Agreement to Hold Defendant Harmless From 'All Other' Liens Includes Medicare's Conditional Payment Claim

In Rhoades v. Beck, 2014 Ore. App. LEXIS 82 (Court of Appeals, filed January 23, 2014), the plaintiff was involved in a motor vehicle accident that resulted in personal injuries. In pursuing the action, the plaintiff specifically alleged $45,517.69 in medical expenses that she had incurred.  On the eve of trial, the parties agreed to settle the case for $15,000.00 to the plaintiff, $5,500.00 to the plaintiff's husband, and that the defendant would satisfy any person injury protection liens asserted by their auto insurance carrier in exchange for a full and final release of all claims and any other liens (Id. at *2).  After confirming that agreement in an exchange of letters, the plaintiff discovered that Medicare was asserting a claim of $22,970.62 against the plaintiff's recovery.  Given Medicare's claim, the plaintiff refused to sign the settlement agreement without a waiver of Medicare's lien. The defendant, in turn, sought to enforce the agreement.

The trial court found that there was an enforceable agreement between the parties and the plaintiff appealed. The court of appeals also found an enforceable agreement.  The plaintiff's (unexpressed) belief that the parties could not reach an agreement because the Medicare lien was not discussed was not an objectively reasonable belief. More to the point, because correspondence confirmed the terms of the agreement, there was an objective expression that there was a meeting of the minds and thus an agreement. Medicare's later assertion of a claim did not extinguish this agreement; even the plaintiff's attorney acknowledged that all parties were aware that Medicare had made some payments at the time of the negotiations, though they had not known the amount of the claim. As the court succinctly stated, "[w]e will not set aside a settlement in a personal injury case merely because, in hindsight, it was obtained too soon and for too little" (Id. at *5). While an 'enforceable agreement' can vary somewhat from jurisdiction to jurisdiction, this is a useful case in that it underscores the importance of identifying who - between settling parties - will be responsible for any outstanding Medicare issues.