Your child has been seriously injured. The first few days are a blur of fear, stress, and struggle to get your mind around what the doctors have told you about your child’s likelihood of recovery. You and your family are worried, upset, and naturally enough, quite vulnerable.
Into that perfect storm sails an insurance representative for the at-fault party – the insurer for the person or entity that caused your child’s injury. With soothing words and expressions of sorrow and sympathy the insurance company convinces you they are here to help. Representations are made, money is discussed, and it all sounds like a distant echo to you because of your shock and grief.
But somehow you end up signing a document that settles your child’s injury claim for a few thousand dollars. The representative is so nice and seems so much to want to help. You just want them to go away and leave you and your suffering child alone. You don’t realize it at the time but you are highly suggestible and easy prey for the insurer.
A few days or weeks later, as your child’s medical bills continue to climb, you come to your senses and realize you have been duped. But you have already signed away your rights, or so you fear.
Sound familiar? This is an all too common scenario, I’m afraid.
What can you do? What can a parent of an injured child do if you signed an injury settlement release and later discover that your child’s injuries are worse than you could have imagined?
If you find yourself in this situation, this post is for you. You need to know that legal options do exist. You need to know that settlement releases are governed by contract law. You need to determine whether an enforceable contract came into being when you signed. You need to assess if grounds exist for undoing the contract (contract rescission). You need to talk to an attorney as soon as possible.
In this post I will briefly describe a few of the ways an attorney might succeed in having a settlement release set aside.
There are two ways to come at this legal problem. Keeping in mind that a release is a contract, the first is to ask whether the parties (you and the insurance company) agreed on all material terms of the settlement such that an enforceable contract came into being? Or were essential terms left unaddressed, meaning there was no “meeting of the minds” (a meeting of the minds is an essential element of contract formation). The second is, assuming an enforceable contract did come into being, are there grounds for undoing (rescinding) the agreement?
ARGUE WHAT YOU SIGNED DOES NOT CONSTITUTE A LEGALLY ENFORCEABLE CONTRACT
Let’s take a look at what Georgia Courts have said about the first of these ways of coming at this problem.
Importantly, the Courts often start their analysis of this first issue by noting that it is the policy of the law to encourage compromise and settlement. What this means is that the Courts favor ending conflicts without resort to litigation and will enforce settlement agreements whenever possible, if they were fairly made and don’t contravene any public policy of the State of Georgia. The Courts will enforce a settlement agreement if it can be shown there was a) an offer, b) an acceptance and c) a “meeting of the minds.”
Offer and acceptance are terms that may intuitively make sense to you.
But just what is a “meeting of the minds”? Unfortunately there is no magic formula. Deciding whether a “meeting of the minds” existed at the time of the signing of a release is a fact-specific inquiry that defies generalization. The starting point for this inquiry is to have an attorney review the settlement release. He or she will review to determine if the parties came to a clear agreement as to all essential terms and whether the agreement left any material terms open for future agreement. What constitutes “essential” and “material” are issues best left to your counsel.
Let’s now take a look at the second way of coming at this legal problem – rescission.
ARGUE THE CONTRACT SHOULD BE RESCINDED
What is contract rescission? It is a way of undoing a contract, either by proving that there was some mistake or unfairness in the deal.
What are some possible grounds that might form the basis for a successful attempt to rescind a settlement release? Let me list some grounds:
- Overreaching by the insurance company in the way they obtained the release from you
Examples would include:
-an insurance company that takes advantage of a parent whose mental state made them temporarily incompetent to understand or execute a release;
-an insurance company that makes dishonest representations about the extent and severity of the child’s injuries;
-an insurance company that deceives the parent about the legal consequences of signing a release;
-an insurance company takes advantage of a parent’s poverty and inability to pay for the child’s medical care to convince them to sign a release;
-an insurance company gives a family such an inadequate amount that it shocks the conscience of the Court
- Misunderstanding by the parent as to the nature and effect of the release
-The parent who signed can’t read the language in which the release is written (this could be due to illiteracy or due to the release being offered in a language other than the parent’s native tongue.)
-An insurance company offers a parent a release to sign that is limited in scope (to just to property damage to a vehicle, for instance) and after the parent agrees to sign substitutes a different and broader release.
- Mistake of fact as to extent of injury
This is the most difficult kind of grounds to prove. This has to do with a scenario where a parent, after signing a release, finds out that the severity of the child’s injuries are more serious than previously known.
The legal path to successfully setting aside a release on these grounds has to do with something the law calls “mutual mistake”. Generally speaking if just one party to a settlement is mistaken about the extent of injury that will not suffice for undoing the contract. But if it can be shown that both parties were mistaken about the extent of what was being released, it may be possible to rescind the agreement.
As you can imagine, mutual rescission requires the cooperation of the insurance company and normally they are not going to be interesting in undoing a release, since the release is what protects the insurance company from taking future responsibility for your child’s injury. But, why not ask?
I have encountered one situation where an adjuster, when confronted with the severity of a child’s injuries, felt that mutual rescission was appropriate.
But the vast majority of the time parents will find that the insurance company will have no interest in reopening a claim it thought closed. What then?
Things get very technical from here on in. Your attorney needs to parse the release language. Does the release language address “all claims for injuries” or “claims for known and unknown injuries” or just what does the language say? Sometime the legal meaning of the language varies from a common sense reading.
OTHER LEGAL STRATEGIES
Here is another possible way to attack an unjust release:
O.C.G.A. Section 33-7-12(a) states that a purported settlement is null and void if the third party (the claimant or Plaintiff) is not provided with a written notice informing the third party of the lack of consent of the insured and that the insured is not thereby precluded from the further assertion of claims against the third persons. The statute states this written notice must be given to the Plaintiff before the settlement occurs or the settlement is of no effect.
O.C.G.A. 33-7-12. Effect of provision in policy permitting insurer to settle or compromise claims upon rights of insured and of third persons; settlement of claims by third persons
(a) Any provision in a liability policy of insurance which provides that the insurer shall have the right to compromise or settle claims of third persons against the insured without the consent of the insured shall be deemed to create, as between the insurer and the insured, the relationship of an independent contractor so that the insured shall not be precluded from asserting a claim or cause of action against third persons, notwithstanding the settlement by the insurer of such claims of third persons, unless the insured shall previously have consented in writing to relinquish his claim or cause of action against third persons, provided in all cases where the insurer shall settle the claims of third persons against the insured without written consent that it shall be the duty of the insurer to inform the third persons in writing of the lack of consent of the insured and that the insured is not thereby precluded from the further assertion of claims against the third persons before taking from the third persons any release, covenant not to sue, or other settlement; and upon the failure of the insurer to give the notice to the third persons of the lack of consent of the insured, the release, covenant not to sue, or other settlement shall be of no effect, null, and void. (Emphasis supplied).
So – take a look at the release you signed. Does it contain language like what you see above? If not, your attorney may be able to get the release set aside.
And here is another strategy:
If you received more than $15,000.00 from the insurance company and the settlement was not submitted for approval to a court, no legally binding settlement has occurred.
O.C.G.A 29-3-3 provides:
(a) For purposes of this Code section, the term ‘gross settlement’ means the present value of all amounts paid or to be paid in settlement of the claim, including cash, medical expenses, expenses of litigation, attorneýs fees, and any amounts paid to purchase an annuity or other similar financial arrangement.
(b) If the minor has a conservator, the only person who can compromise a minoŕs claim is the conservator.
(c) Whether or not legal action has been initiated, if the proposed gross settlement of a minoŕs claim is $15,000.00 or less, the natural guardian of the minor may compromise the claim without becoming the conservator of the minor and without court approval. The natural guardian must qualify as the conservator of the minor in order to receive payment of the settlement if necessary to comply with Code Section 29-3-1.
(d) If no legal action has been initiated and the proposed gross settlement of a minoŕs claim is more than $15,000.00, the settlement must be submitted for approval to the court.
(e) If legal action has been initiated and the proposed gross settlement of a minoŕs claim is more than $15,000.00, the settlement must be submitted for approval to the court in which the action is pending. The natural guardian or conservator shall not be permitted to dismiss the action and present the settlement to the court for approval without the approval of the court in which the action is pending.
(f) If the proposed gross settlement of a minoŕs claim is more than $15,000.00, but the gross settlement reduced by:
(1) Attorneýs fees, expenses of litigation, and medical expenses which shall be paid from the settlement proceeds; and
(2) The present value of amounts to be received by the minor after reaching the age of majority is $15,000.00 or less, the natural guardian may seek approval of the proposed settlement from the appropriate court without becoming the conservator of the minor. The natural guardian must qualify as the conservator of the minor in order to receive payment of the settlement if necessary to comply with Code Section 29-3-1.
(g) If the proposed gross settlement of a minoŕs claim is more than $15,000.00, but such gross settlement reduced by:
(1) Attorneýs fees, expenses of litigation, and medical expenses which shall be paid from the settlement proceeds; and
(2) The present value of amounts to be received by the minor after reaching the age of majority is more than $15,000.00, the natural guardian may not seek approval of the proposed settlement from the appropriate court without becoming the conservator of the minor.
(h) If an order of approval is obtained from the judge of the probate court based upon the best interest of the minor, the guardian is authorized to compromise any contested or doubtful claim in favor of the minor without receiving consideration for such compromise as a lump sum. Without limiting the foregoing, the compromise may be in exchange for an arrangement that defers receipt of part or all of the consideration for the compromise until after the minor reaches the age of majority and may involve a structured settlement or creation of a trust on terms which the court approves.
(i) Any settlement entered consistent with the provisions of this Code section shall be final and binding upon all parties, including the minor.
So – if the insurance company paid you more than $15,000.00 and did not submit the settlement for approval to a court, you have very good odds of getting the release set aside as unenforceable.
Incidentally, you can read up on court approval of child settlements here.
There is hope! If you find yourself in a situation where an insurance company has unfairly persuaded you to sign a release, please contact me. It will cost you nothing to discuss your options with me.
Attorney Pete Pearson practices law in Atlanta, Georgia and has a special interest in helping families with injured children. He is a father to six and lives with his wife and children near Atlanta, Georgia. He can be reached directly at Six-Seven-Eight 358-2564.