Settling the McKinney Dog Bite Case
The attempt to reach a resolution outside of court in the McKinney case involved putting together a settlement package. Settlement packages are a compilation of the liability facts, any witness statements, and damages. If applicable, the package may include medical illustrations or a medical summary that lays out the medical treatment to that point and what more is likely to be needed in the future. All of that was presented to the dog owner’s insurance company so it could evaluate its own case and place money in what is known as “reserve” to cover the cost of a potential resolution based on the evidence.
When an insurance company sets a reserve on a file or case, the insurance company is setting aside funds to potentially pay a claim. Reserve funds typically have to be invested in lower return, safer investments than non-reserved funds. Because the insurance company wants to make as much as possible in returns on premium dollars, there is a natural push back to limit those reserve funds as much as possible. The state however will periodically audit or review a certain portion of these files or claims for adequacy. Should the reserve be inadequate, the state can order those reserves increased. Should a high enough percentage of those claims or files be under-reserved, the state can order across the board increases in reserves. When that happens vice presidents of big insurance companies job’s are at risk. So, there is pressure to have rea reserves on a case or file. One of the goals of the initial settlement packet is to make sure that evidence is developed so that the reserve is set high enough to cover the eventual settlement. In the McKinney case, the insurance company was not interested in settling at the early stage of the demand.
The pre-filing time period is the time when insurance companies are likely to engage in a settlement, but often the more exposure the insurance company has to higher damages, the less likely they are to settle that early. That was the result in the McKinney case, so a lawsuit was filed and the case went on to the discovery stage. That involves paper discovery in which interrogatories, production, requests for disclosure, and sometimes admissions are put on the table. Then depositions are taken of witnesses to tie down stories and see what the facts are. In this stage of the case, the trial lawyer has to develop the evidence so that if the case is tried, the lawyer has what he needs in form for the trial, he knows what the other side has developed for the trial and he narrows issues and dispels misunderstandings about the evidence. At the close of this phase all sides typically have everything they expect to have ready for trial.
The next stage was the judge requiring a settlement conference with a mediator. If the dispute is resolved in mediation, it generally means neither party is 100 percent happy but the matter is settled. In the McKinney case, mediation failed to reach a resolution, so it went forward toward trial. Both sides prepared to pick a jury in a process known as voir dire. As we prepared to seat a jury, the insurance company reevaluated their position and finally offered enough money to the client that it was accepted and the case was settled.
Details of the Settlement
An agreement to settle does not necessarily mean the case is close to a conclusion. The terms of the settlement must still be negotiated, and in the McKinney case, there was an issue of whether confidentiality would be part of it. Eventually, the client was happy with the settlement agreement.
The key to getting a good final settlement is in the final wording, which is the details. It begins with the major terms of the agreement with the knowledge the details will be filled in later in the process. In the McKinney case, the defendant wanted a confidentiality agreement, but the plaintiffs persisted in rejecting that demand because of the nature of the case, a need to make the community aware of the existence of a dangerous dog situation and that there are consequences for not maintaining a safe situation.
The wording of the details must be dealt with carefully, or the agreement could end up creating rights for third parties that did not exist before to seek part of the injured party’s recovery, costing the plaintiff unnecessarily. The defendant’s side also faces a prospect of potentially paying out additional funds if care is not taken in the wording to make sure that folks with valid claims against the recovery are satisfied, so the final agreement often can take much time and effort.
Was the Client Happy with the Settlement?
The McKinney client had been closely involved in legal circles for many years and was aware of the different ways the case could have turned out. In this case, she was very comfortable with the final settlement.