Beware of Hold Harmless Language in Settlements
The recent case of Manuel Barajas v. F&H Cold Storage should serve as a warning to all practitioners who, out of a matter of routine, add hold harmless language to settlement paperwork or agree to such language in Order Approving settlement paperwork. In Barajas, the defendants noted that they would adjust, litigate or pay the lien of a non-Medical Provider Network (MPN) physician. However, the pre-drafted Judge’s Order Approving Compromise and Release added the additional language that the defendants would hold the applicant harmless regarding liens of record.
The defendants did not file a petition for reconsideration of the judge’s Order which added the additional language holding the applicant harmless. The hold harmless language is often pre-printed on a judge’s Order Approving Compromise and Release thus it was unlikely the Defendant even noticed the hold harmless language. The net result in the end was that the defendants faced exposure for the treatment provided by a MPN physician. The WCAB indicated in their opinion that the hold harmless language included in the order placed the defendants in the shoes of the applicant for the self-procured or non-MPN treatment for which they ultimately became responsible.
Please note that these issues apply to liens not only with self-procured treatment or treatment provided outside of the MPN but as well as to Employment Development Department liens, child support liens, etc.
Based upon the Barajas case, you may want to consider changing the way you normally proceed with settlement paperwork. At a minimum, you should consider 3 issues:
- When drafting the Compromise and Release or other settlement paperwork, avoid hold harmless language in your settlement paperwork.
- Consider drafting your own proposed order for the judge to consider rather than relying upon a pre-printed form that often includes hold harmless language.
- Consider utilizing a walk-through for approval of settlement paperwork rather than mailing in settlement paperwork for the judge to consider. If the only remedy to the judge adding language to the Order Approving Compromise and Release is a Petition for Reconsideration, the extra cost for a walk-through in which a party can object at the time the order is drafted may be worth considering.
When evaluating your case for settlement, be aware of the potential for any treatment by a non-MPN or self-procured treatment by the applicant so that this issue can be considered in settlement negotiations. This way you can specifically notify the applicant or applicant attorney that there will not be any hold harmless language agreed to for the self-procured treatment or non-MPN liens.
At the present time, it is unknown as to whether the Barajas case will hinder the parties’ ability to agree upon a Compromise and Release. Certainly the amount of treatment being provided by non-MPN doctors makes this an issue which needs to be considered and analyzed as part of the settlement negotiations, when drafting the settlement paperwork, and now the order approving settlement agreements.