A closed mid-diaphyseal humerus fracture with a radial nerve palsy on presentation is not a contraindication to functional brace management.
Commonly accepted parameters for closed treatment include less than 30 degrees of varus angulation, 20 degrees of anterior/posterior angulation, and 3 cm of shortening. Operative indications are: associated vascular injuries, bilateral humeral shaft fractures, polytrauma patient (including paraplegia), segmental fractures, injury to the brachial plexus, pathological fractures, floating elbow, and floating shoulder.
The article by Rutgers and Ring found that proximal one-third oblique humeral shaft fractures had an unacceptably high 29% rate of nonunion treated with a functional brace.
The article by Sarmiento et al found a 97% rate of union, a radial nerve palsy incidence of 11%, and no contraindication to the use of functional braces in humeral shaft fractures associated with radial nerve palsy.
The review article by Defranco and Lawton states that 70% of these radial nerve injuries recover spontaneously. They note that it "seems reasonable, however, to consider surgical intervention (radial nerve exploration) between 4 and 6 months based on the patient’s clinical course."
Sarmiento A, Zagorski JB, Zych GA, Latta LL, Capps CA. Functional bracing for the treatment of fractures of the humeral diaphysis. J Bone Joint Surg Am. 2000 Apr;82(4):478-86
PMID:10761938 (Link to Abstract)
Rutgers M, Ring D. Treatment of diaphyseal fractures of the humerus using a functional brace. J Orthop Trauma. 2006 Oct;20(9):597-601.
PMID:17088660 (Link to Abstract)
DeFranco MJ, Lawton JN. Radial nerve injuries associated with humeral fractures. J Hand Surg Am. 2006 Apr;31(4):655-63. Review.
PMID:16632062 (Link to Abstract)