The below article of mine recently appeared in the June 18, 2026 edition of the Pennsylvania Law Weekly and is republished here with permission.
Remedies for Late Payment of Settlement Funds
June 18, 2026
By
Daniel E. Cummins
In most instances, once a civil litigation matter is settled, the defendant’s liability insurance carrier promptly issues payment. In this regard, the carrier has an interest in both protecting its insured in this regard and in closing out another file. However, in rare instances, a settlement payment may be delayed for an inordinate period of time for one reason or another.
When a settlement payment is delayed, plaintiffs have options to compel the production of the settlement payment or to secure sanctions against the defendant relative to the delay. Most settlement agreements themselves outline when payment is due. And, whether or not there is such a provision in a release regarding the timing of a payment, plaintiffs also have the benefit of the mandate under Pa.R.C.P. 229.1, which requires that the settlement payment be “delivered … within 20 calendar days from the defendant’s receipt of an executed release.”
In terms of the status of Pennsylvania law in this regard, it is often said by many that, if one needs a thorough overview of the current status of a particular area of the law, one should look for a decision on the issue written by Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas. This advice holds true with Nealon’s recent opinion in the case of Hill v. Riverside Healthcare and Rehabilitation Center, No. 2023-CV-3399 (C.P. Lacka. Co. May 22, 2026 Nealon, J.), in which Nealon addressed the topic of remedies available to a plaintiff under Pa.R.C.P. 229.1 where a defendant fails to produce a settlement payment in a timely fashion after the receipt of an executed release.
According to the opinion, this matter involved a professional liability action against the health care and rehab center. The plaintiff’s decedent’s had been a patient at the defendant’s facility. The defendant facility owner at issue in this case eventually became insolvent and filed for bankruptcy.
During the course of this litigation, the parties agreed to participate in a settlement conference with a private mediator. Prior to the mediation, the defendant’s attorney confirmed in writing that the parent and affiliate entities of the defendant were insolvent and in bankruptcy proceedings. Defense counsel also confirmed that, as such, the defendant would not be able to satisfy the first $75,000 of any settlement as that represented the amount of the defendant’s deductible, but that any obligation above that amount would be covered by the defendant’s liability insurance policy.
As a result of the mediation, the parties reached a settlement agreement for a net payment of $175,000. The total amount of the party’s settlement was actually $250,000 but the plaintiff agreed to waive the defendant’s payment of its $75,000 deductible. The net settlement payment of $175,000 was to be paid entirely by the defendant’s liability insurance carrier.
The court’s opinion emphasized that the insurance company’s adjuster had agreed to the settlement without any indication of any coverage issues existing between the defendant and its insurance company.
After the settlement, the plaintiff proceeded to court on a petition for court approval of the settlement in this death case. The court granted the Plaintiff’s petition and approved the settlement. The parties then executed the settlement agreement.
Plaintiff’s counsel then sent the signed release, the court order approving the settlement and other closing documents to the defendant’s counsel and requested the settlement payment.
In his opinion in this Hill case, Nealon emphasized that noticeably absent from the settlement agreement was any indication or even a suggestion that a coverage issue may exist between the defendant and its insurance company. Nor was there any reference that any such coverage issue needed to be resolved before the plaintiff would receive the settlement payment.
Thereafter, when plaintiff’s counsel wrote for the status of the settlement check, defense counsel indicated that there was some issue that the adjuster had to work out. Again, there was no reference made to any insurance coverage issues.
The opinion of the court noted facts that showed that the plaintiff’s attorney showed great patience and was more than accommodating in his repeated efforts to secure the production of the settlement check over the next several months. After several months then went by with no production of the settlement check, counsel for the plaintiff filed a motion under Pa.R.C.P. 229.1 relative to the defendant’s failure to produce the settlement check in a timely fashion after the production of the executed release.
Judge Nealon reviewed Pennsylvania Rule of Civil Procedure 229.1 which governs the prompt delivery of settlement funds within 20 days of the receipt of an executed release by the defendant.
The rule otherwise provides that, if court approval of the settlement is required, the mandated 20-day time period under Rule 229.1 does not become operative until the settlement is so approved.
Nealon noted that, under Rule 229.1, if a defendant fails to timely deliver settlement funds, a plaintiff has the right to seek either of two remedies. First, a plaintiff can seek to invalidate the settlement agreement and request that the matter return to the trial list. Second, a plaintiff can seek certain sanctions against the defendant.
The court in Hill noted that, if the plaintiff opt to pursue sanctions against the defendant, Rule 229.1(e) directs the plaintiff to file an affidavit “attesting to nonpayment,” and to submit six items for the court’s review with the affidavit. Among the documents to be submitted with the affidavit are a copy of “any document evidencing the terms of the settlement agreement,” a copy of “the executed release,” a copy of “a receipt reflecting delivery of the executed release,” a certification by counsel “the applicable interest rate,” and “that the affidavit and accompanying documents have been served on the attorneys for all interested parties.” Lastly, also attached to the affidavit should be “the form of order prescribed by subdivision (h)” of Pa.R.C.P. 229.1 for execution by the court.
Nealon additionally noted that the type of sanctions allowed in this instance are spelled out under Pa.R.C.P. 229.1. More specifically, under Rule 229.1(g), if the court determines that a defendant has failed to deliver the settlement funds within 20 days and there is no material dispute as to the terms of the settlement or the terms of the release, the court “shall impose sanctions in the form of interests calculated at the rate equal to the prime rate as listed in the First Edition of the Wall Street Journal published for each calendar year for which interest is awarded, plus 1%, not compounded, running from the 21st day to the date of delivery of the settlement funds, together with reasonable attorney fees incurred in the preparation of the affidavit.”
Nealon otherwise ruled in the Hill case that the fact that the insurance company’s noncompliance with the payment requirement may be attributable to a post-settlement assertion of a potential coverage issue did not warrant the denial of the plaintiff’s request for sanctions relative to the failure of the carrier to produce the settlement check within 20 days of the production of the executed release.
Conclusion
The Hill decision written by Judge Nealon provides thorough guidance on the steps to take in securing sanctions relative to a late payment of settlement funds required by an executed release.
As evidenced by plaintiff’s counsel’s actions in the Hill case, it is advisable for the plaintiff to show some patience while repeatedly requesting, in writing, the settlement payment once the mandated 20-day time period has expired for the timely production of the check. By showing some patience and creating a written record of repeated requests for the production of the check, the plaintiff will be able to bolster their request for sanctions as opposed to the case where a plaintiff runs to the courthouse on a motion for sanctions on the 21st day after the release was received by the defense counsel.
Daniel E. Cummins is the managing partner at Cummins Law in Clarks Summit, Pennsylvania. Contact him at dancummins@cumminslaw.net.
Reprinted with permission from the June 18, 2026 edition of the "The Pennsylvania Law Weekly © 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
June 18, 2026
By
Daniel E. Cummins
In most instances, once a civil litigation matter is settled, the defendant’s liability insurance carrier promptly issues payment. In this regard, the carrier has an interest in both protecting its insured in this regard and in closing out another file. However, in rare instances, a settlement payment may be delayed for an inordinate period of time for one reason or another.
When a settlement payment is delayed, plaintiffs have options to compel the production of the settlement payment or to secure sanctions against the defendant relative to the delay. Most settlement agreements themselves outline when payment is due. And, whether or not there is such a provision in a release regarding the timing of a payment, plaintiffs also have the benefit of the mandate under Pa.R.C.P. 229.1, which requires that the settlement payment be “delivered … within 20 calendar days from the defendant’s receipt of an executed release.”
In terms of the status of Pennsylvania law in this regard, it is often said by many that, if one needs a thorough overview of the current status of a particular area of the law, one should look for a decision on the issue written by Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas. This advice holds true with Nealon’s recent opinion in the case of Hill v. Riverside Healthcare and Rehabilitation Center, No. 2023-CV-3399 (C.P. Lacka. Co. May 22, 2026 Nealon, J.), in which Nealon addressed the topic of remedies available to a plaintiff under Pa.R.C.P. 229.1 where a defendant fails to produce a settlement payment in a timely fashion after the receipt of an executed release.
According to the opinion, this matter involved a professional liability action against the health care and rehab center. The plaintiff’s decedent’s had been a patient at the defendant’s facility. The defendant facility owner at issue in this case eventually became insolvent and filed for bankruptcy.
During the course of this litigation, the parties agreed to participate in a settlement conference with a private mediator. Prior to the mediation, the defendant’s attorney confirmed in writing that the parent and affiliate entities of the defendant were insolvent and in bankruptcy proceedings. Defense counsel also confirmed that, as such, the defendant would not be able to satisfy the first $75,000 of any settlement as that represented the amount of the defendant’s deductible, but that any obligation above that amount would be covered by the defendant’s liability insurance policy.
As a result of the mediation, the parties reached a settlement agreement for a net payment of $175,000. The total amount of the party’s settlement was actually $250,000 but the plaintiff agreed to waive the defendant’s payment of its $75,000 deductible. The net settlement payment of $175,000 was to be paid entirely by the defendant’s liability insurance carrier.
The court’s opinion emphasized that the insurance company’s adjuster had agreed to the settlement without any indication of any coverage issues existing between the defendant and its insurance company.
After the settlement, the plaintiff proceeded to court on a petition for court approval of the settlement in this death case. The court granted the Plaintiff’s petition and approved the settlement. The parties then executed the settlement agreement.
Plaintiff’s counsel then sent the signed release, the court order approving the settlement and other closing documents to the defendant’s counsel and requested the settlement payment.
In his opinion in this Hill case, Nealon emphasized that noticeably absent from the settlement agreement was any indication or even a suggestion that a coverage issue may exist between the defendant and its insurance company. Nor was there any reference that any such coverage issue needed to be resolved before the plaintiff would receive the settlement payment.
Thereafter, when plaintiff’s counsel wrote for the status of the settlement check, defense counsel indicated that there was some issue that the adjuster had to work out. Again, there was no reference made to any insurance coverage issues.
The opinion of the court noted facts that showed that the plaintiff’s attorney showed great patience and was more than accommodating in his repeated efforts to secure the production of the settlement check over the next several months. After several months then went by with no production of the settlement check, counsel for the plaintiff filed a motion under Pa.R.C.P. 229.1 relative to the defendant’s failure to produce the settlement check in a timely fashion after the production of the executed release.
Judge Nealon reviewed Pennsylvania Rule of Civil Procedure 229.1 which governs the prompt delivery of settlement funds within 20 days of the receipt of an executed release by the defendant.
The rule otherwise provides that, if court approval of the settlement is required, the mandated 20-day time period under Rule 229.1 does not become operative until the settlement is so approved.
Nealon noted that, under Rule 229.1, if a defendant fails to timely deliver settlement funds, a plaintiff has the right to seek either of two remedies. First, a plaintiff can seek to invalidate the settlement agreement and request that the matter return to the trial list. Second, a plaintiff can seek certain sanctions against the defendant.
The court in Hill noted that, if the plaintiff opt to pursue sanctions against the defendant, Rule 229.1(e) directs the plaintiff to file an affidavit “attesting to nonpayment,” and to submit six items for the court’s review with the affidavit. Among the documents to be submitted with the affidavit are a copy of “any document evidencing the terms of the settlement agreement,” a copy of “the executed release,” a copy of “a receipt reflecting delivery of the executed release,” a certification by counsel “the applicable interest rate,” and “that the affidavit and accompanying documents have been served on the attorneys for all interested parties.” Lastly, also attached to the affidavit should be “the form of order prescribed by subdivision (h)” of Pa.R.C.P. 229.1 for execution by the court.
Nealon additionally noted that the type of sanctions allowed in this instance are spelled out under Pa.R.C.P. 229.1. More specifically, under Rule 229.1(g), if the court determines that a defendant has failed to deliver the settlement funds within 20 days and there is no material dispute as to the terms of the settlement or the terms of the release, the court “shall impose sanctions in the form of interests calculated at the rate equal to the prime rate as listed in the First Edition of the Wall Street Journal published for each calendar year for which interest is awarded, plus 1%, not compounded, running from the 21st day to the date of delivery of the settlement funds, together with reasonable attorney fees incurred in the preparation of the affidavit.”
Nealon otherwise ruled in the Hill case that the fact that the insurance company’s noncompliance with the payment requirement may be attributable to a post-settlement assertion of a potential coverage issue did not warrant the denial of the plaintiff’s request for sanctions relative to the failure of the carrier to produce the settlement check within 20 days of the production of the executed release.
Conclusion
The Hill decision written by Judge Nealon provides thorough guidance on the steps to take in securing sanctions relative to a late payment of settlement funds required by an executed release.
As evidenced by plaintiff’s counsel’s actions in the Hill case, it is advisable for the plaintiff to show some patience while repeatedly requesting, in writing, the settlement payment once the mandated 20-day time period has expired for the timely production of the check. By showing some patience and creating a written record of repeated requests for the production of the check, the plaintiff will be able to bolster their request for sanctions as opposed to the case where a plaintiff runs to the courthouse on a motion for sanctions on the 21st day after the release was received by the defense counsel.
Daniel E. Cummins is the managing partner at Cummins Law in Clarks Summit, Pennsylvania. Contact him at dancummins@cumminslaw.net.
Reprinted with permission from the June 18, 2026 edition of the "The Pennsylvania Law Weekly © 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
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