Krauss in USA Today on Confidentiality Agreements in Tort Suits

A voluntary settlement in a legal action is a contract, and as such it can be conditioned on secrecy reminds Professor Michael Krauss in a USA Today article examining confidentiality agreements in suits involving pharmaceutical errors. "Remember, there is no (court) judgment-- it is a voluntary payment," he says.

"The tricky thing" in cases involving pharmacy errors, says Krauss, "is many people believe the public health is involved. It seems a little bit like extortion. It's not exactly that, but it seems like money for silence."

Many lawsuits against pharmacies settled in silence, USA Today, February 14, 2008. by Erik Brady and Kevin McCoy.

"Michael Krauss, who teaches legal ethics at George Mason University Law School, says it's true confidentiality is agreed to 'in the majority of tort suits,' particularly when a company's or an individual's reputation is at stake, as in medical or pharmaceutical malpractice. 'If you and I agree to make a contract, we can condition that contract on secrecy,' Krauss says. 'And that's all a settlement is, a contract. Remember, there is no (court) judgment -- it is a voluntary payment.'

"Legislatures fear crowded courts

"Reformers argue that when litigants 'avail themselves of the state dispute mechanism, they should have to pay the publicity price,' Krauss says. But he says legislatures are loath to change the rules because they fear many more cases would go to trial and crowd the courts.

"'The tricky thing' in cases involving pharmacy errors, Krauss says, 'is many people believe the public health is involved. It seems a little bit like extortion. It's not exactly that, but it seems like money for silence.'

"Detroit attorney Peters describes 'two levels of secrecy. One is confidentiality. But even before you get to a settlement, there is the protective order, which most companies will ask for (in court) as a precondition to produce documents.' The reason drug chains give, he says, is to keep 'trade-secret stuff' from competitors.

"Walgreens was required to supply recent prescription-error data chainwide in a Tennessee federal lawsuit filed by the family of Trey Jones, a 5-year-old mistakenly given an anabolic steroid. But U.S. District Court Judge Aleta Trauger granted Walgreens' motion for a protective order. She wrote that lawyers for Jones' family were entitled to the information for purposes of pretrial discovery, 'but not for purposes of making a publicity "splash" against the defendant.'

"A typical settlement includes boilerplate language such as this: Terms are 'confidential and are not to be publicized, revealed, disclosed or discussed directly or indirectly with any representative of the print or electronic media, or to any professional or trade publication or organization.'

"This wording was provided by an attorney who asked not to be identified for legal reasons. He says drug chains never admit culpability when paying out settlements. He cites a typical clause that characterizes a settlement as 'a compromise of doubtful and disputed claims, that payment ... is in full accord and satisfaction of any and all claims (and) is not to be construed as an admission of liability, but on the contrary, the parties released expressly deny any liability ... and intend merely to avoid the costs and expenses associated with litigation.'

"Errors are generally not made public by state pharmacy boards unless disciplinary action is taken -- even in cases of death or serious injury -- according to Carmen Catizone, executive director of the National Association of Boards of Pharmacy.

"North Carolina is the only state that makes public all errors involving death or serious injury, he says, adding that his group has tried for 10 years to persuade other states to mandate such reporting. After significant errors such as the Givens case make news, there are demands that errors be tracked. 'But once that initial outrage dies down,' Catizone says, 'the issue is left to politics. Then we lose.'"

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