Petersen v. United States of America et al

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
JOAN PETERSON,
individually, and on behalf of
the heirs and next of kin of
Frank Raymond Servantez, Decedent,
a/k/a, Joan Petersen Servantez,
Plaintiff, 	MEMORANDUM OF LAW
AND ORDER
v. 	Civil File No. 21-01431 (MJD/LIB)
UNITED STATES OF AMERICA,
Defendant.
Jeffrey S. Storms, Ryan O. Vettleson, Newmark Storms Dworak, LLC, Counsel
for Plaintiff.
Friedrich A. P. Siekert, Assistant United States Attorney, Counsel for Defendant.
I. 	INTRODUCTION
This matter is before the Court on Plaintiff’s Motion for Leave to Disclose
Sealed Order Approving Distribution of Settlement Proceeds. For the following
reasons, the Court will grant the motion.
II. 	BACKGROUND
In June 2021, Plaintiff Joan Peterson (“Peterson”), as the surviving spouse
of Frank Servantez (“Servantez”), filed a wrongful death case under the Federal
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Tort Claims Act against the United States for medical malpractice against health
care professionals at a VA hospital claiming Servantez died as a result of
treatment he received at the hospital. Peterson also sued Bio-Medical
Applications of Minnesota, Inc. (“Bio-Med”), among others. As relevant to the
parties’ arguments, Peterson entered into a confidential settlement with Bio-Med
in August 2023. In September 2024, Peterson settled her case with the VA. The
Court granted Peterson’s sealed Amended Petition for Distribution of all
Settlement Proceeds. (Docs. 93 (Amended Petition for Distribution); 97 (Order
for Distribution of Wrongful Death Proceeds); 105-1 (“Settlement Stipulation”).)
The Order for Distribution of Wrongful Death Proceeds (“the Order”) references
the Amended Petition for Distribution.
The United States paid the full settlement amount to Plaintiff and her
counsel. (Docs. 105-1 ¶ 13.) After the United States paid the settlement, Peterson
moved the Court for permission to distribute the settlement proceeds to herself
and Mr. Servantes’ other heirs. The Court approved the distribution and both
the Order and Amended Petition for Distribution were filed under seal. (Docs.
93, 97.) The Order details distributions to Servantez’s next-of-kin, including
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Peterson. (Doc. 97 at 2 ¶ 2.) The United States was not included in any
proceedings leading to the Order and has never seen the Order. (Doc. 120 at 3.)
After the Court approved the stipulation for distribution and signed the
Order, Peterson received notice from the office of benefits of Veterans Affairs
that beginning December 1, 2024, her Dependency and Indemnity Compensation
(“DIC”) benefits would be offset for the full amount of her settlement with the
United States. (Doc. 105 (Vettleson Decl.) ¶ 4.)
Peterson is appealing the VA’s initial decision on two grounds, one of
which is that the VA’s offset of the entire settlement amount against her DIC
benefits is incorrect because per the Order, Peterson did not receive the entire
amount of the settlement. (Id. ¶ 5.)
III. 	DISCUSSION
Peterson argues that her appeal to the Board of Veterans’ Appeals (“BVA”)
requires submission of the Order to demonstrate that she did not receive the full
amount of the settlement and therefore the VA erred by offsetting her DCI
benefits by that amount.
A. 	Legal Standards
“Every court has supervisory power over its own records and files,” and
the decision to seal or unseal a court document is “left to the sound discretion of
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the trial court, a discretion to be exercised in light of the relevant facts and
circumstances of the particular case.” Nixon v. Warner Commc’ns, Inc., 435 U.S.
589, 598-99 (1978); Flynt v. Lombardi, 885 F.3d 508, 511 (8th Cir. 2018) (stating
that the Eighth Circuit reviews “the district court’s ultimate decision to seal or
unseal [a document] for abuse of discretion”) (citation omitted); see also Fed. R.
Civ. P. 5.2(d) (authorizing courts to unseal filings made under seal).
B. 	The United States’ Arguments
The United States argues that the Court should deny the motion for three
reasons. First, Peterson insisted that her settlement with Bio-Med remain
confidential and that the distribution order be sealed. The United States asserts
that Peterson did this because “it was in her best interests to keep this knowledge
from the United States, especially when [Peterson] was negotiating her
settlement with the United States.” (Doc. 120 at 3.) Second, the United States
points out that Peterson worked in her best interest when she paid for a
confidentiality agreement with Bio-Med and sought to get the distribution order
sealed. The United States argues that disclosure of a settlement agreement with
the United States that Peterson, herself, sought alters the value of that agreement.
Thus, it would be inappropriate to allow this disclosure.
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Third, the United States argues that it will be prejudiced by this disclosure
to the BVA because both the settlement agreement and Peterson’s ongoing
benefits are paid to Peterson as a result of the death of Servantez and both the
settlement amount and the on-going VA benefits are paid by Congressionally-
appropriated funds. (Id. at 4.) The United States opines that Peterson’s apparent
theory is that the lower net amount she received from the United States’
settlement, the sooner the suspension of her VA benefits will stop. (Id.) The
United States argues that if this is true, granting the motion will increase the total
amount Peterson will have received from the settlement and would violate “the
rule against the United States paying twice (or double) for the same injury.” (Id.)
C. 	Analysis
The Court finds that Peterson’s DIC benefits are being decreased based on
a misunderstanding that she kept the entire settlement amount rather than
distributing it per the requirements set forth in the Order. (See Doc. 97.)
The United States’ arguments based on Peterson negotiating or working
“in her best interest” while this case was still active are unavailing. Parties in the
adversarial process are expected to work in their own best interests. Similarly,
disclosure of a settlement agreement with the United States that Peterson sought
does not “alter[] the value of that agreement.” This argument appears to be
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based on disclosure of the Order to the public, which is not the case. The Order
will be disclosed for a very limited purpose, only.
Finally, the United States’ argument that if the net amount Peterson
received from the United States’ settlement is amended to show the correct
smaller amount and her suspended VA benefits are therefore reinstated at an
earlier date, it “will increase the total amount Plaintiff will have received from
the settlement of this lawsuit [and] would violate the rule against the United
States paying twice (or double) for the same injury” is also without merit.
In their Settlement Agreement, Peterson and the United States anticipated
that “the Veterans Benefits Administration [would] re-adjudicate Plaintiff’s
ongoing receipt of benefits . . . to determine whether those ongoing Section 1310
benefits should be changed (suspended or otherwise) in light of Plaintiff’s receipt
of the settlement proceeds described in this Settlement Stipulation.” (Doc. 105-1
¶ 8.) The Settlement Stipulation stated that the settlement proceeds were to be
deposited into Peterson’s attorneys’ trust account for distribution in accordance
with the Court’s order on distribution of settlement proceeds. (Id. ¶¶ 13-14.) As
stated above, the Order contains the detailed breakdown of how the proceeds
were to be distributed. (Doc. 97 at 2 ¶ 2 (distributions to next-of-kin), ¶¶ 3-5
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(attorney fees and costs).) It is reasonable to assume any necessary payment
adjustments will be done by the VBA in conjunction with this order and that any
offsets will be calculated to avoid double payments or overpayments.
Accordingly, based on “the relevant facts and circumstances” of this case,
the Court will grant the motion to unseal the Order for limited disclosure to the
Board of Veterans Appeals. Nixon, 435 U.S. at 599. The disclosure is necessary
for Peterson to prove she did not receive the full settlement amount the VA
apparently assumes she received.
D. 	Contents of the Court’s Order
In the event she prevailed on this issue, Peterson provided a proposed
three-paragraph order for the Court’s signature. The United States asks the
Court to delete paragraph 2, which provides that “[g]ood cause exists to permit
limited disclosure of sealed document filed at Dkt. No. 97 to the Board of
Veterans Appeals because The VA is bound by statutory confidentiality
obligations pursuant to 38 U.S.C. § 5701(a).” (Doc. 108 at 1 ¶ 2.)
The Court agrees with the United States and will not adopt paragraph 2
from the proposed order for the following reasons. First, there is no “good
cause” standard for Peterson’s requested relief. Federal Rule of Civil Procedure
5.2 includes a “good cause” standard for protective orders, but not for unsealing
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filings. Compare Fed. R. Civ. P. 5.2(e) (“For good cause, the court may order”
redaction of information or limit nonparty remote access to a document) with
Fed. R. Civ. P. 5.2(d) (“The court may . . . unseal the filing or order the person
who made the filing to file a redacted version for the public record.”).
Second, the final clause regarding the VA’s confidentiality obligations is
merely a statement of fact and need not be included in the Court’s order. The
VA knows its obligations. Peterson’s proposed paragraph 2 will not be included
in the Court’s final order.
IV. 	ORDER
Accordingly, based upon the files, records, and proceedings herein, IT IS
HEREBY ORDERED:
1. 	Plaintiff’s Motion for Leave to Disclose Sealed Order Approving
Distribution of Settlement Proceeds [Doc. 102] is GRANTED;
2. 	Plaintiff may disclose the sealed order docketed at CMECF No. 97 to
the Board of Veterans Appeals for the limited purpose of proving
she did not receive the full settlement amount and for the VA to
recalculate her benefits, if appropriate; and
3. 	Plaintiff shall mark the sealed order docketed at CMECF No. 97
“CONFIDENTIAL – SUBJECT TO COURT ORDER,” and must
submit it to the Board of Veterans Appeals along with a copy of this
order authorizing such disclosure.
Dated: January 7, 2026 	s/Michael J. Davis
Michael J. Davis
United States District Court
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