TIPS FOR HANDLING ERISA SUBROGATION LIENS IN PERSONAL INJURY CASES
Solving your client’s health care related liens often stands in the way of settling the personal injury case. ERISA liens have become exponentially more problematic post McCutchen, the most recent case from U.S. Supreme Court on the subject. The McCutchen ruling clarified the split amongst the lower courts regarding whether equitable defenses should apply to ERISA subrogation claims. The Court definitively ruled that equitable defenses do not apply, effectively limiting Plaintiff counsels’ most successful arguments to negotiate ERISA liens. ERISA plans and third party administrators are using McCutchen to wholesale refuse to except anything less than dollar for dollar reimbursement because of the perceived inability to lose under the Court’s new ruling.
While McCutchen does limit the ability to effectively negotiate the ERISA subrogation claim, there are several strategies that should be explored before conceding reimbursement. First, a determination of whether the Plan is self-funded or insured must be made. If the Plan is self-funded federal law preempts state law and McCutchen applies. If the plan is insured, meaning an insurance company is paying the health care expenses with its own monies, then State law applies to the interpretation of the plan documents and whether the plan has a right of reimbursement. The law varies from state to state, with the spectrum defined as no difference between state and federal law on one hand, to specific strict procedural controls that may limit the right of plan reimbursement on the other.
To determine whether the plan is self-funded or insured, you can request the Summary Plan Description from the Plan Administrator or Third Party Plan Administrator. There are sites that allow you to search for this information by employer and it’s free. If you would like more information on this process, please enter your email at the conclusion of this article to get immediate access to instructions. Other documents that should be requested include the Actual Plan or Contract, the Bargaining Agreement, the Latest Summary Annual Report, the Latest Terminal Report and the Trust Agreement.
The examination of the Plan documents together with the application of your state law can lead to possible defenses to the Plan’s right of reimbursement if the Plan is an insured Plan. Look for Plans that are silent as to attorney fees allocation to argue common fund doctrine to make the Plan contribute to the attorney fees thus reducing the overall right of reimbursement. Additionally, in certain jurisdictions the state law may allow for strict notice requirements regarding amounts claimed by the Plan to potentially bar the Plan’s reimbursement right. While occurring less frequently after McCutchen, check to make sure the insured Plan does not actively exclude or eliminate the Made Whole Doctrine which can be used a strong defense to reimbursement. If all else fails, argue the facts! Often a negotiation can be reached by detailing how the case will not be brought if the total amount of the reimbursement is required by the Plan. Another strategy with smaller self-funded Plans, may be to get your client to request that the owner or management waive the right of reimbursement when the settlement funds or policy limit is such that the client is clearly not made whole.
While the legal arguments and negotiation strategies have been discussed, there is a new and novel method to address the underlying ERISA lien in many personal injury cases, securing massive reductions in ERISA subrogation claims with little to no legal effort on the part of Plaintiff’s Counsel. While initially appearing counter intuitive, attacking the causation of your client’s injury in a safe and non-discoverable manner can attack the basis for the ERISA lien. Diagnostic Dating Specialists, LLC provides real time double blind expert reports from Board Certified Radiologists to determine if the injury is related or unrelated to the date of the incident forming the basis of the claim using objective findings and peer reviewed supported opinion. Approximately 80% of all DOI (“Date of Injury”) Reports determine that the injury is unrelated to the date of the accident. Armed with this report after a tentative settlement agreement, Plaintiff’s Counsel can manage his or her Client’s expectations and often reduce or eliminate the medical bills associated with expensive surgeries and treatments from the ERISA lien through an unbiased double blind medical opinion provided by a Board Certified Radiologist. The reports typically can be produced in two to five business days for less than $500.00 and is an expense to the case.
All of the arguments made by Defense Counsel and the Insurance Company can be used along with this report to eliminate the need for time consuming research and challenging legal arguments and accomplish the goal of increasing the monies to the Client to effectuate faster and more lucrative settlements. Please contact us today for a free consultation on how our expert reports can assist you in settling those challenging personal injury cases that have ERISA liens preventing or inhibiting settlement. Mention this special code: BEAT ERISA within the next seven days and receive your first DOI report at a low introductory rate of $425.00. With a signed patient release, we can also will obtain the necessary medical scans/film on your behalf in an expedited manner. As a note, we have success with reducing Medicare and Medicaid liens through our expert process as well. Contact us today.