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United Airlines Settles Dragged Off Doctor Case

United Airlines has settled the legal case against it being brought by Dr. David Dao, the UA passenger who was forcibly removed from his seat by law enforcement, on April 9 of this year, when he refused to get bumped from a flight. Dr. Dao allegedly suffered a concussion, a dental injury, and other injuries, as a result of the incident which went viral causing a PR nightmare for UA.

While the settlement is for an undisclosed amount, most commentators agree that the amount must have been enormous to achieve a resolution this quickly. The level of public vitriol over this incident was enormous. While United Airlines initially attempted to stand by the actions of their crew and law enforcement, after the massive public backlash, the company reversed their position.

Show Me the ... Policy Changes?

In addition to the enormous undisclosed amount, United Airlines has implemented many new policies that are related to this incident, as well as one policy that is completely unrelated. Some of the new policies include:

  • Raising the amount of money reps can offer to passengers to give up seats from $1,350 to $10k
  • Unless safety or security issues are present, seated passengers won't be forced to get up
  • UA will provide additional training to employees
  • UA will reduce the amount of overbooking of flights
  • UA will ensure that employee or crew members are booked one hour prior to departure

The new unrelated policy applies to lost bags on UA flights. Now, United will have a no-questions-asked policy of paying $1,500 for lost bags (unless a passenger can show documentation that the contents of the bag were valued higher).

Taxed on Confidentiality

Despite the fact that the popular media and social media are chomping at the bit to find out the confidential settlement amount, that information likely commands a rather high premium. In fact, confidentiality provisions in injury settlement agreements are essentially considered separate agreements and can result in making a part of an injury settlement taxable.

While generally injury settlements are non-taxable, other financial settlements, such as settlements for lost wages or contract damages, are taxable. In order for a confidentiality clause to be valid, it must be supported by consideration, meaning it must be paid for. The person being paid to maintain the confidentiality then must declare the portion of the settlement related to maintaining confidentiality as taxable income.

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