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What Should You Know About Confidentiality Provisions In Personal Injury Settlements?

If you've recently been injured in an auto accident or other incident in which another party was clearly negligent and you have filed a lawsuit to recover financial damages, you may be entering the early stages of settlement negotiations with the other party or their insurance company. As a condition of settlement, many defendants and their insurance companies will require you to sign a confidentiality agreement that prevents you from openly discussing the amount of any settlement or even the fact that a settlement exists. Read on to learn more about the confidentiality provisions to which you may be subjected as part of a personal injury settlement, as well as the potential penalties you could face for breach of such a provision. 

Why is a confidentiality provision often deemed necessary in a personal injury case?

There is a nearly endless list of reasons why a particular defendant may want a plaintiff to sign a confidentiality agreement -- from a reluctance to publicly admit liability for personal or professional purposes to a concern about being viewed as a target by other potential plaintiffs due to the large amount of a particular settlement. As a result, confidentiality provisions are fairly standard in most settlement agreements and, unless overly broad and much more restrictive than any legitimate business or personal interests should dictate, are usually upheld in court. 

What types of disclosure do confidentiality provisions generally cover?

Confidentiality provisions can cover everything from the mere existence of a settlement to the amount of settlement or trade secrets or other proprietary information learned during the discovery process. Although you'll usually be given leeway to discuss this information with a financial adviser or tax accountant so that you can structure your finances to account for the sudden windfall, these disclosures must be made to individuals who are also covered by confidentiality provisions and for a legitimate purpose (like receiving financial advice), rather than to gossip. 

Confidentiality provisions can be fairly broad with regard to the number of individuals covered and still be upheld. In one recent Florida case, a former school headmaster who had recovered an $80,000 settlement in a wrongful termination lawsuit forfeited his right to the entire settlement after his daughter wrote a Facebook post referencing the amount of settlement and the fact that it was financing a trip. Even though the plaintiff's daughter, not the plaintiff himself, was responsible for revealing information about the settlement and violating the confidentiality agreement, the Florida Court of Appeals held that these confidentiality provisions extended to the plaintiff's communication with his daughter and covered her actions. Although the headmaster argued that he was required to provide information on the settlement to his daughter because she had suffered retaliation while enrolled at the defendant's school, the court did not find this argument compelling.

While someone may need to share information about a monetary settlement with a spouse or another family member or friend who is directly affected by the process, that person then becomes covered by the same confidentiality provisions to which the plaintiff was required to adhere. It's also a good idea for plaintiffs to negotiate for the inclusion of specific individuals in any permitted disclosure section of the agreement to avoid inadvertently running afoul of the agreement.

What are the potential penalties for disclosing details of a personal injury settlement? 

Depending upon the terms of the agreement and the contract laws in the state in which the claim is being litigated, breach of a confidentiality provision can result in forfeiture of a portion or even all of the settlement. In some cases, especially if disclosure involves trade secrets or has a tangible effect on the defendant's business or professional life, the defendant may be able to bring a separate civil action for damages.

This may be something that you want to discuss with your attorney, someone from a place like Swartz & Swartz P.C.