In Slip and Fall Case, Court Says Fairgrounds Can Enforce Settlement Agreement

On May 12, 2021, the Iowa Court of Appeals published an opinion involving a personal injury settlement arising after an injury at county fairgrounds. After negotiating to settle for $12,500, the plaintiff learned that Medicare was seeking reimbursement in the amount $25,482 for conditional payments made on the plaintiff’s behalf. Because the district court properly applied contract law to the settlement agreement, the Court of Appeals affirmed the grant of summary judgment in favor of the fairgrounds’ owner.  

Background

After a fireworks show at the county fairgrounds, the plaintiff slipped on a wet wooden ramp and fell over a guardrail, causing a serious head injury. The plaintiff filed a negligence lawsuit against the owner, the Benton County Agricultural Society.

While awaiting trial, the owner reached out to the plaintiff’s attorney and offered to settle for $10,000. The plaintiff’s attorney countered, offering to settle for $12,500. He stated that this amount would cover a $2,732 medical lien, as well as attorney fees. The plaintiff would receive the rest. The owner responded stating that their insurance carrier agreed to the amount in exchange for dismissal of the lawsuit and offered to draft a release acknowledging the plaintiff’s duty to “satisfy any subrogation interests and liens.” The owner also asked the attorney to complete a Medicare questionnaire and request a “final CMS letter, showing the amount owed, if any, in reimbursement to Medicare,” as required by law before the settlement could be finalized.

The plaintiff’s attorney completed the questionnaire and gave instructions on how the settlement check should be deposited. However, he eventually learned that Medicare made conditional payments in the amount of $25,482 for the injury. Rather than litigate comparative fault, the owner amended its answer asserting affirmative defenses of compromise and settlement. The plaintiff resisted, claiming that there was a mutual mistake or, in the alternative, no meeting of the minds. The district court found in favor of the owner, holding that there was a meeting of the minds and that the plaintiff bore the risk of any mistake. The plaintiff appealed.

Meeting of the Minds

On appeal, the court first noted that “[s]ettlement agreements are essentially contracts” and are governed by contract law. See Sierra Club v. Wayne Weber LLC, 689 N.W.2d 696, 702 (Iowa 2004). To be enforceable, a contract does not need to be in writing but both parties must express their mutual assent. Here, the parties both agreed to a $12,500 settlement. However, the plaintiff asserted that the parties did not agree on all of the terms, such as the existence of the Medicare lien and that the plaintiff must indemnify the owner against any such claims; therefore, the settlement agreement was not final.

The court sided with the owner and found that the plaintiff agreed to these terms when his attorney gave instructions on how to deposit the settlement check and completed the Medicare questionnaire. Under contract law, “acceptance of an offer is a manifestation of assent to the terms….” Heartland Express, Inc. v. Terry, 631 N.W.2d 260, 270 (Iowa 2001). The plaintiff offered to settle for $12,500, which the owner accepted.

Mutual Mistake

Alternatively, the plaintiff asserts that both parties mistakenly believed the $2,732 payment was the only lien that existed. If there is a mutual mistake, the adversely affected party may void the contract. Restatement (Second) Contracts § 152 (1981). However, the adversely affected party bears the risk of the mistake if he has “conscious ignorance” in that “he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient.” Id. at § 154(b). The courts may also allocate risk to the party when it is reasonable to do so. Id. at § 154(c).

The plaintiff was conscious of the fact that he had limited knowledge of the Medicare payments, yet chose to accept the settlement amount instead of looking into his medical records and payments. Additionally, the Court of Appeals found that the district court reasonably assigned the risk of the mistake to the plaintiff. In the two years between the fall and the commencement of this lawsuit, the plaintiff had ample time to investigate his medical bill payments. Therefore, the court affirmed that the district court properly granted summary judgment on its defense of compromise and settlement.