Personal injury cases are often accompanied by healthcare-related liens which you must take care of before receiving the settlement. The most challenging type of lien when it comes to your personal injury case, is an ERISA health insurance lien.
What is ERISA?
The Employee Retirement Income Security Act (ERISA) is a federal law that provides the minimum standards for most voluntarily established retirement and health plans for companies to provide protection for individuals in these plans. Recently, ERISA has been used by large self-funded insurers to avoid preemption by state laws that could hinder their ability to recover dollars paid on behalf of employees. Preemption occurs when state law and the federal law conflict, federal law blocks state law, due to the Supremacy Clause of the Constitution.
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What is an ERISA Health Lien and How Does it Impact My Settlement?
If you receive a settlement from a third party and an ERISA health plan paid for your medical care, your settlement must be used to pay back your ERISA plan. Our attorneys can work with you to lower the amount of your lien by reviewing various aspects of your plan.
Types of ERISA Plans
One of the first steps is to determine whether your plan is an ERISA plan. Few plans are actually covered by ERISA.
Is my plan covered by ERISA?
We will help you evaluate your plan to determine whether your plan is covered by ERISA. Our team of highly experienced attorneys will evaluate questions including whether you plan is directly funded by the employer. We will look at how large your employer is or if you work for the government.
Self-Funded Plans and Insured Plans.
A self-funded plan is where the employer pays an insurance group to carry a plan. “A Self Funded, or Self-Insured plan, is one in which the employer assumes the financial risk for providing health care benefits to its employees. In practical terms, Self-Insured employers pay for claims out-of-pocket as they are presented instead of paying a pre-determined premium to an insurance carrier for a Fully Insured plan. Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims.” Self-funded health plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA).
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What does the McCutchen Court Case Mean to My ERISA Negotiations?
The Supreme Court ruled on ERISA liens in the US Airways, Inc. v. McCutchen case. The Supreme Court determined that equitable defenses such as unjust enrichment could not be asserted against a plan’s equitable lien by agreement claim. To recover on a claim of unjust enrichment, the you must show that the defendant was unjustly enriched at your expense. An “Equitable Lien” can be defined as “a category of liens that are typically imposed by a court for reasons of fairness.” As such, if a reimbursement claim was equitable in nature because the plan’s terms created an equitable lien by agreement on third-party settlements. This could be a “victory” for you because it could allow you to reduce the lien to cover some attorneys’ fees owed. Ultimately, the court said the specifics of the plan should be reviewed to determine to what extent the ERISA plan should be reimbursed. You should discuss with an attorney how the McCutchen decision will impact your recovery and whether it will impact your lien amount.
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What steps will our Team Take?
Our team of attorneys is extremely competent in handling ERISA lien claims with personal injury settlements. Specifically, we will look to see whether your plan is self-funded and evaluate what items to request to proceed with your case. Once we have all the documents related to your case, we will evaluate various legal arguments to support your case including the following:
State Law Preemption
We will evaluate your claim to see whether your plan is not self-funded, and would therefore have state law applied.
Language in your plan
We will scrutinize your plan language to determine whether there is an argument to be made that there is no right of reimbursement under ERISA.
Made Whole Doctrine
We will determine whether the made whole doctrine establishes that there is no plan recovery available in your case. Essentially, the made whole doctrine limits the use of subrogation, or substitution of one person or group by another in respect of a debt or insurance claim, prior to an insured party receiving full compensation for damages.
Common Fund Doctrine
We will ascertain if your plan’s language addresses attorney’s fees and can argue, pursuant to the McCutchen case that the amount should be reduced for recovery of attorney’s fees.
Reduce Settlement with Medical Expenses
We will argue that most of the settlement proceeds were for things other than medical expenses if the plan had a lien only on the portion of proceeds for medical expenses.
Ensure You Fully Understand Your Plan and The Implications on Your Lien and Settlement
As you can see, these are highly complex matters that can have a big impact on your finances. As such, it is of utmost importance to contact a personal injury lawyer that understands the intricacies of ERISA and liens.
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