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Remarks of Peter Steenland, Section Chair and Senior Counsel for ADR at the Department of Justice:
Mr. Steenland welcomed the 45 attendees to the Department of Justice for the first meeting of the Claims Against the Government Section. He discussed the Administrative Dispute Resolution Act of 1996 and the Presidential Memorandum of May 1, 1998, that established the Working Group. He stressed the value of using ADR in appropriate cases to settle disputes efficiently. This can free resources for other matters that cannot or should not be settled. He noted ADR is not a silver bullet that is perfect for every case, but rather it is a tool that is valuable to use in selected cases.
He noted that ADR efforts have been made in the federal government before, with limited successes. However, this time we are working with the support of Congress, which passed the ADR Act of 1996; the support of the President, who signed the Presidential Memorandum of May 1, 1998; and the support of Attorney General, who spoke at the September 14, 1998 meeting about her abiding commitment to ADR. He mentioned OMB Deputy Director Ed Deseve's remarks at this meeting that agency budget requests for ADR in FY2000 will be reviewed as Presidential Priorities.
He described the Attorney General's goal that every agency implement at least one new ADR program in the coming year. He noted that OMB will be reporting back to the President about agency progress at the end of September, 1999. He mentioned that agencies should choose which of the Sections they will join and notify the Department of Justice by November 13, 1998.
He stated that upcoming Section meetings will cover such topics as ADR skills development, how to locate and pay for neutrals, and how to evaluate the effectiveness of an ADR program. These meetings will be interactive, not merely lecture sessions. The leaders of the Section will need to hear from participants as to what programs would be most valuable.
Remarks of Jeff Senger, Deputy Senior Counsel for ADR at the Department of Justice:
Mr. Senger described the scope of the Claims Against the Government Section. He said the Section will cover cases meeting the following criteria:
1. Monetary cases. While some agencies have non-monetary claims filed against them, the focus of the group will be on monetary claims.
2. Administrative cases. The ADRA, our founding document, covers administrative claims, not federal court litigation, so this will be what the Section will cover. Most federal court litigation is handled primarily by the Department of Justice, and we don't want this Section to be primarily a DOJ initiative. It is possible to view a claim as a continuous process from its inception at the agency to a jury verdict in federal court, and some agencies work with DOJ at the federal court level. However, the emphasis here will be on ADR while a case is still before the agency.
3. Cases that do not involve the workplace or contracting. These areas have their own Sections.
He noted that, after talking with about a dozen different agencies in preparation for the meeting, it appears that typically agencies have settlement authority up to $25,000, after which DOJ must approve the settlement. Also, typically settlements for under $2,500 come from the agencies' own funds, while amounts over that come from the Judgment Fund. This can create odd incentives and may be something for the Section to address.
He described how certain agencies have specific programs that would fit under this Section. For example, the Department of Agriculture has cases where a claimant appeals the denial of a loan or a farm subsidy. The FDIC has cases where a claimant files against a bank that is in receivership. The Department of Interior has cases where a claimant files a Fifth Amendment takings claim in a Fish and Wildlife Service matter. The Department of Health and Human Services has cases where a claimant sues the Provider Reimbursement Review Board, claiming the reimbursement rate is too low. Other agencies may have similar programs as well.
Mr. Senger then described the Interagency ADR Working Group website. He said the site contains links to many important ADR documents, including the Administrative Dispute Resolution Act; the Presidential Memorandum of May 1, 1998, that established the Working Group; a model Policy Statement on ADR; a statement of key elements of a successful ADR program; and a copy of the Attorney General's speech at the opening meeting of the Working Group. The site includes additional links to other federal agency ADR programs and several private sector ADR organizations. As the Working Group Sections create additional documents, they will be posted on the website.
He described how participants should sign up for the internet mailing lists for the Sections of interest, to receive all relevant email messages concerning the work of the groups. He explained that participants can send email messages to everyone else in a Section with this feature. Participants can also go to the "Forums" section to participate in newsgroup discussions, posting a comment or question to everyone else who visits the Forum.
Finally, he said the website will provide a convenient means of publishing information regarding future meetings of Sections of the Working Group. Times, locations, agendas, and minutes of meetings will be posted on the site.
Remarks of Martha McClellan, Federal Deposit Insurance Corporation:
Ms. McClellan described an ADR program used by the FDIC in cases where the government served as a receiver for a failed bank. Claims would be referred to ADR under a statutory mandate from FIRREA. The FDIC provided a list of neutrals for parties to select from. They found neutrals did not need subject-matter expertise to be effective; general mediation skills were more important. Neutrals did not need to be lawyers. Fees were split between the parties and the FDIC. An evaluation of the program found it was very effective.
Remarks of Mike Keogh, Program Director, Medicaid Drug Rebate Program, Health Care Financing Administration:
Mr. Keogh said that his office set up a dispute resolution pilot program with drug companies to settle reimbursement rate disputes. If the companies did not settle, the cases would be referred to a state administrative hearing. These hearings had huge backlogs, so the companies had an incentive to settle. He said that obtaining buy-in from management-level people in the agency is invaluable in establishing the program. Their program has been very cost efficient. In one case, they spent $1200 in travel expenses to send him to Denver for a week, in which time he helped resolve $13 million in disputes, with about half of that figure going to the government. Overall, they have resolved claims for more than $360 million in 46 states. Their travel expenses were only $46,000. Because he worked for HCFA, his role was not as a neutral but as a facilitator. He is not a lawyer, and he is at the GS-13 level.
Remarks of Neil Kaufman, Director of Mediation Services, Department of Health and Human Services
Mr. Kaufman noted that Mr. Keogh developed the ADR program at HCFA on his own, which is a real success story. Most people agree that ADR is appropriate in workplace cases, but use of it in other areas is still growing. He described another HHS mediation program at the Provider Reimbursement Review Board. This Board had a 10,000 case backlog, it took three years to get a hearing, and it took another year after that to get a decision. Some people were initially skeptical of ADR in this context, fearing it would add yet additional delays to the process. Others were skeptical because 90-95 percent of the cases settled anyway without assistance. However, most of these cases did not settle until the eve of the hearing, which took three years. An evaluation of the ADR program there found that it saved both time and money. The program resulted in settlements of 44 of the 48 cases involved.
Remarks of Jeff Senger, Deputy Senior Counsel for ADR at the Department of Justice:
Mr. Senger described a study of ADR effectiveness in medical malpractice claims against the government handled by Assistant United States Attorneys. Out of 29 cases studied, 17 cases were settled in mediation, 10 cases had their issues narrowed by mediation, and two cases were not helped by mediation. Attorneys estimated that ADR saved in each case an average of 100 hours of attorney time, six and a half months of litigation time, $12,000 in litigation costs. Attorneys also stated that the settlements achieved were better for the United States than would have been achieved in court, by an average of $500,000 per case.
Mr. Senger noted that ADR is not appropriate in every case. Litigators stated that ADR did not work when the opposing party was irrational and settlement was impossible. It could also be used as a delaying tactic by the other side. However, when the opposing side has unrealistic expectations, ADR can be very useful in providing a reality check to that person. Many litigators reported that the mediator was effective in readjusting the plaintiff's expectations.
Mr. Senger noted that ADR is not appropriate where unassisted negotiations are working smoothly, a court precedent is required, where the U.S. is likely to win the case quickly and inexpensively with a motion, and where settlement would encourage frivolous claims. ADR is appropriate in cases where negotiations have broken down, litigation would be expensive and time-consuming, a court precedent is not needed, and confidentiality would be valuable.
Remarks of Pete Steenland, Senior Counsel for ADR at the Department of Justice:
Mr. Steenland thanked the participants for attending. He repeated the Attorney General's goal that all agencies create a new ADR program, substantially improve an existing program, or work with other agencies in creating a group program, over the coming year.