Austin v Providence Hospital

In this decision from our Court of Civil Appeals, the court examined a decision by the trial court granting summary judgment in favor of the employer and its third party administrator (TPA.) in this case the employer and employee had reached an agreement to settle the employee’s right to future medical benefits for the sum of $75,000. However, because the employee was a Medicare beneficiary, they had to submit the proposed settlement to CMS for review. While the proposed settlement was being reviewed the employee died. The employer and TPA refused to honor the settlement, and the employee’s estate filed suit alleging breach of contract. The trial court granted summary judgment in favor of the employer/TPA on the basis that the action was barred by the exclusivity provisions of the Act.

The Court of Civil Appeals affirmed the trial court’s decision, but in doing so did not reach the merits of the decision, as the employee’s estate failed to even address the application of the exclusivity provision to the facts of the case. The issue was, therefore, waived by the employee. However, in its decision the court did discuss the additional issues raised by the trial court with respect to the inability to essentially enforce the settlement given the fact the parties had not obtained court approval of the settlement as required by AL Code section 25-5-56. While not precedent, this decision does provide some useful insight as to how the court might respond when faced with a similar claim. It should also be noted the decision does not indicate that the employee’s estate otherwise sought to enforce the settlement by relying on Al Code Section 34-3-21, but that may well be due to the fact that this section only applies to the authority of a party’s attorney to enter into a binding settlement. We believe that the failure to obtain court approval of the settlement, as well as the exclusivity provisions would pose significant barriers to enforcement of this settlement, if the Court of Civil Appeals were actually given the opportunity to review the merits of these arguments.

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