What is the Effect of a Release in a Personal Injury Settlement?

When a defendant settles a case, the plaintiff’s attorney is presented with a release. It is a document that ends the case against the settling defendant. It “releases” and “holds harmless” the opposing party from liability for a particular claim or set of claims being brought against it.

In Massachusetts, as in most states, releases are treated no differently than basic contracts in terms of the court’s interpretation of them. Therefore, any ambiguous language in the release will be construed against the party who drafted the release. The release is most typically drafted by the defendant’s insurer. The client’s attorney will surely review the release and be mindful of the consequences. One issue that requires great care is releasing a defendant while other parties remain in the litigation. Thus, when adding language to the release, one must be sensitive to the effect that overly specific and/or overly general language might have on a client’s rights. In Atlas Tack Corp. v. DiMasi, 41 Mass. App. Ct. 429 (1996), the Supreme Judicial Court held that a party can reserve claims against other parties when those parties and/or claims are explicitly mentioned in the release. But I did say one must be sensitive to the effect of overly specific language. By that I mean the language should contemplate the existence of many potential defendants. Otherwise, if a claim is brought against a defendant not explicitly reserved in the release, trouble may follow.

The standard language in releases can be broad enough to include acts of the particular defendant from the beginning of the world to the present time, and even beyond. The goal is to protect the insurer and insured from ever having to pay again for the particular injury, even if that injury should become worse than expected. Without getting that signature on the document, the insurer won’t pay. The time, therefore, for the attorney and the client to discuss the longterm implications of the injury is before he/she puts pen to paper. Additionally, the attorney and client must focus on the advisability of settling with one defendant while leaving other defendant(s) in the litigation. In light of the Atlas case, good legal practice dictates a very carefully worded exclusion or reservation in the release, one that contemplates a continuing action but against another party.

I don’t want to give the impression that signing a release is like going to the dentist. Usually, it represents the end of a case unless there are additional parties out there. For the most part, though, the language in releases is on the mark: it is “full and final”.