Release of Defendant’s Insurer Not Implied as Part of Settlement

Plaintiff Kupolati slipped and fell outside of her condominium complex and filed a personal-injury lawsuit against Defendant Timber Creek Association. Kupolati v. Timber Creek Ass’n, 2021 N.J. Super. Unpub. LEXIS 7 (January 5, 2021). On the date of trial, parties reached an oral settlement agreement that, in exchange for $180,000, Plaintiff would sign a general release, waiving any claims against Defendant.

When Defendant’s counsel prepared the general release for Plaintiff to sign, it also contained a general release of Defendant’s insurer. The document also released Defendant and its insurer from repayment of liens under the Medicare Secondary Payer Act and directed that settlement proceeds would be used to repay any conditional payment claims.

Plaintiff accepted the terms holding Defendant’s insurer harmless for liens against settlement proceeds and agreed to use settlement proceeds to reimburse Medicare for conditional payment claims.

However, Plaintiff objected to a general release of Defendant’s insurer and moved to enforce the settlement without that term. The court found that, because there was no evidence that the general release of the insurer was contemplated during the oral settlement negotiations, the parties did not expressly agree to the same. The court also noted that Defendant failed to prove that a general release of Defendant’s insurer was essential or implied as a common and cursory practice in settling personal injury suits.

The court granted Plaintiff’s motion to enforce the settlement agreement without the objectionable terms. Defendant appealed the decision, and the appellate division affirmed the judgment of the lower court.

In this case, Plaintiff agreed to reimburse Medicare out of the settlement funds and to hold Defendant’s insurer harmless for liens against the settlement. However, had Plaintiff objected to these portions of the settlement, the court very likely may have stricken them as well. It is important to ensure that Medicare compliance issues are clearly addressed as part of settlement, and that a plan for reimbursement of conditional payment claims is agreed upon.

Let us help you protect Medicare’s interests and comply with the Medicare Secondary Payer Act in your settlement.