Contingencies in Settlement Agreement Need to Be Clear
Roy Franco
April 18, 2011

The Medicare Secondary Payer law creates contingent liabilities for the insurance company or self insurance plan settling a liability or workers’ compensation claim. One way to mitigate against those liabilities is to settle a claim based on certain conditions. In several cases our office has blogged about, courts have been reluctant to support these pre-conditions unless there was a clear meeting of the minds. A recent decision in Florida reminds us of the importance to spell out these conditions clearly during the settlement process. In that case, a settlement was upheld because the letter from claimant’s counsel did not objectively create any contingencies. Even though this letter discussed the need for claimant to review the MSA and require settlement documents to be filed before a certain date, which never were, the court did not recognize any contingency. The important takeaway from this case is to carefully spell out contingencies during and after settlement negotiations. Contingencies that are implied may not be upheld by a court, thereby exposing the insurance company, including a self insured plan. See United Airlines v. Nemoto (2011 Fla. App. LEXIS 5422.