Settling With Multiple Defendants: Setoffs, Allocation and Why Order Matters

Published July 9, 2024 · Injury Law Basics

A truck driver runs a red light while a second driver, distracted by a phone, swerves into the same intersection. A patient is harmed by a surgeon who never should have been given hospital privileges. A drunk driver crashes after being overserved at a bar. In each of these cases more than one party shares the blame, and that changes everything about how the case settles.

Most people assume that when two or three parties caused an injury, the injured person can simply settle with each of them one at a time. Sometimes that works. Sometimes the order of the settlements, and the words in the release, decide whether the family recovers full compensation or loses a claim entirely. Here is how Ohio law handles it.

Rule one: settling with one defendant does not release the others

Under R.C. 2307.28(A), when you give a good-faith release to one of two or more people responsible for the same injury or death, the release does not discharge the others unless its terms say so. That last clause matters. Insurance companies sometimes hand over release forms that release "all persons, firms and corporations." Signing a form like that for one driver's $25,000 policy can wipe out your claim against a trucking company with $1 million in coverage.

A release should name the party being released and expressly preserve every claim against everyone else. That is not a formality. It is the difference between a case that continues and a case that is over.

Rule two: the other defendants get a credit, but you are protected from coming up short

The same statute provides that a settlement reduces the claim against the remaining defendants by the amount paid for the release, or by any larger amount the release states. This is called a setoff. The law's goal is to prevent a double recovery: you should be made whole once, not twice.

R.C. 2307.28(A) also protects the injured person. The reduction does not apply if it would leave you recovering less than the total compensatory damages the jury awarded. In plain terms, a setoff can keep you from collecting more than your full damages, but it is not supposed to leave you with less.

Settling with one party also ends that party's exposure to the others. Under R.C. 2307.28(B), a settling defendant is discharged from any liability for contribution, meaning the non-settling defendant cannot turn around and sue the settling one to share the bill.

Rule three: the jury still assigns fault to everyone, including people who settled

Ohio juries do not just decide whether a defendant was negligent. Under R.C. 2307.23, the jury must assign a percentage of fault to the plaintiff, to each defendant, and to anyone else who contributed, including people the plaintiff settled with or never sued. The percentages must add up to 100.

R.C. 2307.22 then decides who pays what:

• Noneconomic damages (pain, suffering, loss of companionship) are always paid in proportion to each defendant's share of fault.
• Economic damages (medical bills, lost wages) can be collected entirely from a defendant found more than 50 percent at fault. Defendants at 50 percent or less pay only their percentage.

This is why the fight over percentages is so important. We saw that this spring in the Cuyahoga County verdict for 5-year-old Jordan Rodriguez, where a $12 million award was divided among six people and agencies, and only small percentages were assigned to some of the defendants. I walked through what that means for collection in our post on how Ohio's fault-apportionment rules work. Our guide chapter on what your case is worth explains the same rules alongside comparative fault and damage caps.

The practical lesson: a settling party can still be blamed at trial by the remaining defendants. Before agreeing to any settlement, we think through how the empty chair will look to a jury.

Rule four: intentional wrongdoers get no credit

The setoff rule has an important exception. Ohio courts hold that a defendant found liable for an intentional tort, such as fraud or battery, is not entitled to a setoff for other parties' settlements. R.C. 2307.25(A) also denies intentional tortfeasors any right of contribution.

The Durrani spine-surgery cases from Cincinnati show this in action. In January 2022 I wrote about a verdict against Dr. Durrani that stood without any credit for the family's other settlements. This April, in Bender v. Durrani, 2024-Ohio-1258 (1st Dist.), the court of appeals did it again: a family whose child underwent an unnecessary scoliosis surgery had settled with the hospitals, and the jury found the surgeon liable for fraudulent misrepresentation. Because the jury found an intentional tort, the court held the surgeon and his clinic were "not entitled to credits or setoffs against the verdict."

When the facts support it, pleading and proving intentional misconduct can protect the full value of a verdict.

Rule five: in hospital cases, the order of settlement can forfeit a claim

The most dangerous trap is in medical cases. A hospital that grants privileges to a doctor it knew or should have known was incompetent can be sued for negligent credentialing. But in Walling v. Brenya, 171 Ohio St.3d 346, 2022-Ohio-4265, the Supreme Court of Ohio held that this claim cannot proceed without a simultaneous or prior adjudication of, or stipulation to, the doctor's malpractice.

In Walling, a father whose daughter died after heart procedures settled with the cardiologist four days into trial, even though the doctor had conceded on cross-examination that he failed to review her chest x-rays. The settlement contained no stipulation of negligence. The Court held the family could not go forward against the hospital and noted that a plaintiff who settles with the physician without obtaining a stipulation "is precluded from proceeding" on negligent credentialing.

The lesson is not that families should refuse to settle. It is that the settlement with the doctor must be structured, and sequenced, with the hospital claim in mind.

Wrongful-death settlements are divided by the probate court

When a case involves a death, settlement does not end with the defendants. Under R.C. 2125.03(A)(1), money received in a wrongful-death action, "whether by settlement or otherwise," is distributed among the beneficiaries, and when they are not equally related to the person who died, the probate court adjusts each share based on each person's loss. Settlements with several defendants may each need court approval. Our 2023 post on who shares in an Ohio wrongful-death settlement explains the notice rules, and our wrongful death page explains the claim itself.

What this means for you

• Never sign a release from any insurer without having a lawyer read it. Broad "all persons" language can end claims against parties with far more coverage.
• Identify every responsible party early. A defendant you never sued can still be assigned a share of fault at trial.
• In medical cases, a settlement with the doctor may need a stipulation of negligence to keep the hospital claim alive.
• In fraud and intentional-misconduct cases, the defendant may not be entitled to any credit for other settlements.
• Sequencing matters. Which defendant settles first, for how much, and on what terms can change the final recovery by hundreds of thousands of dollars.