What is an unconditional tender, and what is the problem with a condition upon a settlement check?
Very few cases have caused this much concern recently as the Louisiana Supreme Court’s ruling in Zinn v. Zagis, USA, LLC, 307 So.3d 193 (La. 12/322/20). In that case, the parties reached a full and final settlement, and the carrier presented the settlement check to counsel for Mr. Zinn. On the back of the settlement check was the following language, “Notice to Injured Workers Being Paid Disability or Supplemental Benefits. By endorsing this check, I certify that I have not worked or earned wages from any business or individual during the period covered by this check, or that I have reported any earnings to the employer/carrier paying me workers’ compensation benefits. I understand that making a false statement by endorsing this benefit check may result in civil or criminal penalties.”
The attorney for Mr. Zinn held the checks for thirty days – the time limit in which to make an “unconditional tender” of settlement funds – and then filed a claim for penalties and attorney’s fees for not properly paying the settlement within thirty days. The trial court, and later the appellate court, ruled that penalties and attorneys’ fees were not proper due to the developing nature of case law on this issue; however, the Louisiana Supreme Court had no such qualms and found that the language on the back of the settlement check was a prohibited condition requiring the employee to acknowledge that obligation before being able to negotiate the check. And as the settlement funds were not unconditionally tendered within 30 days, penalties and attorneys’ fees were appropriate.
Remember, when you pay a settlement or judgment, the presentation of the funds, or the “tender,” must be “unconditional.” That unconditional tender must be presented within 30 days after the settlement is approved or the judgment is finalized under LSA-R.S. 23:1201(G). If there is any requirement on that settlement check requiring the employee to agree to something, obligate himself to do something, etc., then that tender is conditional. While the language above may be appropriate for an indemnity check, such seemingly innocuous obligations that require the employee to agree prior to the funds being available now run afoul of the Zinn case. Zinn now stands for the proposition that a settlement or judgment check must be completely “unconditional” and can have no other limiting language or language requiring the employee to do anything other than signing the check and taking the money.
We would recommend that all readers of this newsletter coordinate with the department that issues your checks and ensure that any settlement check or a judgment check do not have any conditional language. We recommend that you have this conversation with that department immediately, as we can guarantee to you that every claimants’ attorney in the State of Louisiana is now looking at the back of every settlement or judgment check.
Fun Fact: Dr. Zin was the main protagonist of Dr. Benton Quest, the father of Jonny Quest, from the 1960’s cartoon series, Johnny Quest.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.