Sometimes lawyers are upfront and direct.
Other times, they can be sneaky. It’s those sneaky lawyers that you need to watch out for.
In all of my years of practice, I’ve seen some sneaky stuff. Lawyers and insurers trying to add terms to agreements which weren’t previously discussed, or negotiated. Lawyers and insurers seeking to get in through the back door, what they could not otherwise get in through the front door so to say.
Here are a few examples of those sneaky terms which you should watch out for in the context of your personal injury or long term disability case.
A Plaintiff is disabled and his/her claim for long term disability benefits gets denied. The Plaintiff then brings a claim for payment of his/her long term disability benefits. The litigation goes by over the years through the pleadings stage, discovery stage, and then to mediation. But over the years, the Plaintiff does not quit his/her job, get fired, or tender a formal resignation. The Plaintiff is still technically an employee of the company; albeit, and employee who is not working. It can certainly be argued that the employment is frustrated, but that’s an argument for the employer to make.
At mediation the insurer, as a term of settlement requires that the Plaintiff sign a formal resignation from his/her employment in order to get the long term disability settlement. The Plaintiff’s employment is not part of the litigation. If the long term disability case went to trial, the Judge would not be able to make any Order with respect to the employee resigning, or remaining an employee. The Plaintiff’s employment status is a completely separate matter.
Yet, the insurance defence lawyer is insisting that the Plaintiff in the long term disability action sign a formal resignation (without any consideration). The Plaintiff would be sacrificing any potential severance pay, access to other collateral benefits (medical, dental, life etc.) without receiving any consideration save for the long term disability benefits owed to him/her.
Sometimes, insurers will insist on a confidentiality clause being put into their Release upon settlement. The confidentiality clause was not discussed or negotiated. It will simply just be put in there with an expectation that the Plaintiff sign. It’s never a good practice to just put in a clause which was not discussed or negotiated; but it happens more than you would think.
A confidentiality clause or non-disclosure agreement means that a Plaintiff will keep the details of the settlement confidential, save for having the ability to share them with lawyers, financial advisors, accountants or other professionals. Some Plaintiffs have a hard time doing this, or understanding why insurers insist on them. At the end of the day, the insurer doesn’t want any bad press, even if it’s coming from you. They don’t want all of the people who they settle with going around town disparaging their name and telling the world that the insurer paid them out a lot of money.
But confidentiality clauses shouldn’t be seen as all that bad for Plaintiffs; and here’s why. The thing about money; or about a large legal settlement is that once people inside or outside of your orbit knows that it’s happened; the more they are attracted to you in the hope of getting a piece of that settlement. Once people find out that you are coming into money, all sorts of people will come out of the woodwork asking for money or for favours. The last thing a Plaintiff needs after a lengthy legal battle are strangers asking for a part of their settlement or for an investment in an odd business venture. It sounds cliché, but it’s cliché for a reason. It does in fact happen. My tips for all Plaintiffs is to keep their mouths shut about the settlement for their own good. Attracting unnecessary attention for the wrong reasons is a bad idea.
Carve Out of Pay Back Clauses
We call these return to work clauses. They are largely seen in the context of long term disability cases.
A long term disability case may settle for $100,000. But, as a part of settlement, the insurer puts a claw back or carve out clause into the Release. It states that in the event that the Plaintiff returns to work within a certain amount of years after settlement, that the Plaintiff must return a certain amount of money back to the insurance company. Basically, if a Plaintiff goes back to work and starts to earn an income after settlement, the Plaintiff must give back part of the settlement which they negotiated in the lawsuit. These clauses can be hard for a Plaintiff to grasp or understand. But they often get included in long term disability cases.
Reversionary Interest Clauses
These are clauses which we see largely in catastrophic motor vehicle accident cases where the Plaintiff is very seriously injured.
In these cases, the insurer has paid a large amount to a seriously injured Plaintiff. A lot of this money has been allocated for the Plaintiff’s future care costs, or future income loss. But what happens if a Plaintiff dies earlier than expected and the money doesn’t end up being used for its intended purpose (future med/rehab costs, future attendant care, future income). In these cases, the insurer takes out a separate insurance policy against the life of the Plaintiff to protect the settlement amount. That may sound very odd to you. But insurers see it differently. They see it as a small price to pay in order to protect their money. You see, if the Plaintiff dies earlier than expected, the insurer will get part of the money back which they paid out to the Plaintiff for the settlement. The Plaintiff will need to agree to this as a part of the settlement. But often this term is not negotiated until the very end, when it’s too hard for a Plaintiff to walk away from the deal. And often, no additional consideration is offered to a Plaintiff for signing off on such a term.