In April 2022, Tennessee rewrote its statute governing tort settlements involving minors. The legislature sought to decrease unnecessary costs, and so this rewrite removed the court-approval requirement in smaller settlements. Overall, this is good news as it will decrease unnecessary costs. But the legislature—as part of the rewrite—unfortunately removed the prior affidavit procedure and overlooked a specific subset of plaintiffs. This will have the unintended consequence of increasing costs for minors that are unrepresented by counsel.
Under the prior version of the statute, all tort settlements involving minors required court approval to ensure that the settlement was in the best interest of the minor. As part of this prior statute, if the settlement amount was less than $10,000, the court could forego a hearing and simply rely on affidavits from the parties to approve the settlement. Tenn. Code Ann. § 29-34-105 (effective July 9, 2012 to Apr. 26, 2022).
Although the prior statute had a solid reasoning, the actual procedure did not always work efficiently when the settlement amount was small, as explained by Tennessee Senate Minority Leader Jeff Yarbro: “And so you’ll have very small cases where in order to get a settlement approved, you’ve got to pull a kid who is no longer injured out of school, go sit in a courtroom, run up legal costs for both sides in a way that’s probably not necessary for the children, not helpful for the children, and doesn’t really further the real purposes that we had in passing this.” S.B. 2201, 112th Gen. Assemb., 60th Legis. Day (Mar. 30, 2022) (statement of Sen. Jeff Yarbro).
To fix this scenario and to minimize unnecessary costs, the Tennessee General Assembly rewrote the procedure. The new statute abolishes the need for court approval of settlements less than $10,000 if it is a lump-sum settlement and the minor is represented by an attorney. Tenn. Code Ann. § 29-34-105 (effective Apr. 27, 2022). The parties are free to settle out of court without needing any sort of court filing. But if the settlement is a structured settlement, involves an unrepresented minor, or is for an amount of $10,000 or more, then a court hearing and court approval are required. Id.
Although this will greatly save costs in many cases, it will have the unintended side effect of increasing costs for a subset of minor plaintiffs. In removing the court-approval requirement for settlements under $10,000, the General Assembly also removed the procedure for using affidavits, which previously was available for settlements under $10,000. This was likely done on the belief that the affidavit procedure would be unnecessary under the new procedure since settlements under $10,000 generally no longer require approval. But the cases that will now suffer from increased costs are small settlements where the minor is not represented by a lawyer. Under the old procedure, the court could rely on affidavits from the unrepresented minor’s legal guardian in approving the settlement. Now, unrepresented minors fall through the cracks—the minors still need court approval of small settlements, but the court can no longer rely on affidavits. Instead, the court is required to conduct a hearing in these small cases.
Overall, this new statute will be greatly beneficial for almost everyone in cases involving minors. But it will have a negative impact on minors who are unrepresented by a lawyer and can no longer rely on affidavits. Perhaps the General Assembly may recognize this omission in the coming years and reinstate the affidavit procedure for minors not represented by counsel. Until then, unrepresented minors now require a court hearing as opposed to being able to submit affidavits.
Besides this subset of plaintiffs, the statute is an improvement to the procedure, and it will greatly save costs for everyone involved in smaller settlements where the minor is represented by counsel.
The new statute is set out below in full:
Tenn. Code Ann. § 29-34-105 (2022).
(a) (1) In any tort claim settlement involving a minor, the court shall conduct a hearing at which the minor and legal guardian are present if the tort claim settlement:
(A) Is a settlement of ten thousand dollars ($10,000) or more;
(B) Is a structured settlement; or
(C) Involves a minor who is not represented by an attorney licensed to practice in this state.
(2) Notwithstanding subdivision (a)(1), the court may, in its discretion, conduct the hearing in chambers or by remote communication and may excuse the minor from attending the hearing.
(b) A tort claim settlement does not otherwise require court approval merely because it involves a minor.
(c) In the order approving a tort claim settlement authorized by this section, the court has the discretion to determine whether the settlement proceeds are to be paid to the minor’s legal guardian or held in trust by the court until the appropriate time.
