Why You Should NEVER Agree To A Confidential Settlement


98% of malpractice lawyers agree to confidentiality as a standard condition in medical malpractice settlements. HUGE mistake! Confidential settlements do not benefit anyone and this can result in unexpected income taxes.

Two Big Reasons Why You Should NEVER Agree to Confidentiality

Through lawsuits, malpractice lawyers should strive to improve the standard of care for future patients. In litigation, doctors and hospitals are held accountable for medical mistakes and are forced to address the failure of their policies and procedures. However, no one is held accountable for medical mistakes when the plaintiff agrees to confidentiality. With a confidential settlement, no one can find out what happened in the lawsuit and the negligent doctors and hospitals get a free pass for their misconduct. The lawsuit, in effect, accomplishes nothing in terms of improving patient care.

And it gets worse. When you agree to a confidential settlement, the Internal Revenue Service can tax the part of the settlement that is allocated to confidentiality. For example, if the IRS determines that 80% of your settlement represented payment for a physical injury and the other 20% represents payment for confidentiality, you will owe income taxes on 20% of your settlement. The portion of your settlement that represents payment for confidentiality is taxable income. Didn’t expect to get a bill from the IRS when you settled your case, did you?

An Inside Secret from a Plaintiffs’ Lawyer

There’s a solution: NEVER agree to confidentiality! The defense lawyers will insist upon confidentiality at first, but they want to settle the case more than you. Just tell the defense lawyers that there will be no settlement if confidentiality is a condition. The defense lawyers will always back down, and you’ll get what you want.

In 20 years of practicing medical malpractice law, I have never agreed to a confidential settlement and this has never prevented a case from settling. Even after 20 years, defense lawyers will ask for confidentiality, but once they know you will never agree to confidentiality, they stop asking. Make a new policy today that you will never agree to a confidential settlement.

Have Questions?

If you have questions about your case, consult a dedicated attorney right away.