Must a conservator for a Tennessee person under disabilities seek court permission to compromise and settle a claim for the conservator’s ward?
The Tennessee Court of Appeals says “no.” In Hamilton v. Methodist Healthcare Memphis Hospitals, No. W2022-00054-COA-R3-CV (Tenn. Ct. App. Oct. 16, 2023), plaintiff filed an HCLA suit as conservator on behalf of a disabled 24-year-old patient. In the original suit, plaintiff conservator named multiple defendants, including a doctor and defendant hospital. All claims against the hospital were based on its vicarious liability for the actions of the doctor. At the end of a jury trial, the jury was unable to come to a unanimous verdict, and plaintiff conservator was granted a mistrial. The conservator thereafter entered into a settlement agreement releasing the doctor in exchange for the doctor not pursuing discretionary costs. The same day the agreement with the doctor was signed, plaintiff refiled the HCLA claim against the hospital, naming the hospital as the sole defendant and alleging that it was vicariously liable for the actions of the doctor.
Unsurprisingly, the hospital later argued that it could not be liable under the theory of vicarious liability for any fault of the doctor because the doctor, its agent, was released from liability. This result was mandated because of Abshure v. Methodist Healthcare-Memphis Hospitals, 325 S.W.3d 98, 106 (Tenn. 2010).
To avoid this disaster, plaintiff conservator claimed that she did not have the authority to settle with the doctor without court approval. The Tennessee Court of Appeals found that order appointing her as conservator gave her the legal right to settle the claim with the doctor and Tennessee law did not require her to obtain court approval prior to doing so.
The Court of Appeals said:
We likewise interpret the probate court’s order of appointment in this case as authorizing the action taken by the conservator. She entered into a Consent Agreement agreeing not to name Dr. Rayder as a defendant in her re-filed complaint in exchange for his agreement to withdraw his motion for discretionary costs. “[S]ettlement agreements are contracts between the parties[.]” The order of appointment vested Ms. Hamilton with the power to “dispose of property, execute instruments, . . . enter into contractual relationships, . . . and pursue legal causes of actions on behalf of [Ms. McGill],” including “the power to collect, receive, and manage the monies, property, and effects of the Ward[.]” And, as Methodist aptly notes on appeal, Tennessee courts have found in other contexts that the authority to settle was encompassed by other powers. … Considering the language used in the probate court’s order of appointment, we conclude that it authorized Ms. Hamilton to enter into the Consent Agreement at issue.
Id. at 12. (internal citations omitted).
The appellate court then concluded that Tennessee Code Annotated section 34-1-121(b) “’gives a court the power to approve a settlement [entered into by a conservator], but does not mandate that the court must approve all settlements.’” Thus, we reject the conservator’s position that approval by the probate court was mandatory and that the Consent Agreement was void without it.” Id. at 15. Note: the opinion distinguishes settlements by conservators from those acting for minors; claims involving minors are governed by a different statutory provision.