Settlements of Municipal Legal Claims

Background

Civil lawsuits between private parties often end in confidential settlements - that is, the parties agree not to disclose the terms of the settlement. That practice is controversial because courts are public institutions and even more so when one of the parties to the litigation is a public entity. However, in 1991, when the Rhode Island General Assembly enacted legislation providing that “records reflecting the financial settlement” of legal claims against public bodies “shall be deemed public records” (RIGL 38-2-14, 1991 version), public entities lost some of their potential ability to keep lawsuits secret. This public-access statute is important for two reasons. First, lawsuits against municipal entities often allege some sort of “public” wrongdoing. To assess government performance and hold public entities accountable, citizens must have access to information about the behavior of elected officials and government employees. Second, financial settlements cost money and therefore impact municipalities by directly incurring costs or indirectly by affecting insurance premiums. Again, accountability is possible only if citizens have access to information about such costs.

A study conducted at the Taubman Center at Brown University last year made the first effort to test compliance with the law mandating public access to the financial terms of settlements of municipal legal claims. The researchers, with the assistance of members of Common Cause, identified two lawsuits in every city and town in Rhode Island and requested in writing the financial terms of the respective settlements. The requested information was provided in twenty-three of seventy-three cases, translating into a compliance rate of only 32 percent. This low level of compliance made the topic ripe for additional study, especially since the study concluded that a major obstacle to compliance was that municipal employees were often unsure of where to find the information. Has compliance improved since these problems were identified?

A second reason for studying this issue again is that the law was revised in 1998. Under the revised law, “settlement agreements of any legal claims against a governmental entity shall be deemed public records” (RIGL 38-2-14). This change clarifies that the entire settlement agreement, not just the financial terms of the settlement, is a public document. The difference can be particularly important in cases with both financial and non-financial components. Claims for sexual harassment or discrimination, for example, might ask for money damages and for an injunction against certain practices. A settlement agreement contains all terms, financial and otherwise, regardless of whether there was a confidentiality agreement. Last year’s study specifically requested the financial terms of settlements, since that is all that the 1991 law clearly covered. This year, in accordance with the 1998 amendments, we asked for the full settlement agreement.

Study Design

Last year, we identified an excessive tax suit and a personal injury suit in every city and town in Rhode Island and then requested the financial terms of the settlement from the Tax Assessor or the City/Town Solicitor, respectively. One drawback of this approach is that for some municipalities, the requested settlements were over five years old. After the study was published, some officials objected that these records were difficult to locate, especially since many city and town solicitors are private practitioners who keep their own files and were no longer in office when the information was requested. While that obstacle does not alter the fact that these are public records, it is arguable that the most important measure of public accountability is whether citizens can obtain information on developments in the past year. For this reason, and to insure that our requests were clearly covered by the 1998 amendments, the basic design of this year’s study was to request the settlement agreements for all cases settled between July 1, 1998 and June 30, 1999. Further, to keep the study manageable and to focus on the most important claims, we narrowed the inquiry to claims settled for more than $15,000 (the jurisdictional limit for Superior Court).

It is impossible to identify the terms of settlements against municipalities using the information available to the public through the Superior Court system. If it were possible, there would be no reason to do this study. The information available at the Superior Court Clerk’s Office rarely includes the financial terms of settlements. The computerized database provides extremely limited information on case disposition, generally indicating only whether a case remains active or has been dismissed. The terms of settlement are almost never included in the electronic record; they are almost never included in the actual court file either.

There is an organization in Rhode Island, however, that tracks the legal claims of many municipalities. It is called the Rhode Island Interlocal Risk Management Trust, commonly referred to as “the Trust.” The Trust was created by the General Assembly in 1986 in response to increasing insurance premiums and shrinking coverage for government entities. The new law allowed “city and town councils to jointly establish an insurance corporation, to obtain insurance, and to enter into a cooperative risk management program” (RIGL 45-5-20.1). As of June 30, 1999, the Trust, which is not-for-profit, covered 29 municipalities, 15 school districts and 26 other agencies, such as water and fire districts and libraries. The Trust handles virtually all of the claims against its members, including both the legal defense and the payment of any settlements or verdict.

Our study proceeded in two different ways, one for all public entities that are members of the Trust and another for all remaining municipal entities. For those entities that belong to the Trust, we asked the Trust directly to identify all cases it settled between July 1, 1998 and June 30, 1999. We asked that the list include the names of the parties, the attorneys, the dates of filing and settlement, and the financial terms of the settlement for all liability claims (except workers’ compensation). We also asked for the docket number if a legal action was filed. From this information, we identified all claims settled for more than $15,000 and then requested the settlement papers directly from the relevant public body.

Our initial request to the Trust was denied; the Trust argued that it was not subject to the Public Records Act. Disagreeing with that interpretation, we cited the relevant provisions of the law and expressed intent to complain to the Attorney General if compliance was not forthcoming. The Trust eventually complied, insisting that it did so voluntarily rather than out of legal obligation. The information received from the Trust allowed us to identify all cases settled for over $15,000 during the relevant time period. There were ten such cases. On January 3, 2000 we wrote to the ten relevant jurisdictions and requested the settlement papers for those cases.

For the remaining public entities, where we could not identify the cases in advance, we requested a list of all cases settled during the same time period. On December 2, 1999, we sent letters to the 31 jurisdictions (municipalities and school districts) not fully* covered by the Trust. We sent all of our correspondence to the city or town solicitor at the town or city hall for municipalities and to the superintendent for school districts. The Trust also covers some “special districts,” but because we had difficulty identifying non-Trust “special districts,” we decided to limit our scope to schools and municipalities. As responses to our requests for lists of cases came in, we followed up where appropriate with requests for the settlement papers of specific cases where the payment exceeded $15,000. Some solicitors refused to compile a list of cases, and in those cases we usually resorted to asking for the settlement agreements for all the cases settled, regardless of dollar amount. Also, some solicitors referred us elsewhere for the information. In those cases, we sent a letter as directed (except in the few cases where we were told, incorrectly, that the information was available from the court).

We sent follow-up letters to all the entities that did not respond to our initial request after at least a month. We also sent follow-up letters to anyone who requested more information or to those who said they would respond to us but after several weeks had not. We limited the number of follow-up letters to two, given the time constraints of the study and the fact that a single failure to reply constitutes a denial under the law. We retained copies of all correspondence sent and received.

Findings

In simple overall terms, we reached a satisfactory conclusion with 29 of 41 entities with which we interacted. (See Appendix F) This means that we found out how many cases were settled and got the settlement papers for any cases over $15,000. This translates into a 71% compliance rate, a significant improvement over last year, but still one that indicates significant room for improvement. Municipalities responded at a 65% rate, and 76% of school departments replied satisfactorily. The response from members of the Trust was considerably higher than from those not insured by the Trust. We obtained a satisfactory response from 82% of those in the Trust, but only 67% from those not in the Trust. The request to non-Trust members was more complicated, though, since we had to ask them to identify the relevant cases and provide settlement papers. With the Trust members, we knew the cases by name and requested only the settlement papers.

Overall, we made 17 requests for settlement agreements. Those were the number of cases we ultimately identified that were settled for over $15,000 during the specified time period. (The Trust provided information to identify 10 of those cases; City and Town solicitors who responded to our initial inquiry identified the other seven.) We received the actual settlement papers in 12 of the 17 cases, for a compliance rate of 71 percent. Again, compliance was much better (but still not complete) from members of the Trust. Non-members provided settlement papers in identified cases only half the time. Considering that the cases at issue were all recent and that the law is absolutely clear that these are public documents, this response rate is not satisfactory.

Conclusions

These results suggest three problem areas regarding public access to municipal legal settlements: failure to reply, unwillingness to provide useful information, and poor information management.

While there was improvement from last year, there were still a number of public entities that simply did not respond to a written request for information. Thirteen entities did not respond to our first letter. Six of those did not even respond to a follow-up letter. In three other jurisdictions, we never received a responsive reply, while never explicitly denied the information, we were either asked for more time or more information (which is not necessary, as evidenced by the ability of so many other jurisdictions to provide responsive replies). Our first recommendation then, is for municipalities to take requests for public information more seriously, and this message must be strongly conveyed to the city and town solicitors. Some of the least responsive jurisdictions in this study were similarly unresponsive last year.

Second, while some offices replied to our requests promptly and completely, others were very hesitant to provide the requested information. We encountered two obstacles. Some argued that they are not required to “compile” information, citing the provision of the Public Records Act that states “Nothing in this section shall be construed as requiring a public body to reorganize, consolidate, or compile data not maintained by the public body in the form requested at the time the request to inspect the public records was made except to the extent that such records are in an electronic format and the public body would not be unduly burdened in providing such data” (RIGL 38-2-3 (f)).

It is debatable whether this provision applies to requests for information about the settlement of lawsuits against municipalities. The narrow interpretation urged by a few jurisdictions would mean that one could request settlement information only if they already knew various details of the case. Moreover, this interpretation would render it impossible for citizens to obtain aggregate information about municipal legal claims. In a few instances, when solicitors were intransigent, we simply requested all the settlement agreements within our parameters (excluding the $15,000 limit), and dropped our request for a list of settlements. We had somewhat better results with this technique.

Still, there are obvious problems for entities that do not belong to the Trust. For those entities, there is often no central repository of information on civil settlements, which makes it difficult for anyone to obtain a full picture of a municipality’s settlements. Thus, all entities, particularly those that do not belong to the Trust, should evaluate how they manage their legal information, both for their own good and to make what is public information accessible to the public. Perhaps a list of all settlements should be posted on a central Rhode Island web site annually, with information on how to obtain copies of settlement agreements if desired. This would serve the public by making important information readily available.

Finally, the Trust is an integral part of public insurance in Rhode Island and an important repository of public records. Many of the problems surrounding access to information about municipals claims could be solved if the Trust routinely made claims information public. They already compile this information, and they recognize at least implicitly that it is public information. Leaving dissemination of this information entirely to its members impedes public access. While members of the Trust were more responsive to requests than non-members were, there is still room for improvement, and those problems would be solved if Trust, which was created by the General Assembly, would recognize that it is covered by the Public Records Act and act accordingly.

Appendices

Appendix F: Settlements of Municipal Legal Claims