Plaintiff Walter Cabezas, as administrator of the Estate of Aldemar Cabezas, filed a wrongful death lawsuit following the death of Aldemar Cabezas who was struck by a vehicle owned by defendant Penske Truck Leasing Co. on September 7, 2021. Medicare issued a conditional payment letter to plaintiff, stating that Medicare had identified $62,100.82 in conditional payments related to the claim. The issue in Cabezas v. Penske Truck Leasing Co., L.P., 2025 N.J. Super. Unpub. LEXIS 2034 (App. Div. Oct. 28, 2025) was whether defendants (Penske Truck Leasing and Nehal Selim) were entitled to pay the lien directly or whether they were required to pay the entire settlement amount to plaintiff, who had agreed to satisfy any outstanding medical bills and liens, as well as indemnify and hold defendants harmless as to such liens.
The case settled for the amount of $500,000 and, in the settlement agreement, it indicated that plaintiff would release all claims and be solely responsible for satisfying any and all outstanding medical bills and liens. However, despite the language in the agreement, defendants paid the Medicare lien directly and then remitted the remainder of the settlement amount to plaintiff.
After the case settled, plaintiff sent the defendants an executed release. Thereafter, CMS issued a final demand letter setting the finalized Medicare lien at $39,365.09. That final demand letter was supplied to defendants and plaintiff’s counsel again asserted plaintiff’s sole responsibility for the lien and pressed for immediate payment of the $500,000 settlement.
However, defendants notified plaintiff that it had issued a check for $460,634.91 and paid the Medicare lien directly. Plaintiff objected and immediately demanded the full $500,000.
Plaintiff filed a motion to enforce the settlement agreement. Defendants argued that plaintiff suffered no damages and would be provided a “windfall” if they now had to pay the full amount.
At the oral argument, plaintiff made the argument that by the defendants paying the Medicare lien directly, it removed from them the ability to resolve the Medicare lien and potentially compromise the lien. Hence, plaintiff argued that there was potential harm by defendants paying the lien directly.
The trial court granted the motion and enforced the settlement agreement as written. The court awarded plaintiff counsel fees and costs incurred with bringing the motion and entered an order to enforce the settlement agreement, which required the defendants to pay plaintiff the full $500,000 settlement, despite having already satisfied the Medicare lien.
Defendants moved for reconsideration, arguing that the trial court’s decision provided plaintiff with a “double recovery” or a windfall. The court denied reconsideration and found that the parties had a contract that they had agreed to $500,000 as a settlement. The trial court found that the Medicare payment made by the defendants fell outside of the agreement and did not excuse the obligation to plaintiff.
This decision was appealed. Unfortunately for the defendants, it was upheld by the Appellate Division.
The Appellate Division found that the parties had entered into a valid settlement agreement that defendants breached. The language in the agreement was explicit in assigning the responsibility for satisfying any Medicare lien to plaintiff. The Court found the language of the agreement to be clear and unambiguous. Defendants were to pay plaintiff $500,000 in exchange for plaintiff releasing all claims and plaintiff was solely responsible for the Medicare lien. Thus, the Court found that the trial court correctly enforced the settlement agreement as written when it ordered defendants to pay the entire $500,000.
The takeaway from this case is, if a defendant desires to pay the Medicare lien directly to avoid any future liability if the plaintiff’s counsel fails to satisfy this lien, this requirement must be part of the settlement agreement. It cannot be done unilaterally or brought up after the settlement is reached. Otherwise, a defendant may be forced to face the potential consequence of Penske Truck Leasing in this case in which, after paying the lien, it still was required to pay the full amount of the settlement to plaintiff.
