Can a Lawsuit Be Reopened After Settlement?
Personal injury lawyers often field calls from people who have settled their case and want to know whether they can reopen a lawsuit. They may have signed an agreement and learned they did not get enough money. Unfortunately, the usual answer to this question is that you cannot reopen the lawsuit once a settlement agreement is signed. Absent some extraordinary circumstances. Settlement agreements are always final.
Settlement Agreements Are Legal Contracts Between You and the Insurance Company
You should always understand what exactly a settlement agreement is. A settlement is a binding contract between you and the insurance company or defendant. The agreement will contain terms to define the parties’ obligations, just like any other contract. It is necessary to sign this agreement. Otherwise, the insurance company will not pay you anything. While most of the language in a settlement is boilerplate and standard to most agreements, there may be some customized terms for your specific case.
Every contract requires something called consideration. This term is legal terminology for what you and the other party must do according to the agreement. For example, one party pays you money in exchange for you doing something else (or not doing something – waiving legal right counts as not doing something). Without consideration, a contract is not enforceable at all. To put it differently, an insurance company requires something in return when offering you a settlement.
The Insurance Company Gets Things From You in Exchange for Their Check
In a settlement agreement, the thing that the insurance company does for you is pay you money for your losses. In return, they may ask several things from you. One thing that they may ask is for you to keep the terms of the agreement confidential. The defendant may not want it getting out into the public realm that they have admitted to doing something wrong.
Another important term in settlement agreements is a release. You are releasing the insurance company from any further liability concerning your claim. The insurance company wants to know that you will not be coming back to them for more money. Therefore, the settlement agreement is the final word about your claim.
The release clause says that you agree not to hold the defendant or insurance company liable in the future regarding your claim. In other words, it is the end of your claim. You are signing away any further legal rights that you may have stemming from the accident.
There Is No Settlement Agreement Without a Release
A settlement agreement and a release clause will go hand-in-hand. There will not be one without the other. In fact, you will often see this document referred to as “settlement agreement and release of all claims. ”
The legal effect of a release clause is that you cannot reopen the lawsuit again after a settlement agreement. While you have certain legal rights when someone else is at fault for your injury, the settlement agreement means you have signed those rights away moving forward.
The Release Agreement Limits You if You Do Not Get Enough Money
This result can particularly come back to hurt you if you later discover that other parties may have been liable for your injuries. For example, a driver might have been on the job at the time of an accident. Under personal injury law, their employer will also be liable for the injuries that you have suffered. Having a corporate defendant to sue can increase the size of your recovery.
When signing the settlement agreement, you may not understand how many people may have a legal right to part of your settlement. The first thing to know is that you must pay your health insurance company back for the money they have already spent on your care.
Your medical providers have a potential lien against your settlement agreement, which already reduces the amount of money in your pocket. Then, your health insurance company is off the hook to pay for your future medical care. If you underestimate the amount of your medical care, you will have no money left for yourself. Then, you will have no way of getting more money.
The release agreement will be binding on you. It is part and parcel of your contract and a condition of receiving the money. Very few circumstances will allow you to reopen a lawsuit once you have signed a release.
The Insurance Company Will Require a Broad Release Clause
The release language will most likely be drafted by the insurance company and inserted into a potential settlement agreement. While your attorney can negotiate the terms with the insurance company, they will very rarely compromise on the release clause language. They do not want you to ask for more money in the future.
Insurance companies will draft this language to be as broad as possible. They will have you release both claims that are known to you and those that are unknown to you. This language means that you cannot file a lawsuit if you learn that you have suffered an additional injury in the future.
You Need to Understand Your Case Before You Sign the Settlement Agreement
The practical implication is that you must know the full extent of your damages and injuries before you sign the settlement agreement. You cannot use an excuse that you did not know about all of your injuries at the time you agreed to the settlement. The law will assume you knew about them.
Therefore, you must get the necessary medical treatment to diagnose your injuries. You must work to follow all the treatment recommendations that your doctors give. Most personal injury accident victims will wait until they reach the point of maximum medical improvement until they file their claim. Thus, they know what they seek compensation for when they reach an agreement. If you learn key medical facts after you have settled your case, you will be out of luck.
You can be practically certain that the insurance company will not make any mistakes with the release clause. This is the language that they have used in tens of thousands of agreements before yours. Their lawyers have carefully vetted this language, and you cannot rely on them making a mistake. Therefore, you should not count on coming back for more money in the future if you do not get enough funds now.
Because the insurance company is in the business of settlements, you need your own advocate who will protect your interests in settlement negotiations. Always have a personal injury lawyer handling your claim. Your lawyer will be familiar with the settlement agreement language and terms and can advise you of all possible implications – good and bad – of signing the agreement and release.
The Release Clause May Contain Limited Exceptions
The facts of your case may allow you to escape the release clause under minimal circumstances. You will be unable to renew your claim based on the plain language of the release clause.
Here are some reasons why the release clause may not provide the final statement in your case:
- The insurance company did not follow the terms of the agreement (they did not hold up their end of the bargain)
- Someone actively tried to conceal key facts that kept you from learning of the extent of your injuries
- The language about the claims to be released was vague, and your future claim may not have been covered by it
- The release agreement will be void because it goes against public policy
- The release clause overreaches to the point where it will be considered unconscionable in favor of the insurance company
Courts will strictly construe the language of the release clause. You will have the burden of proof to show why the court should not enforce this contractual term. Allowing you to reopen your case will be the exception rather than the norm.
Only rarely is the release clause not fully enforced. There will need to be some rather extreme circumstances for a court to allow you to reopen a case once a settlement agreement is signed. Needless to say, it is very unusual.
Do Not Rush to Take Money Offered to You
Many people do not understand the practical effect of a settlement agreement. They may take the money offered to them now without understanding that it is the last money they can get. They may not have the foresight to fully know what money they need in the future to pay for their injuries. However, once they sign the settlement agreement, it is the end of the story. Your case no longer exists because you have no more right of action.
Therefore, you should enlist the services of an experienced personal injury attorney to help you negotiate the settlement. You should not agree to any settlement before you have had an attorney review the agreement. However, it is always best to hire an attorney far before that point. You do not have to wait until you need a contract review to enlist legal help for your injury claim.
Your Settlement Agreement Should Cover All of Your Damages
Your settlement agreement should fully compensate you for all the damages and injuries you suffered from the accident. Your settlement should pay for your past and future damages in connection with your injuries.
You may wonder how you can see into the future to know how much money you should request. That is one of the burdens you bear as a personal injury plaintiff. You should work with an experienced attorney who will accurately estimate the value of your claim. Your lawyer will review your unique situation to help you determine the appropriate number to demand from the insurance company and what might be an acceptable settlement amount.
Your damages depend on how your injury has impacted you and your life. There are no two personal injuries that are exactly alike. The insurance company might push you to rush into a settlement agreement before you know the value of your claim. They know you are signing away your legal rights through the release clause. They do not want you to get a personal injury lawyer because you will no longer be in the dark about how much money you might get.
Hiring an attorney puts the brakes on the prospect of the insurance company rushing you into a below-value settlement. The right lawyer evens the playing field, as insurers handle claims like yours every day. This is likely your first time filing a serious injury claim, so you might not be familiar with the process.
Among many other things, your attorney will advise you to reject an inadequate settlement offer and demand more money to compensate you for your injuries fairly. Then, you will not need to worry about a release agreement and whether it is final.
You May Not Even Want to Settle Your Case
Knowing that the settlement agreement is the final word in your case, you may even decide not to sign one at all. If the insurance company does not offer you enough money, you can and should take your case to trial. Then, the jury will decide how much in damages you can get. They will not have the same self-interested financial concerns as the insurance company. Your lawyer will advise you on the best legal option for your case.
Do not ever try to proceed on your own in a personal injury case. You may think you are saving money by handling your case and not paying a lawyer, but it will cost you far more. Before you realize it, the insurance company will pick your pockets, and there is nothing you can do about it. You will not need to pay any money upfront to hire a personal injury lawyer, nor will you need to pay them hourly while your case is pending. The cost of not hiring a personal injury lawyer will be far more than you can save trying to handle the matter alone. Contact us today at G & K to see how we can assist you in your claims and cases.