Originally from Dispute Resolution Journal

WORKER’S COMPENSATION

Mediation Confidentiality/Enforceability of Oral Settlement Agreement

The Utah Supreme Court recently held that settlements reached in mediation must be reduced to writing before a court may enforce their terms. In addition, it ruled that a trial court may not compel the deposition of a mediation participant to determine whether the parties reached an oral settlement.

The case arose out of a workplace injury suffered by Murlyn Reese in May 2000 while employed by Tingey Construction. Tingey’s workmen’s compensation insurer paid Reese’s medical expenses until it went into liquidation. At that point, Utah Property and Casualty Insurance Guaranty Association assumed financial responsibility for Reese’s medical costs, and engaged LWP Solutions to pay those costs from Utah Property’s funds.

In 2004, Reese sued his employer for negligence. The parties agreed to mediate before proceeding with the lawsuit. LWP attended the mediation to protect Utah Property’s interest in any settlement proceeds. Reese claimed that he reached an oral agreement to settle with LWP, and that he relied on that agreement to settle with his employer. However, when the mediator reduced the terms of both agreements into a “memorandum of understanding,” LWP would not sign this document, claiming that it contained a term LWP did not agree with. Both Reese and his employer jointly moved to enforce the oral settlement. They sought to depose LWP’s representative regarding the contents of the mediation, LWP opposed their motion, arguing that Utah’s Alternative Dispute Resolution Act precluded Reese from revealing confidential mediation communications. The trial court ordered a deposition of LWP’s attorney regarding the process of the mediation and the conversations and agreements made.