HARRELSON v. ARCADIA – CMS Approval as a Term of Settlement is a “Suspensive Condition”

Medicare Set-Aside Blog on June 14, 2011
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The Court of Appeals of Louisiana recently affirmed a WCJ’s decision to deny a motion for penalties and attorney fees for failure to timely fund an MSA on the basis that the MSA had to first be approved by CMS and then was funded within 30 days of receiving approval notice from CMS. The court determined that CMS’ approval was a suspensive condition, completely outside the control of defendant, and therefore the settlement agreement could not be enforced until the condition was met. The court further rationalized that provisions under state law as to the employer’s lack of control over the CMS approval would have also prevented penalties for nonpayment. However the court did not necessarily have to leave the four corners of the settlement agreement to find the settlement conditioned upon CMS approval  given that the employer had an option to leave medicals open should it have elected to not fund a CMS counter-offer. Because the settlement could not possibly have been finalized until the employer made that determination, it was actually the employee acting in “bad faith” by bringing such a claim, let alone requesting additional attorney fees for the appeal.

No 2010 CA 1647
Court of Appeals of Louisiana, First Circuit
June 10, 2011