2017: Fitzpatrick Voted To Ban Third Party Settlement Agreements
Except If The Settlement Is For Restitution To An Affected Party Or Is A
Direct Remedy For Harm. In October 2017, Fitzpatrick voted for
legislation that would have, according to Congressional Quarterly,
"prohibit[ED] settlement agreements involving the U.S. government from
requiring the non-governmental party to make a payment or loan to any
party other than the U.S. government. Prohibitions would not [have]
appl[ied] if the payment or loan under the settlement is for
restitution to affected parties or is a direct remedy for actual harm."
The vote was on passage. The House passed the bill by a vote of 238 to
183. The Senate took no substantive action on the legislation. [House
Vote 580, 10/24/17;
Congressional Quarterly, 10/24/17;
Congressional Actions, H.R.
732]
Certain Federal Agencies Have Used Negotiated Settlements To Fund
Community Service Projects, Such As When JP Morgan Credit Against
Its Settlement For By Donating To Community Redevelopment
Organizations. According to Congressional Quarterly, "Beginning in
the 1980s, various federal enforcement agencies, including the
Commodity Futures Trading Commission, Nuclear Regulatory Commission
and Environmental Protection Agency (EPA), have wanted to use money
from negotiated financial settlements to fund community service
projects. [...] Beginning in 2013, the Justice Department entered
into a number of agreements with large banks to settle issues
surrounding the banks' mortgage practices. The settlement with JP
Morgan offered the bank credit against its settlement obligations
for donations to community redevelopment groups. In 2014,
settlements with both Citibank and Bank of America required $150
million in donations to housing nonprofits. These donations earned
double credit against the banks' overall obligations. Meanwhile,
credit for direct forms of consumer relief remained
dollar-for-dollar." [Congressional Quarterly,
9/2/16]
Opponents Of Third Party Claim That These Settlements Subvert
Congress' Power Of The Purse. According to Congressional
Quarterly, "Supporters of the bill, primarily Republicans, say
Congress' power to control spending has been subverted by the
diversion of monetary settlements from lawsuits to groups favored by
the executive branch, often in direct contradiction to enacted
spending bills. They say the Justice Department, in particular, has
directed settlement dollars to favored groups, and that since those
payments often counted double toward a settlement (allowing
defendants to lower their total settlement costs) there was a strong
incentive for defendants to make them, directly circumventing the
congressional appropriations process. The Justice Department, they
say, should focus its existing authority on obtaining redress for
victims harmed by defendants, and that once those victims have been
compensated the decision on what to do with any additional funds
extracted from defendants should be properly decided by Congress."
[Congressional Quarterly,
10/20/17]