State Court of Appeals Upholds Settlement Despite Unknown Conditional Payment Amount

In Forbes v. Benton County Agric. Soc'y, 2021 Iowa App. LEXIS 405, the Plaintiff slipped and fell at the local fairgrounds. Two years after the fall, he filed suit. Plaintiff’s counsel and counsel for the defendant subsequently negotiated settlement. As a condition of settlement, the Plaintiff agreed to handle reimbursement of the lien asserted by Tricare, who paid for a portion of Plaintiff’s accident-related treatment. In the email accepting the Plaintiff’s counter offer the Defendant’s counsel offered to draft a release in which the Plaintiff would acknowledge his duty to "satisfy any subrogation interests and liens." Her email then noted that, "As you know, insurance companies are required by law to protect the interests of Medicare and submit information to Medicare regarding a Plaintiff before a settlement can be finalized." Shortly thereafter, it was determined that Medicare did, in fact, have a subrogation interest in this matter. Plaintiff then attempted to withdraw from settlement. Defense filed a motion for summary judgment and requested that the court enforce the settlement. Plaintiff resisted, arguing that the agreement was unenforceable because of failure to reach a meeting of the minds or that the settlement was voidable as being a result of a mutual mistake. The court disagreed and upheld the settlement. Plaintiff then appealed to the Court of Appeals of Iowa, which resulted in the current matter. The Court upheld the lower court’s decision and the settlement, determining that the Plaintiff bore the risk of the mistake, as he was aware when he agreed to the settlement that he had limited knowledge about potential Medicare payments and that the district court was still reasonable in assigning the risk of mistake to him, as “he had the opportunity and the burden to inquire thoroughly into the payment of his medical bills.”

At the end of the day, the Medicare lien remains an issue and both parties are liable until it has been resolved. This case speaks to the importance of taking Medicare’s interests into consideration at the beginning of settlement negotiations, including obtaining all necessary authorization forms up front and handling the proper reimbursement of Medicare’s liens post-settlement. As always, we are happy to assist you with any Medicare compliance issues!