OPEN SETTLEMENT BILL

A suggested draft

by

Health Administration Responsibility Project, Inc.

Harvey S. Frey MD, PhD, Esq., Director

(310) 394-6342 hsfrey@harp.org

A Bill to:

add Civil Code Section 1668.1

THE PEOPLE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. The Legislature finds and declares as follows:

No person or organization should be required by law to suppress evidence of wrong-doing.

(1) Some organizations, when they have been sued for acts or policies which adversely affect public health or safety, represent consumer fraud, or violate regulations or laws, will offer a settlement conditioned on the silence of the plaintiff and his attorneys.

(2) The legislature finds that acceptance of money in return for silence about wrong-doing is repugnant, unethical, and possibly illegal. Therefore, as a matter of public policy, no legal organization or attorney should be bound by such a confidentiality clause from disclosing, to regulatory agencies or consumer groups, information about such acts or policies by the non-client party.

(3) Such gag clauses are already barred in cases involving other licensed entities, such as physicians and attorneys.

SECTION 2.

Civil Code Section 1668.1 is added to read:

1668.1. (1) In any agreement settling litigation or arbitration, any clause shall be null and void as against public policy if it requires that any party or his attorneys suppress information concerning another party's acts, omissions, or policies which

(a) are subject to oversight by any regulatory agency or licensing body, or

(b) may reasonably be considered to violate any law or regulation relating to, or adversely affect, public health or safety, in such areas as, for example,

(1) product safety,

(2) consumer protection,

(3) health care,

(4) health insurance,

(5) managed health care, or

(6) consumer fraud or misrepresentation.

(2) Violation by a party of any clause as defined in paragraph (1) shall not be considered a breach of the agreement, nor justify any failure of the other party to perform in full under the agreement.