Petersen v. United States of America

Background

Joan Peterson filed a wrongful-death medical-malpractice case under the Federal Tort Claims Act against the United States, alleging that health-care professionals at a Department of Veterans Affairs hospital caused Frank Servantez’s death. Peterson also sued Bio-Medical Applications of Minnesota, Inc., among others. She reached a confidential settlement with Bio-Med in August 2023 and settled with the Department of Veterans Affairs in September 2024.

The court approved Peterson’s sealed amended petition for distribution of the settlement proceeds and entered a sealed order describing distributions to Servantez’s next of kin, attorney fees, and costs. The United States paid the settlement to Peterson and her counsel. Peterson then received notice that, beginning December 1, 2024, her Dependency and Indemnity Compensation benefits would be offset by the full amount of the settlement. She appealed that decision, arguing in part that she had not received the entire settlement because the court’s distribution order required payments to others.

Motion and Arguments

Peterson moved for permission to disclose the sealed distribution order to the Board of Veterans Appeals. The United States opposed the motion, arguing that Peterson had sought confidentiality for her own benefit, that disclosure of the United States settlement could affect its value, and that disclosure could prejudice the government by potentially increasing the total amount Peterson received from the settlement and ongoing benefits.

Court’s Analysis

The court explained that a federal court has authority over its own records and may decide whether to seal or unseal a document based on the facts and circumstances of the particular case. It found that Peterson’s benefits were being reduced based on an apparent misunderstanding that she kept the entire settlement amount.

The court rejected the United States’ arguments. It stated that parties in an adversarial case are expected to act in their own interests and that the requested disclosure was not public disclosure of the settlement agreement. The court also found no merit in the argument that disclosure would result in the United States paying twice. The settlement agreement anticipated that the Veterans Benefits Administration would reconsider Peterson’s benefits in light of the settlement, and the distribution order detailed how the proceeds were allocated. The court considered it reasonable that any necessary adjustments would be made while avoiding duplicate payments or overpayments.

Disposition

The court granted Peterson’s Motion for Leave to Disclose Sealed Order Approving Distribution of Settlement Proceeds. Peterson may disclose the sealed order docketed at CMECF No. 97 to the Board of Veterans Appeals only to show that she did not receive the full settlement amount and to allow the Department of Veterans Affairs to recalculate her benefits if appropriate.

Peterson must mark the order “CONFIDENTIAL – SUBJECT TO COURT ORDER” and submit it to the Board together with a copy of the court’s order authorizing disclosure. The court did not include Peterson’s proposed statement that good cause supported disclosure or that the Department of Veterans Affairs was bound by statutory confidentiality obligations.