2–64. Purpose and extent
See FTCH § II, G for discussion of methods of negotiation.
a. Undertaking negotiations.
(1) The purpose of negotiating is to reach a prompt agreement to settle a claim at an amount that is fair to both the claimant and the United States. If the parties cannot agree on an amount, they should clearly define the liability and damages issues in the event suit is filed under the FTCA or AMCSA or an administrative appeal is brought. Because claims statutes represent a partial waiver of sovereign immunity, the legislative intent behind them clearly authorizes the government to pay meritorious claims in a fair amount.
(2) From the outset of a claim, claims personnel should fully inform the claimant or the claimant’s representative about the applicable procedures and, when indicated, the nature and extent of the government’s investigation. A meaningful negotiation is usually enhanced by the mutual exchange of information derived from both sides’ investiga- tions. Where a claim is barred or excluded from jurisdiction, as by the incident-to-service doctrine or the statute of limitations, claims personnel should inform the claimant that an investigation of the merits either is not necessary or, if undertaken, may be limited in extent.
(3) Where negotiations result in an irreconcilable difference in the value of the claim or interpretation of law, consider mediation prior to making a final offer.
b. Admissions of liability. Government representatives should not make admissions of liability, either written or oral,
during negotiations. This is standard procedure whether or not a judicial remedy exists. Such statements constitute admissions against interest which are admissible in evidence.
(1) It is not necessary to admit liability to settle a claim. Admitting liability may even make settlement more difficult to achieve. Many claims settlements represent a compromise, reflecting all the strengths and weaknesses of the
claimant’s claim on liability and damages. Admitting liability removes any incentive to compromise that a strong government case might present. It creates the impression that the claim should be settled for full value, regardless of factual or legal strengths or weaknesses. For example, if the government is able to raise a meritorious contributory negligence defense, it may justifiably reduce the settlement offer. Admitting liability eliminates any chance to do this. (2) During negotiation of FTCA claims, withholding an admission of liability forces the claimant’s attorney to assess the risks of litigation. This represents a real incentive to settle, considering the time and expense involved in litigation as well as its uncertain results. Withholding an admission of liability also serves to encourage the claimant’s attorney to cooperate in investigating the claim.
(3) There are several ways to settle claims without admitting liability. The simplest and most effective way is to shift the focus of discussion from liability to damages. For example, telling a claimant’s attorney that the parties need to discuss damages rather than liability usually suffices to turn most attorneys’ attention to settlement.
(4) When the government’s own investigation establishes liability, it is counterproductive to require the claimant’s attorney to prove liability, through either written opinions from hired experts or letters or memoranda citing legal authorities. Insisting on a full-scale showing not only increases the claimant’s legal costs, but also indicates to the claimant’s attorney how strong the claim is and, hence, its higher value.
(5) The amount of the compromise settlement should represent a reduction in the claim’s full value in accordance with the strength of the arguments mitigating full values, whether based on comparative negligence or uncertainty as to the injuries.
c. Claimant interview. When the initial claimant interview has been limited to liability issues request an additional
interview to gather information about damages. See paragraph 2–23b(10) for information on how to interview on damages.
d. Knowledge of facts. Settlement is not possible without a full understanding of the facts. To this end, obtain as
much firsthand knowledge as possible. When a factual disagreement develops, try to resolve it. If the disagreement arises because the claimant’s attorney does not understand the case, try to disclose the facts that your investigation has developed through IMEs, interviews, or site visits. For example, if the parties disagree about whether an intersection is blind, offer to visit the scene and show the attorney the intersection. Never allow the disagreement to escalate into a dispute. Simply state, for example, what you saw when you visited the scene. The claimant’s attorney should realize that your position is stronger because it is based on direct investigation.
2–65. Who should negotiate
a. Obtaining advance authority. Determining who is the appropriate officer to negotiate a settlement is directly
related to the amount of the claim, the authorized settlement and approval limits of various claims officials and the statute that the claim falls under. Settlement and approval limits are set forth at paragraph 2–69. An AAO or, upon delegation, a representative of an ACO or CPO may settle a claim in any amount subject to approval by higher authority, in accordance with the settlement limits that are authorized. An AAO need not obtain advance authority from the DOJ or DA when the settlement amount will not exceed USARCS’ authority: $200,000 for FTCA claims and $25,000 for MCA claims. A USARCS representative will conduct advance discussion with the DOJ when implement- ing regulations require it. See 28 C.F.R. § 14.6(b). If the settlement amount is subject to approval by a higher authority, let the claimant know this at the outset. If the claimant states a preference for direct negotiation with the DOJ or the Army General Counsel, tell the claimant that the FTCA does not confer upon the DOJ authority to settle any agency claim during its administrative stage. Under other statutes, only the Commander USARCS represents the Army.
b. Authorized settlement limits. An ACO, a CPO, or Claims Service may settle any claim in a stated amount within
his or her authority as set forth in paragraph 2–69. Where a claim’s stated amount exceeds the settlement authority, the ACO or CPO and the AAO will determine who should settle. Because they can and do settle many claims for higher amounts, it is not proper for the ACO or CPO to inform a claimant that only USARCS exercises jurisdiction on claims seeking amounts over the ACO’s or CPO’s delegated authority. Moreover, USARCS has made it a case-by-case practice to delegate greater authority to ACOs or CPOs with the requisite ability and experience.
c. Responsibility of negotiator.
(1) The ACO or CPO should try to negotiate a tentative settlement. Non-attorney claims personnel may conduct negotiations only with a claimant or a non-attorney. Only an attorney should negotiate with a claimant’s attorney. All persons who negotiate for the government should always disclose that they are seeking a tentative settlement.
(2) After reaching the tentative settlement, the attorney who settled the claim will prepare a settlement memorandum with the AAO’s help.
(3) Forward the settlement memorandum to the appropriate settlement or approval authority for approval of the tentative settlement. Once the settlement is approved, forward it for payment as outlined in Section X, Payment Procedures.
d. Disclosure of settlement authority. For claims in which the settlement amount exceeds the negotiator’s settlement
authority, disclose appropriately, following these guidelines:
(1) Always explain the settlement procedure to a claimant’s attorney before negotiations begin, summarizing the limits of settlement authority existing within both the Army and the DOJ. Otherwise, the claimant’s attorney will
assume that authority exists for any offer the negotiator makes. Explain that the DOJ must approve any FTCA settlement over $200,000, and that a delegee of TJAG or the Secretary of the Army, as appropriate, must approve settlements over $25,000 for the MCA, and $100,000 for the AMCSA or FCA.
(2) A settlement made by one who lacks authority is void. It is a source of potential embarrassment both to the Army and to the individual who negotiates it. Any such settlement is certain to create difficulties in managing the case. (3) Avoid disclosing specific instructions included in a grant of negotiating authority for a specific claim, except in the most unusual case after consulting the AAO.
2–66. What should be compromised
a. Special damages.
(1) Practically any claim, regardless of amount, may be compromised through direct negotiation. Scrutinize small property damage claims for governmental liability and damages and compromise accordingly. Damage estimates should be reviewed by either well-trained claims personnel or an expert to determine if the repair costs and the parts to be repaired are justified. Similarly, have a government physician scrutinize medical bills and records to determine whether the care furnished was reasonable and necessary. The fact that an insurer paid a certain amount to its insured does not govern the extent of the Army’s liability. The insurer, as subrogee, stands in the shoes of its insured as subrogor, and so is entitled to only that amount to which the subrogor is entitled.
(2) In cases of companion claims, where an insurer demands immediate payment on behalf of its insured, the negotiator should offer less than full value at first because the AAO must authorize all split payments. Once the offer is made, the ACO or CPO should consult the AAO. Review Section VI, Determination of Damages, and ensure that all special damages are justified before approval. The claimant should support past lost wages with income tax forms and future medical costs with a competent medical opinion. Where the proof is questionable, negotiate a lesser amount.
b. General damages. These are not only difficult to estimate but they are also the award component most subject to
fluctuation in amount. The difficulty may be alleviated by studying past medical records and conducting interviews with the claimant, family and friends or acquaintances. Obviously, special damages are easier to quantify and negotiate than are general damages. While the claimant may agree to accept reductions in special damages, the claimant may cancel out any reduction by demanding higher general damages. The key to negotiating general damages is learning what amount the claimant will accept as settlement. In view of the tort reform legislation pending in Congress at the time of this writing, which seeks to limit general damages on FTCA awards, the DOJ’s current position severely limits the acceptable general damages amount in an administrative settlement. This policy has succeeded mostly because in those jurisdictions well known for “runaway” general damage awards granted either by judge or jury, FTCA adminis- trative settlements still occur frequently. Perhaps this approach is succeeding also because of the length of time required to obtain a final judgment. In an all too typical situation, after various appeals, a brain-damaged baby whose claim is filed by age two does not receive compensation for personal injuries until reaching age eight. By regulation, a $500,000 damages cap has been set for MCA and NGCA claims. See AR 27–20, paragraph 3–5a(3)(h) and paragraph 2–53 of this publication. Damages under the FCA will be limited by host country law. General damages under the FTCA should be scaled accordingly.
c. Compromising statute of limitations cases. Whether or not a claim has been timely filed is a question of fact that
should be answered only after a thorough investigation, including questioning the claimant, treating physicians and anyone else who cared for the claimant during the relevant time period. See paragraph 2–23 b(11). If a thorough investigation does not reveal a definitive answer, then consider compromise and consult the USARCS AAO, who will coordinate with the DOJ as needed. The claim settlement value should reflect the unresolved statute of limitation issue and the fact that the claimant might not recover damages if the case was successfully defended at trial on the basis that it was not timely filed. Claims personnel frequently compromise large claims involving serious injuries, such as brain damage and quadriplegia, with structured settlements that address the claimant’s lifelong medical and personal care expenses through the use of a reversionary medical trust, which provides an immediate payment award sufficient to cover past expenses and attorneys’ fees, taking the statute of limitation issue into account.
2–67. How to negotiate
a. Extent of preliminary instructions. Successful negotiation is a matter of style and temperament. Good practice
dictates against instructing the chosen negotiator in too much detail how to reach agreement at the authorized settlement amount. Nevertheless, the DOJ’s informal policy is to start low to approach a fair settlement. In fact, the DOJ requires that all settlement memoranda sent to it for approval include a negotiation history. Keep the DOJ’s policy in mind. It is usually not too difficult to "start low" since most claimants file for amounts much higher than what they deserve or reasonably expect. Once claimants file suit, it is difficult to obtain an increase in the amount claimed, 28 U.S.C. § 2675(b), FTCH § I, B6e.
b. Caution in formulating offer. The ability to conclude a successful negotiation depends in large part upon
determining what the claimant will accept. For example, when a claim seeks $1,000,000 and the government evaluates the claim at $200,000, the government should not open with an offer of $175,000 unless the negotiator knows that the claimant is willing to enter into meaningful negotiations from that starting point. The government, by offering
$175,000, then enters any pretrial settlement conference with the potential to split the difference between $175,000 and $1,000,000.
c. Preliminary knowledge. Knowing the other attorney’s reputation and background, including his or her ability to
try cases, assists in determining the negotiation methods. When attorneys are expected to split their fees, the likelihood of executing an administrative settlement is enhanced since the referring attorney’s fee will be reduced if there is a trial. Refuse to negotiate with a paralegal or junior attorney; deal only with the attorney empowered to make the decision. When negotiating a disputed claim with an insurance company, deal only with its senior adjudicator or attorney. Prior to any negotiations, make sure that the attorney has obtained authority to settle from the client and secure a promise that the attorney will pass your offer to the client in accordance with the legal profession’s ethical requirements. Remember that you are dealing with the claimant through an attorney and your aim is to meet the claimant’s desires, not the attorney’s. Always refer a claimant’s direct inquiry (for example, a claimant’s complaint to a member of Congress) to the attorney. In a delegated claim within USARCS’ authorized jurisdiction, negotiate in person, at least initially. Subsequently, it is permissible to use the phone or e-mail. A personal relationship with the claimant’s attorney is always best.
d. Initial offer. It is hoped that following these guidelines will assist in formulating and determining the govern-
ment’s initial offer. If the negotiator is uncertain, ask the claimant’s attorney for a demand. If the response is meaningless, do not make an initial offer of $175,000 (when the authorization is $200,000 and demand is $1,000,000.) A better initial offer would be $100,000. If the attorney will not name a figure, ask the attorney to identify the key elements of damages and deal on a point-by-point basis. Successful negotiation is conducted through dialogue. Try to start a dialogue by identifying the disputed points. Do not mention a figure unless you intend it as an offer. To continue with the above example, do not state that the offer is $100,000 but you will go to $150,000 if the attorney will come down. By doing so, you have offered $150,000 without forcing your opponent to drop below the $1,000,000 claimed. Never bid against yourself! Never raise your offer in the absence of a reasonable counteroffer.
e. Final offer. If an impasse is reached, do not immediately make a final offer. Wait until the attorney has had time
to reflect. Make certain the attorney knows that once suit is filed, the case is no longer under the Army’s jurisdiction. If the attorney demands a written confirmation of your verbal offer, do not provide such an offer. A written offer’s only legitimate purpose during negotiations is to provide the opposing attorney the means to convince the client that the latter’s expectations are unreasonable. In this situation, write a letter for the claimant’s consumption. Include your arguments, not merely a figure. In a FTCA case, a final offer may be in order when there is no reasonable expectation of continued negotiations. When the six-month administrative period for filing suit has expired and meaningful negotiations have never commenced, inform the claimant’s attorney that suit may be filed at any time as there is no reasonable expectation of a settlement. When administrative appeal, not suit, is the next step, a notice containing a final offer, detailing the reasons therefore, is in order so that an informed appeal may be made.
2–68. Settlement negotiations with unrepresented claimants
a. An ACO or CPO deals with unrepresented claimants in four situations:.
(1) When investigating the incident before the claim is filed.
(2) When the claimant seeks information about filing a claim against the United States.
(3) When the claims attorney or investigator seeks to interview or obtain information from the claimant after the claim has been filed.
(4) When attempting to settle the claim.
b. Establishing trust. When dealing with unrepresented claimants in these situations, follow the principles outlined
below. Certain disclosures are intended to foster an atmosphere of trust and confidence. They may be made orally or in writing. If making oral disclosures in an interview with an unrepresented claimant, prepare a memorandum for record and place it in the claim file. These disclosures should be made in writing, however, if it appears that these matters may form the basis of a dispute.
(1) Fully explain the administrative claims process to an unrepresented claimant.
(2) CJAs and claims attorneys must disclose their status as attorneys. Claims personnel who are not attorneys will not represent themselves as such or create the impression that they are attorneys.
(3) Claims personnel should not indicate, or create the impression, that they are disinterested in the outcome of the claim. Accordingly, claims personnel should tell the claimant that they represent the United States and not the claimant.