A New Jersey appeals court has vacated a $1.25 million medical malpractice settlement after finding that the trial judge imposed conditions that a defendant physician never agreed to.

The issue of whether a defendant's settlement contribution is paid in cash or placed in an annuity is a material detail and cannot be forced on a party who does not agree to it, the Appellate Division said in the opinion, captioned V.M. v. Jersey Shore University Medical Center.

The appeals court vacated an order approving a settlement based on the trial judge's imposition of several terms that the settling physicians did not agree to. Those terms included a requirement that the defendants' insurance company purchase an annuity to fund a special-needs trust, a separate payment of $30,000 to the trust for the plaintiff's immediate needs, and appointment of the plaintiff's mother as sole trustee without the requirement of a bond. The appeals court also vacated a sanction ordering the appellant doctor to pay the plaintiffs' counsel fees, in an undetermined amount, for failing to comply with the settlement terms.

The case was brought on behalf of an incapacitated man, identified in the opinion as “V.M.,” who was born in 1993 at Jersey Shore University Medical Center in Neptune, New Jersey. V.M. had a strep infection that led to cerebral palsy. His mother and guardian, LaTanya Murphy, filed a suit in 2009 accusing several physicians of negligence in connection with her pregnancy and her son's delivery. The suit claimed that the doctors deviated from the standard of care, and that contributed to V.M.'s permanent disabilities.

In the midst of a jury trial in September 2015, defendant physicians George Laubach and Steven Feld agreed to settle for $1.25 million. Also under the proposed settlement, another physician, Charles Hux, would be dismissed without contributing to the settlement.

Separately, Jersey Shore University Medical Center agreed to pay $150,000 in settlement to the plaintiffs, but that settlement is not related to the present issue on appeal.

At a hearing held to approve the settlement in March 2016, Murphy initially expressed a desire to have the entire amount of the settlement paid to her as the guardian of V.M., but she later consented to having the money placed in a special-needs trust. Later, Superior Court Judge Joseph Quinn of Monmouth County asked an attorney who specializes in settlements involving minors and incapacitated adults to provide advice on disbursement of V.M.'s settlement. The attorney called for the special-needs trust to be funded through the purchase of an annuity, called for Murphy to be named sole trustee, and recommended payment of $30,000 of the settlement funds up front to help with V.M.'s housing and transportation needs.

Laubach and Feld did not agree with the mandate to purchase an annuity, the up-front payment and the appointment of V.M.'s mother as sole trustee without a bond. Quinn, finding that the terms recommended by the consulting attorney were in V.M.'s best interests, issued a final order specifying the settlement terms.

Laubach and Feld appealed. At the Appellate Division, Judges Jack Sabatino and Mitchel Ostrer said that a settlement is not enforceable unless the parties have agreed on all essential terms. They cited a 2007 Appellate Division ruling in Impink v. Reyes, which held that a defendant's insurance carrier may, within the bounds of good faith, determine what issues are of material importance to it. In the context of a hearing to approve a settlement involving a minor or incapacitated person, the court's inherent powers do not permit a judge to change the terms of a settlement without the parties' consent.

Sabatino and Ostrer ordered the parties to conduct a case management conference within 30 days.

“If a final enforceable settlement with all material terms is attained, it shall be reduced to writing and presented to the trial court for review at a renewed friendly hearing. At such a hearing, the court's sole options will be either to approve the negotiated terms, or reject them as not being in V.M.'s best interests,” the judges said in an unsigned opinion.

Mark Petraske of Buckley Theroux Kline & Petraske in Princeton, New Jersey, who represented Laubach, said the ruling was “a correct result as far as it clearly was not a meeting of the minds.” He said he expects the case to be resolved on remand.

Manasquan attorney Joseph DiCroce, who represented Feld, and Sharyn Rootenberg of Chase Kurshan Herzfeld & Rubin in New York, who represented V.M. and Murphy, did not return calls seeking comment.