Close Call for Employer on Unapproved MSA
Jeff Signor
April 9, 2013

Rainey v. The GoodYear Tire & Rubber Company, 2013 N.C.

Facts:  Rainey, a tire builder injured his back on August 4, 2004.  During the course of his claim, a Medicare Set Aside was prepared in the amount of $65,948.  The Parties agreed to settle the workers’ compensation claim for $315K plus the MSA.  Subsequent to the acceptance of the deal, the MSA was submitted to Medicare for review and rejected.  After several attempts by GoodYear, Medicare would require no less than $266,207 for the MSA, at which time GoodYear refused to settle the case.  Rainey, then moved to enforce settlement.

Issue:  Is a settlement, subject to approval of a MSA enforceable, where the amount is substantially different then what was expected by the employer?

Holding:  Yes.  However, settlement agreements are governed by general principles of contract law.   To enforce these agreements, there must be a meeting of minds by the parties as to the essential terms.  In this case, the evidence was clear that the employer, GoodYear had no intention of putting in extra cash beyond what was offered and the previously calculated MSA.  Consequently, there is no settlement to enforce.

Commentary:  This case demonstrates the importance of negotiations and being clear with regard to the terms of any release as Parties complete their obligations with Medicare.  Since enforcement in this area is based on general principals of contract law, it is important that evidence will be gleaned from the four corners of the document, if written, and if no agreement is in place, from communications that led up to partial performance.  In this case, GoodYear was fortunate that there was enough evidence to support its position that no offer was being made beyond the value of the MSA.   It may be wise to be very clear in negotiations going forward of pre-conditions for the Release.  In general, when dealing with a Medicare case it is always a good idea to have the following understandings laid out clearly:

  1. TPOC Date;
  2. TPOC Amount;
  3. ICD-9 Codes related to the claim;
  4. Event Code related to the claim;
  5. Identification of conditional payments;
  6. Satisfaction of conditional payments; and
  7. MSA approval and amount