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Settlement accepted? That makes it a contract

by on
in Employment Law,Human Resources

Here’s something to remember when your attorneys are negotiating a settlement agreement in a pending lawsuit or other claim: As soon as you and the other party agree to an offer, a contract is formed and the terms are binding. That’s true even if the agreement hasn’t yet been signed.

Recent case: Surgeon Nabil Bissada is an Egyptian Coptic Chris­tian. When other medical profes­sionals he worked with at a children’s hospital complained about Bissada’s failure to communicate with patients, canceled operations and poor surgical outcomes, the hospital initiated a peer review of 18 patient files. After­ward, administrators terminated his hospital privileges.

Bissada requested a hearing, as the hospital’s procedures allowed. His attorneys then suggested a possible settlement that involved dropping the privilege termination in exchange for his voluntary resignation. In addition, the offer included specific language that the hospital would report Bissada to the National Practitioner Data Bank (NPDB). A report to the NPDB can have serious implications for a doctor’s license.

The hospital immediately accepted the offer and sent off the suggested report language to the NPDB. But Bissada then said he did not agree to the terms and sued, alleging various forms of discrimination based on national origin and religion.

The court said he was out of luck because once it was accepted, the offer became a contract even if it had not yet been officially signed. (Bissada v. Arkansas Children’s Hospital, No. 09-2138, 8th Cir., 2011)

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