduced to writing thereto or thirty days
after service of such arbitration award on the parties and signed by all the
parties. Failure of the physician to comply with the provisions of this section
is an offense punishable by a fine of not more than five hundred dollars.
Knowing and intentional failure to comply with the provisions of this section,
or conspiracy or collusion not to comply with the provisions of this section, or
to hinder or impede any other person in such compliance is an offense punishable
by a fine of not less than five thousand dollars nor more than fifty thousand
dollars.
Further, again in Massachusetts, under the medical malpractice statute which governs some professional abuse cases against therapists, G.L.c. 231, section 60B, the law provides:
Whenever the [medical malpractice] tribunal makes a finding, the clerk of the court
shall, no later than fifteen days after such finding, send a copy of the complaint and
finding to the board of registration in medicine. Upon entry of judgment, settlement,
or other final disposition at trial court level, the clerk shall, no later than fifteen days
after such entry, send a copy of the judgment, settlement or other final disposition,
to the board of registration in medicine. The terms of such judgment, settlement, or
other final disposition shall not be sealed by agreement of the parties or by any other
means and shall be available for public inspection, except, however, the identity of the
plaintiff may be kept confidential by the board.
Therefore, in Massachusetts, insofar as the statute concerns psychiatrists and physicians and following the initial phase of a malpractice tribunal, the Board of Registration in Medicine will be notified of the offending conduct and papers filed in Court will remain open for public inspection. This is mandatory disclosure in the malpractice litigation process designed to expose the abuse to the bright light of discipline.There are also protections for those who are called to testify before the Board of Registration in Medicine. For example, Massachusetts G.L.c. 112, section 5 provides that, "…no person . . . who provides information pursuant to this section or who assists the board at its request in any manner in discharging its duties [including obtaining information concerning settlement of malpractice actions] . . . shall be liable in any cause of action arising out of the receiving of such information or assistance."
Caution: The above discussion involves Massachusetts law. Your jurisdiction probably
has different rules, regulations, procedures and/or statutes which MAY govern this
area. Further, even in Massachusetts, these statutory protections are not all
inclusive and do not apply to non medical abusers. Further legislation should
be enacted to extend these laws to other professional fields. We should
vigorously support such efforts. Always consult an attorney."Are secrecy agreements truly unenforceable?"
Fourth, some attorneys who oppose confidentiality agreements incorrectly assume that such provisions are against public policy and will not be enforced. This is simply not the case. Such provisions are routinely utilized. Would this be the case if they were patently against public policy and went unenforced? Wishing should not be confused with reality.
Recently, a law review article, which dealt with confidentiality in priest abuse cases, explored the applicable legal principles. Avedis H. Seferian & James T. Wakeley, 2002-2003: Secrecy Clauses in Sexual Molestation Settlements: Should Courts Agree to Seal Documents in Cases Involving the Catholic Church? 16 Geo.J.Legal Ethics 801 (2003). With respect to confidentiality agreements, the authors state, at 809-810, notes 77-80,
There is a presumption that a court should enforce the settlement agreements reached
by parties. Further, a court's role 'in reviewing a settlement is not to just substitute
its own judgment for that of parties to a decree but to assure itself that the terms of the
decree are fair and adequate and are not unlawful, unreasonable, or against public policy.'The vast majority of cases and jurisdictions respect the right of parties to contract in settlement as they please. Most terms of a settlement agreement, then, will be dealt with in much the same manner as a traditional contract. Parties have the right to contract as they wish, and most courts will not seek to impose their own judgment for those of the parties. Courts will, however, refuse to enforce agreements that violate public policy. (Emphasis added)
"What? The defendant won't settle? You mean I have to go to trial?!"Fifth, victims of sexual abuse have few meaningful tools to promote pre-trial settlements. If most health care professional lack insurance coverage because of policy exclusions, a settlement may require the former treater to pay out-of-pocket to the victim or, in any event, acknowledge past derelictions. A promise of confidentiality is one of the few tools available to induce stubborn defendants to compensate plaintiffs now --- without the added distress, embarrassment, humiliation, and pain attendant to testifying in Court where outcomes are usually subject to uncertainty, delays, and possible appeals.
Pre-trial settlement with confidentiality provides an incomplete but certain immediate remedy. Without the threat of disclosure to the perpetrator (and often potential disclosure of the victim's experience is equally painful!), defendants are motivated to delay for as long as possible. Independent of other considerations, the promise of confidentiality is a great inducement to settlement.
Negotiate, negotiate, negotiate!
Sixth, confidentiality agreements can be combined with written obligations by the wrongdoer to undergo carefully monitored psychotherapy at their sole expense. In such agreements, the therapist who treats the wrongdoer periodically reports upon the attendance and participation of the defendant to the victim's attorney. Failure to satisfy the duty to engage in meaningful therapy can result in, yes, disclosure of the defendant's prior actions to disciplinary bodies or others. While there should be few illusions about the efficacy of such treatment for each and every therapist, creative negotiations involving a mix of nondisclosure with other incentives can, in some instances, achieve positive results for all concerned. Still other settlements permit the victim to disclose past abuse to specified relatives, loved ones and others subject to various conditions. The scope and variety of negotiated settlements is dependent upon only the creativity of the parties and counsel.
Be careful! A promise is a promise! Violating a secrecy agreement can be dangerous to your wealth!
Some attorneys argue that a secrecy agreement may not be enforced, because it is against public policy. So, if the confidentiality restriction is unenforceable, should the settling victim, who agrees to such a clause, later ignore it? Be careful!
Releases, including any confidentiality provisions or agreements, are contractual arrangements. Under Massachusetts law, all contracting parties must act in good faith and deal fairly with each other.
This means that when parties negotiate and enter into contracts, they must act honestly. Making a promise without the intention of performing the promise at the time the promise is made is actionable fraud or deceit in Massachusetts. So, if a victim agrees to confidentiality and accepts the settlement proceeds but does so with the intent and expectation that he or she will later contest the nondisclosure clause as being in violation of public policy, the plaintiff is, in effect, acting in bad faith, not dealing fairly, and perhaps acting fraudulently. In short, a cynical attitude and related course of conduct could ultimately turn a settling plaintiff into a newly minted defendant, as the therapist (and/or the therapist's insurance company) would be justified in suing for breach of contract or fraud. Suffice it to say, that the victim-now-defendant may be forced to repay (or be liable for) the entire amount of the settlement previously paid and could be liable for other damages occasioned by such dishonest conduct.
By the way, at the very minimum, the victim-now-defendant would be forced to retain his or her own attorney to defend her interests in the second action at extremely considerable --- and wholly unreimbursed -- personal expense. Worse, if the victim, having breached the confidentiality agreement on the assumption that the same is "against public policy," is required to pay back all of the settlement money to the tortfeasor, the victim will also be required to repay not just the sum received by him or her but also the entire legal fee paid to her attorney in the original proceeding. After all, the responsibility for breaching the confidentiality restriction belongs to the client, not to her former attorney. The victim received the total settlement proceeds, and the plaintiff's attorney received payment for his/her services at that time. Just as the plaintiff paid her expert witnesses, her treating physicians, her current therapist, car insurer, and groceries with the settlement proceeds, she likewise paid her then attorney.
Another consideration: During the initial settlement process, the victim's attorney is likewise bound by the duties of good faith and fair dealing. Moreover, the victim's counsel is held to even higher standards as an officer of the Court. Simply put, victim attorneys simply cannot be placed in the position of negotiating a settlement, one that includes the requirement of confidentiality, in bad faith. Attorneys must deal fairly with all parties as well as the Court.
Litigation is not therapy. Litigation is long, unpleasant and wearing. Expect the process to strongly encourage settlement before trial.
We are concerned with victims' rights, but this issue must also be viewed from the perspective of the abusive therapists and the insurance companies paying for their legal representation. The settlement process is one of give and take where, ideally, the parties each sacrifice some part of their respective agendas in exchange for the certainty of a final result. In the case of victims, pre-trial settlement ends the litigation process and provides compensation, however imperfect, for the damage suffered. The compensation is often needed to obtain ameliorative therapy and rebuild lives shattered by the earlier abuse. Pre-trial settlement also insures that the sometimes unbearable nature of the intrusive litigation process terminates without the stress and anxieties of the trial itself.
The abusive therapists seek to control and limit their financial exposure and protect the tatters of their professional reputations and careers. The insurers' interests are to stop litigation costs and limit their financial exposure to the minimum while still satisfying their contractual obligations to the policyholders (i.e. the defendant therapists). To obtain their insureds' consent to settlement, the companies must, in turn, satisfy the concerns of the defendant therapists. The companies may also seek settlement confidentiality to prevent the financial resolution of the immediate case from serving as a model or part of a pattern for future settlements in similar cases of this type.
Be mindful of the courts' strong policy to promote pre-trial settlements and avoid exhausting scant judicial resources on more trials than the system can handle. Paradoxically, to the extent that judges relentlessly push cases to trial, their purpose is to avoid actual trials and promote settlements. Thus, the reality is that whether or not confidentiality provisions are required, the victim will experience enormous personal and systemic pressures to settle short of trial.
If a victim wants vindication, there are essentially five, sometimes overlapping choices:
(1) File a complaint with the licensing board and cooperate fully with the resulting investigation
and hearing;(2) File a complaint with an appropriate professional society or association;
(3) Start a legal proceeding, refuse to settle and proceed to trial.
(4) Settle out of court either before commencing litigation or during the litigation process.
(5) Accept reasonable confidentiality and negotiate intelligently for maximum benefit.
Conclusion
The decision to disclose or to accept confidentiality is complicated. Make sure you completely understand the implications of each available choice.
The law firm of SJ Spero & Associates, P.C. has had substantial experience negotiating confidentiality agreements. Let us help. We can explain their advantages and disadvantages and assist you in making intelligent decisions regarding them.
SJ Spero & Associates, P.C.
336 Baker Avenue
Concord, Massachusetts 017412
Telephone: (978) 318-9292
Facsimile: (978) 318-9290
speroandjorgenson@msn.com
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