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Court Finds Defendants Unable To Pay Medicare Lien Directly Because Not Part of Settlement Reached

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.

Appellate Division Upholds Trial Court’s Decision That Execution Of A Release Was Essential Term Of The Parties’ Settlement

Plaintiff Ronald Goldstein appealed from a trial court decision order denying his motion to enforce the terms of a settlement that was placed on the record.  He also appealed from the trial court’s order granting defendants’ cross-motion to enforce the settlement in accordance with their written settlement agreement.  The issue in Goldstein v. Prolong Pharmaceuticals, LLC, 2025 N.J. Super. Unpub. LEXIS 794 (App. Div. May 16, 2025) was whether the execution of a release was an essential term of the parties’ settlement.

This lawsuit involved a claim by the plaintiff, an intellectual property attorney, who sued the defendants for unpaid invoices for legal services rendered to Prolong pursuant to a consulting contract.  After negotiations mediated by the trial court, the parties agree to resolve the case and placed the terms on the record.  According to the terms placed on the record, in exchange for a release of all claims in favor of the defendants, the defendants agreed to pay $240,000 in full and final settlement of the fee claims.  The payment was to be made within 30 days of the execution of the release.  Further, defense counsel confirmed that all four defendants would be jointly and severally responsible for the settlement agreement.

Following the in-court settlement, the parties exchanged various drafts of proposed releases which did contain some different terms that the defendants provided to the plaintiff.  Defendants’ drafts required plaintiff to forever release all claims in favor of defendants and “past, present, and future” parties associated with the defendants, “including but not limited to claims” arising out of the services agreement between plaintiff and Prolong.  Further, defendants added a confidentiality and non-disparagement clause.

In response, plaintiffs submitted a revised draft of defendants’ release.  Plaintiff objected to the defendants’ version, claiming that it was overreaching, one-sided, and well beyond the scope of the litigation.  It also included a reciprocal release, requiring defendants to release all claims in favor of plaintiff.  Finally, it removed the confidentiality and non-disparagement clause.

Thereafter, defendants accepted a few of the changes but retained the original language in the release and the confidentiality and non-disparagement clause.  It also changed the draft to indicate that plaintiff would receive payment within 30 days of the execution of the settlement agreement.  Plaintiff in turn advised defendants that the proposal made the document “fatally defective” because, pursuant to the terms, the case was to be dismissed and the $240,000 would be paid within 30 days of the settlement placed on the record.  Plaintiff claimed that defendants improperly attempted to change the payment date and made the payment an uncertain event contingent on the execution of the agreement.

The exchange of drafts of the release was followed by a case management conference.  After the case management conference, the parties continued to propose various drafts of the settlement agreement but never agreed on the finalized terms.  A further conference between the parties did not resolve the remaining issues pertaining to the settlement.

Ultimately, plaintiff moved to enforce the settlement terms placed on the record.  The defendants cross-moved to enforce their draft of the settlement agreement and sought attorney’s fees, costs, and sanctions.

The respective settlement terms differed with respect to the scope of the release, the definition of a disparaging statement, and the effective date.  The court held oral argument on both motions.  The trial court denied the plaintiff’s motion but granted the cross-motion.  The trial court found that the defendants’ proposed release and confidentiality and non-disparagement clause contained “standard language.”  It concluded that the settlement agreement proffered by the defendants contained the essential settlement terms placed on the record and contained “standard release language.”  Also, the trial court noted that the plaintiff understood that it was only upon execution of the release that he would be due payment.  However, the court denied the defendants’ motion for attorney’s fees.

Plaintiff appealed the court’s ruling, which compelled him to sign a settlement agreement which he considered to be unnecessary, unfair, and to include terms he had not agreed upon.  He argued that defendants should have been required to make the $240,000 settlement payment because he had provided defendants with his own unilaterally signed release, claiming that it satisfied the terms of the settlement put on the record.  Further, he argued that a release is a mere formality and, as a matter of law, a written release or settlement agreement “is not an essential element of settlement.”

The Appellate Division agreed with the defendants that the execution of a release in favor of defendants was an essential term of the settlement placed on the record.  Further, the defendants’ payment of $240,000 was not due until 30 days after the execution of the release.  Hence, the execution of a written release was not a mere formality but rather was a central component of the settlement.

As for the terms of the settlement, the Appellate Division agreed that plaintiff was not entitled to a reciprocal release according to the agreed-upon terms placed on the record.  One of the essential terms of the settlement agreement was the execution of a written release in favor of defendants but there was no reference to a reciprocal release.  Hence, defendants had no obligation to sign a reciprocal release. 

As for the non-disparagement clause, plaintiff argued that this term was not a necessary term of the settlement, and the parties disagreed on its language.  As for this provision, the Appellate Division disagreed with the trial court in enforcing the non-disparagement clause because the parties never expressed an intent on the record to include that term as part of the settlement.  To the contrary, it was an additional, non-negotiated term.

Next, the Appellate Division addressed the plaintiff’s argument that the defendants’ proposed language in the release exceeded the scope of the parties’ agreement regarding the nature of the claims released and the time period for the release.  The defendants’ proposed release was overly broad to the extent it included a release not only from the claims advanced in this case but also from other unknown and unidentified claims.  The Court found that the release should be limited to plaintiff’s claims and should be further confined to the relevant time period when the dispute arose and the case was litigated.

As for the due date of the payment, the Appellate Division noted that the parties agreed on the record that defendants would make payment within 30 days of the execution of the release.  This term suggested only that plaintiff’s signature was required in order for him to be paid by defendants and did not necessitate defendants’ signatures prior to payment.  Thus, the payment should be made within 30 days of plaintiff executing the release, not from the date on which the last defendant signed the agreement.  To the extent the trial court held otherwise, the Appellate Division found that it made a mistake in enforcing the effective date for payment as defined in defendants’ draft settlement agreement.

Hence, the Appellate Division remanded the matter back to the trial court.  It ruled that the parties shall promptly exchange a release consistent with the essential and limited terms set forth on the record.  The release should not include a reciprocal release for plaintiff or any non-disparagement clause or any other provision not specifically agreed to.  The parties may include a confidentiality agreement consistent with the representations made during oral argument.  Further, the Court found that defendants must pay plaintiff $240,000 within 30 days of plaintiff’s execution of the release. 

Finally, the Appellate Division found that the trial court correctly ruled that plaintiff was not entitled to an award of statutory interests.  Because he had not yet executed a release to satisfy his obligation, he had no right to payment.  Therefore, he also had no right to interest from when he claimed the payment was due. 

Plaintiff’s Settlement of Property-Based Claim Against Landlord Found Not to Bar Subsequent Personal Injury Claim

Plaintiff Lourdes Gonzalez had filed a lawsuit against her landlord, defendant 908-910 Washington Street, LLC, alleging various theories of liability, based upon the condition of her apartment.  That lawsuit was settled on certain terms which included a general release of any and all claims against the landlord.  The issue in Gonzalez v. 908-910 Washington Street, LLC, 2023 N.J. Super. Unpub. LEXIS 1528 (App. Div. Sept. 13, 2023) was whether the plaintiff’s subsequent lawsuit for a personal injury based upon alleged lead poisoning in her apartment’s water supply was barred by the release she signed in the property dispute.

Plaintiff, along with two other tenants, had filed suit against the defendant landlord claiming that “ongoing course of discriminatory and unconscionable conduct for the purposes of evicting tenants are causing them to vacate the leased premises.”  Plaintiff sued the landlord based upon various theories of liability and requested an order enjoining the defendant landlord from pursuing eviction and she also sought damages.  Subsequently, that lawsuit was settled pursuant to a six-page settlement agreement which included a general release.  These settlement terms included the execution of a two-year lease with the parties’ simultaneous execution of a consent judgment for possession at the end of the two-year period and the defendant landlord’s payment to the plaintiff of $55,000.

The settlement agreement included a general release which contained language releasing the landlord from any and all actions and causes of action, whether known or unknown, or whether asserted or which could have been asserted against the landlord.

Following the execution of the agreement, the plaintiff retained the services of a building inspector to document her apartment’s condition at the beginning of her new lease.  The inspector tested her water.  She learned from the inspector’s report that the lead level in her apartment’s hot water supply was 60 times greater than the level permitted under federal regulations.  She had her blood levels tested and she learned that she had an elevated lead level.

Thereafter, plaintiff vacated the premises pursuant to the settlement agreement.  Following her departure from the apartment, she sued the defendant landlord a second time, claiming that the landlord negligently installed plumbing in her apartment and sought damages for personal injury.  She claimed that the hot water pipe to her apartment tested for lead and that the test results showed a lead level 60 times the permissible lead levels established by the United States Environmental Protection Agency.  She further claimed that she suffered chronic lead poisoning caused by the prolonged contact with the lead contaminated water supply in her apartment and that the lead poisoning resulted in a serious permanent bodily injury.  She sued on various theories of liability which boiled down to the defendant landlord’s “alleged failure to maintain plaintiff’s apartment’s potable water supply in a safe condition, resulting in harm to her through lead contamination.”

The defendant landlord filed a motion to enforce the settlement agreement and dismiss the complaint with prejudice.  The trial court found that all parties had the capacity to understand and enter into this agreement and granted the motion as to defendant, finding that the agreement unambiguously and expressly provided that any and all claims arising out of or relating to the prior lawsuit were waived, which included claims and damages, known or unknown.   The trial court relied upon prior case law for the proposition that a plaintiff who has signed a general release is barred from bringing a subsequent personal injury claim. 

Plaintiff appealed that order, finding that the trial court failed to apply the Supreme Court’s holding in Bilotti v. Accurate Forming Corp.   Pursuant to Bilotti, the Court held that the scope of a release must be determined by the intention of the parties “as expressed in the terms of the particular instrument, considered in the light of all the facts and circumstances.”  A general release would ordinarily cover all claims and demands due at the time of its execution and within the contemplation of the parties.  However, questions of such intent cannot ordinarily be “fairly disposed of on affidavits in a summary judgment application.”

In opposing the defendant’s motion to enforce the settlement, plaintiff submitted a certification that she did not intend to give up any future claims for personal injury damages due to lead poisoning.  Her first complaint was a property-based relief as she sought to compel her landlord to make repairs to her apartment.  Her claims at that time were that the building plumbing system did not supply adequate hot water to her apartment.  It was only after she settled her first lawsuit that she learned that the hot water system was contaminated with lead at unsafe levels.

After considering all of the facts in this case, the Appellate Division did find that the Bilotti case applied and emphasized that a general release, while it would ordinarily cover all claims and demands at the time of its execution, it would only cover those claims within the contemplation of the parties.  The Court found that the trial court made a mistake when it failed to find that there were genuine factual issues on the question of the party’s intent when they settled the first lawsuit.  Hence, the court’s order of dismissal was vacated and the case was remanded back to the trial court for further proceedings. 

Settlement Reached at Mediation Deemed Unenforceable Due to Parties Failure to Sign Written Agreement

This matter arose from a dispute over the sale of two nail salons.  Defendants PD Nail Corp., CD Nail Corp., Hee Jung Kim, and Sook Hee Kim made a $550,000 down payment and acquired possession of the nail salons, but the sales were not finalized due to the deterioration of the negotiations.  Plaintiffs Gold Tree Spa Inc. and Gold Garden of Wall Township, Inc., and Ok Sim Baik filed suit primarily for breach of contract and breach of an agreement to purchase the nail salons.  The parties voluntarily agreed to mediate their dispute but the defendant Baik refused to sign the settlement agreement following the mediation.  The issue in Gold Tree Spa, Inc. v. PD Nail Corp., 2023 N.J. Super. LEXIS 31 (App. Div. Mar. 28, 2023) was whether the parties reached an enforceable settlement agreement due to the failure of the parties to sign a written agreement at the conclusion of the mediation.

At the mediation session, the mediator did prepare a draft settlement agreement which provided that plaintiffs would retain the $550,000 down payment and defendants would retain possession of Sharon Nails but return possession of Ceci Nails, contingent upon Ceci Nails’ landlord consenting to assignment to its lease to plaintiffs by February 1, 2022.  Additionally, defendants agreed to give the third-party defendants (Soon Wea Son, the manager of Ceci Nails and her new nail salon Graceful Nails of Brielle, LLC) $4,000 to resolve any claims between the parties.  Within a few hours after the mediation ended, plaintiff Baik informed her attorney that she did not want to settle and did not sign the agreement.  This refusal to settle was communicated to the other parties and the trial court.

Thereafter, defendants moved to enforce the settlement.  Plaintiffs filed opposition, stating that they were prepared to honor the settlement agreement if the contingencies could be met regarding the assignment of Ceci Nail’s lease.  The parties did acquire the landlord’s consent, contingent upon defendants guaranteeing two years of plaintiff’s rent.  Defendants contacted the mediator and plaintiffs to finalize the draft settlement agreement and sent a bill of sale, contract for sale of business, assignment of lease, and mutual release and indemnification agreement.  Plaintiff’s counsel responded by requesting an extension of time to review the documents while also seeking clarification in disputing certain terms of the agreement, specifically the defendants’ guaranty.  The parties did not finalize the agreement by February 1, 2022 as required by the draft settlement.

The trial court denied the defendants’ motion to enforce the settlement, stating that the motion to enforce the settlement was moot because the parties failed to reach a valid agreement under Willingboro Mall, Ltd. v. 240-242 Franklin Avenue, LLC., 215 N.J. 242 (2013).  In her decision, the trial court judge explained that Willingboro’s requirement that “[the] terms of settlement must be reduced to writing and signed by the parties before the mediation comes to a close” was not satisfied because the parties did not sign the agreement.  Defendants had argued that Willingboro did not apply because, in that case, the mediation was court-ordered and, in the within case, the party’s mediation was voluntary.  Further, the judge stated that plaintiffs’ actions and communications following their rejection of the settlement were irrelevant because there was no meeting of the minds.

In this published Appellate Division decision, the Court applied Willingboro’s holding.  In Willingboro, the Supreme Court found that “[t]o be clear, going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.”  The Appellate Division noted that in the within case, the parties failed to sign the draft settlement agreement and, hence, it was unenforceable under Willingboro’s broad, bright-line rule. 

The Court found that it made no difference that in Willingboro the mediation was court-ordered or that it was a voluntary mediation in this case.  It cited to Justice Albin’s statement in Willingboro that “mediation will not always be successful, but it should not spawn more litigation . . . Instead of litigating the dispute that was sent to mediation, the mediation became the dispute.”  The Appellate Division noted that this case was exactly the situation Willingboro was addressing, i.e., settlement through the mediation process only occurs when the parties agree in writing.

Further, the Court noted that there was no meeting of the minds that a settlement was reached.  The e-mails provided by defendants indicated that Baik refused to sign the draft settlement agreement.  Defendants admitted that they were still engaged in negotiations for the settlement and that the settlement became null and void because they did not finalize it by February 1.

Hence, the Appellate Division upheld the trial court’s decision denying the motion to enforce the settlement and remanded the matter back to the trial court.

This published decision reinforces the necessity of a signed written settlement agreement at the conclusion of a mediation to make any agreement reach at a mediation enforceable.  As the Appellate Division pointed out, the agreement needs to be in writing and signed by the parties, regardless of whether it was a court-ordered mediation or a voluntary mediation.  A term sheet with all materials terms should be sufficient to ensure the enforceability of a settlement reached at the mediation.

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