Minor’s Compromise Hearing

When we settle a child’s bodily injury claim, in most states a judge has to approve the settlement. This is required because a minor cannot enter into a contract, and the state wants the child to be treated fairly. The details about the claim and settlement are filed at court. After that, there usually is a hearing. This is “nonadversarial,” meaning that only the child, his parents and their attorney are present. The hearing lasts only a few minutes, and should be regarded as a short ceremony to celebrate the end of a bad chapter in the family’s life together. 

The parent or parents who will appear at the hearing need to do a little bit of preparation:

  • Read the petition, its exhibits, and the order of approval.
  • Review the accounting and make sure you understand where the settlement money is going.
  • Review the annuity proposal that you selected for a structured settlement, and ask your attorney any questions you may have about it.

The child also needs to be prepared. Tell him or her to be very respectful and polite to everyone at court. The judge will love being addressed as “Your Honor,” so make your child practice saying “Yes Your Honor,” “No Your Honor” and “Thank you Your Honor.”

It is not possible to predict exactly what will come up in the hearing. Nevertheless, some typical dialogue appears in the next section. Review it but do not memorize it.

The three key points you have to remember:

1. First, you are informed. You read the documents which were filed at court, you understand them, and you agree with them.

2. Second, you want the settlement. This is a fair settlement, and the expenditures are also fair. You want the settlement.

3. Third, you have no questions and no doubts.

If the judge senses that you are not informed, do not quite understand the settlement, are unsure whether you agree with it, or that you have questions about it, there will be no approval and therefore no settlement.

So inform yourself, ask your questions before the hearing, and attend the hearing with a clear mind and happy attitude!

A Typical Exchange At the Minor’s Compromise Hearing

Judge: I take it you are the father of the injured minor?

Parent: Yes Your Honor.

Judge: Have you read the petition?

Parent: Yes Your Honor.

Judge: Do you agree with it? Is it correct?

Parent: Yes Your Honor. I agree with it and it is correct.

Judge: Is there anything that you want to ask me or your attorney about it?

Parent: No Your Honor.

Judge: How is your child doing now?

Parent: He is doing fine.

Judge: Does he have any complaints about what happened, any aches and pains?

Parent: He does not have any complaints, aches or pains. He has a scar on his cheek, which you can see.

Judge (to the boy): Let me see you. Come closer. How are you doing today?

Boy: Fine, Your Honor.

Judge: You look great. You are not afraid of dogs, are you?

Boy: No Your Honor. We have a dog. I like him.

Judge: Well that is just fine. You can go back and stand next to your father. (To the father:) Have you decided whether to give him any more medical treatment?

Parent: We have discussed it. We do not think this is the right time. If he wants it in the future, we can do something then.

Judge: Okay. You understand that this is a final settlement, and that you are not going to be able to get anything else except what has already been agreed to?

Parent: Yes Your Honor.

Judge: You have asked your attorney all the questions you have about this?

Parent: Yes Your Honor.

Judge: Do you recommend the settlement to this Court?

Parent: Yes Your Honor.

[The judge thereafter asks the child’s lawyer several questions about the settlement.]

Basic Information Needed Before Drafting the Closing Documents

Here are the questions that an attorney must get answers to before drafting the documents needed to set a minor’s compromise hearing:

  1. Who are the lienholders and how much is each lienholder seeking?
  2. How much less (if any) will each lienholder agree to accept?
  3. Which health care providers are owed money for the child’s treatment, irrespective of liens?
  4. How much less (if any) will each health care provider agree to accept?
  5. Were any treatment costs paid by the victim’s health insurance?
  6. If so, how much less (if any) will the health insurer agree to accept?
  7. Which court will hear the petition or complaint?
  8. Which attorney will appear for the hearing?
  9. If the attorney is not the one handling the case in general, how much will this attorney charge?
  10. How much does the court charge as a filing fee?
  11. Will the defense pay for the court filing fee?
  12. Does the court require the appointment of a guardian other than one or both parents?
  13. If an unrelated guardian is appointed, what will he or she charge as fees and costs? (Find out the likely amount and also the highest amount so that enough funds can be reserved.)
  14. Will the defense pay for the guardian’s fees and costs, if there is an unrelated guardian?
  15. Is the guardian or conservator required to post a bond?
  16. Will the defense pay the cost of the bond?
  17. Do the parents need to be reimbursed from the settlement?
  18. If so, how much reimbursement do they seek?
  19. Are there receipts to justify the amount of reimbursement being sought?
  20. Does the court require an affidavit from the parents in support of their request for reimbursement?
  21. Does the court require the attorney to present a detailed breakdown of services rendered and hours expended?
  22. If so, how much detail is required?
  23. Will the court approve a contingency fee in the amount of 33-1/3% or whatever has been stated in the Attorney Retainer Agreement?
  24. If not, what rate will the court approve?
  25. Are the attorney’s recoupable costs deducted before the fee is calculated?
  26. Is the parental reimbursement amount (if any) deducted before the fee is calculated?
  27. Are the medical expenses deducted before the fee is calculated?
  28. Are the parents required to pay a portion of the attorney’s fee and recoupable costs from their reimbursement?
  29. Do the parents feel that any settlement money should be set aside for medical treatment prior to the child turning 18 years of age?
  30. If so, how much money should be set aside for the child?
  31. Is the child’s money required to be deposited into court, and is there a fee for this?
  32. What is the name and address of the bank where the funds will be kept?
  33. If there are funds in excess of the amounts required to pay all of the foregoing, should they be invested in an annuity?
  34. If so, how much should be paid to the child upon attaining 18 years of age?
  35. Assuming there will be more money in the annuity, at what intervals should the child be paid after age 18?
  36. Has the attorney obtained an annuity payment schedule (or “quote”) in writing?
  37. Is the annuity issuer a highly rated life insurance company?
  38. If the annuity issuer is a “straw company,” is there a written guarantee from the life insurance company?

Expedited procedures in some jurisdictions

The State of Maryland has a statutory process for closing a bodily injury case in which the victim is a minor, so a court appearance is not required. Under section 13-403 of the Estates and Trusts laws, the “person responsible for the payment of the money” (defined as including the minor/guardian’s attorney, any defendant, and insurers) shall make the check payable to “______, trustee under Title 13 of the Estates and Trust Article, Annotated Code of Maryland, for ______, minor.”  Issuance of a check in this manner establishes the person named on the check as the legal trustee of the proceeds. Nothing further is required; there is no need for a “friendly suit” or judicial review of the settlement and disbursements.

Georgia takes a similar approach. In Georgia, if the gross settlement is $15,000 or less in a child’s injury case, the natural guardian may compromise the claim without becoming the conservator and without court approval. O.C.G.A. §§ 29-3-1, 29-3-3(c). When settling a claim with a natural guardian who has not been appointed as conservator, the settlement proceeds should not be paid until the natural guardian has executed and delivered an affidavit attesting that (1) the value of all the personal property of the minor, including the net settlement proceeds, will not exceed $15,000 in value; (2) no conservator has been appointed for the minor’s estate; and (3) the affiant is the natural guardian of the minor. O.C.G.A. § 29-3-1. A settlement that complies with all of the foregoing rules will be final and binding upon all parties, including the minor. O.C.G.A. § 29-3-3(i). 

Many courts have forms for use in connection with the approval process. It is essential for the attorney to determine whether using the forms is mandatory, and whether the wording of the forms can be changed without having to provide a brief. For example, Georgia has a set of forms and Attorney Phillips has routinely added language to the final Order. California has a set of forms, the use of which is mandatory, and they cannot be changed.

Some courts provide an expedited procedure for the approval of a child’s settlement, which might not require a court appearance and might also have its own set of forms. In California, for example, a settlement less than $50,000.00 may qualify for expedited treatment (no court hearing) under the following rule:

2013 California Rules of Court – Rule 7.950.5 Expedited petition for court approval of the compromise of, or a covenant on, a disputed claim; a compromise or settlement of a pending action; or the disposition of the proceeds of a judgment

(a) Authorized use of expedited petition

Notwithstanding the provisions of rule 7.950, a petitioner for court approval of a compromise of or a covenant not to sue or enforce judgment on a minor’s disputed claim; a compromise or settlement of a pending action or proceeding to which a minor or person with a disability is a party; or disposition of the proceeds of a judgment for a minor or person with a disability under chapter 4 of part 8 of division 4 of the Probate Code (commencing with section 3600) or Code of Civil Procedure section 372 may, in the following circumstances, satisfy the information requirements of that rule by fully completing the Expedited Petition to Approve Compromise of Disputed Claim or Pending Action or Disposition of Proceeds of Judgment for Minor or Person With a Disability (form MC-350EX):

(1) The petitioner is represented by an attorney authorized to practice in the courts of this state;

(2) The claim is not for damages for the wrongful death of a person;

(3) No portion of the net proceeds of the compromise, settlement, or judgment in favor of the minor or disabled claimant is to be placed in a trust;

(4) There are no unresolved disputes concerning liens to be satisfied from the proceeds of the compromise, settlement, or judgment;

(5) The petitioner’s attorney did not become involved in the matter at the direct or indirect request of a person against whom the claim is asserted or an insurance carrier for that person;

(6) The petitioner’s attorney is neither employed by nor associated with a defendant or insurance carrier in connection with the petition;

(7) If an action has been filed on the claim:

(A) All defendants that have appeared in the action are participating in the compromise; or

(B) The court has finally determined that the settling parties entered into the settlement in good faith;

(8) The judgment for the minor or disabled claimant (exclusive of interest and costs) or the total amount payable to the minor or disabled claimant and all other parties under the proposed compromise or settlement is $50,000 or less or, if greater:

(A) The total amount payable to the minor or disabled claimant represents payment of the individual-person policy limits of all liability insurance policies covering all proposed contributing parties; and

(B) All proposed contributing parties would be substantially unable to discharge an adverse judgment on the minor’s or disabled person’s claim from assets other than the proceeds of their liability insurance policies; and

(9) The court does not otherwise order;

(b) Determination of expedited petition

An expedited petition must be determined by the court not more than 35 days after it is filed, unless a hearing is requested, required, or scheduled under (c) or the time for determination is extended for good cause by order of the court.

(c) Hearing on expedited petition

(1) The expedited petition must be determined by the court without a hearing unless a hearing is requested by the petitioner at the time the expedited petition is filed, an objection or other opposition to the petition is filed by an interested party, or a hearing is scheduled by the court under (2) or (3).

(2) The court may on its own motion elect to schedule and conduct a hearing on an expedited petition. The court must make its election to schedule the hearing and must give notice of its election and the date, time, and place of the hearing to the petitioner and all other interested parties not more than 25 days after the date the expedited petition is filed.

(3) If the court decides not to grant an expedited petition in full as requested, it must schedule a hearing and give notice of its intended ruling and the date, time, and place of the hearing to the petitioner and all other interested parties within the time provided in (2).