Sometimes it is difficult to get final authority upon settlement, especially when mediation or negotiations run late in the day.  Its 5:30 on a Friday and you just need $5000 in additional authority to get this sucker done.  So what do you do?  You agree, in the mediation agreement, to settle the claim at the agreed upon amount on a contingent basis.  You also offer the Claimant 20 days so your supervisor or the insured can get back to you in time. 

But, is this a “meeting of the minds?”  In other words, do the parties have a binding settlement when the E/C is only agreeing on a contingent basis?

According to the First DCA, no, they do not.

In Monroe v. US Food Service, the parties entered a mediation agreement which read like this:

Contingent upon employer/carrier approval, the parties agree to a total settlement of $30,000, out of which claimant will pay attorney fees + costs of $5000. Claimant will net $25,000. E/C has 20 days for the contingency. If e/c does not approve of $30,000, claimant has option of accepting $25,000 total with $5000 to attorney + therefore [$]20,000 to claimant net.  Claimant agrees to sign a General Release + Voluntary Resignation.  E/C agrees to authorize physical therapy until Judge signs order.”

Claimant, her attorney, and attorney for the E/C, all signed the agreement.

While waiting for authority, Claimant fired her attorney and expressed her desire to back out of settlement.  The JCC granted the E/C’s motion to enforce and the First DCA reversed.  The reason was the parties never had an agreement. 

Section 440.25(3)(b), states that “tn the event both parties agree, the results of the mediation conference shall be binding and neither party shall have a right to appeal the results.”  The Court viewed that the  mediation report expressly provided that both parties had not yet agreed, that Claimant offered $30,000 to settle, to which counsel for the E/C provisionally agreed*, pending actual acceptance of the offer by the E/C.  The Claimant could revoke the offer before the E/C accepted it.

Now, I’ve done settlements on a contingent basis before.  Every time, the Claimant waits for approval because he or she wants the money.  I think the “if e/c does not approve of” language invited interpretation.   But, the Court is not saying it had a problem with this.  It is saying that a contingency by the E/C on settlement amount, inserted into the mediation agreement, is a “contract that has not been formed.”  

This should make all of us on the E/C think when its 5:30 on a Friday and we just need $5000 more to “get it done.”   The Munroe decision tells us that its best to wait until Monday for additional authority.   So look at this case as another reason to enjoy our weekend. 

(*It should be noted in the Monroe decision that the adjuster did not show up for this mediation, hence the contingency placed within the mediation agreement.  In a footnote, the Court makes note of this and Florida Admin Code 60Q-6110, which states “failure to attend the mediation conference without having shown good cause or failure to appear at the mediation conference with full authority to resolve the issues may subject the party or the attorney to sanctions.”  This is a warning by the Court to all adjusters and employers: do not ignore an order for you to attend state mediation.)