Posted by Matthew Garretson
Question:
I represent a client who was involved in two collisions with a total of $100,000 coverage available. Her employer's self-insured health plan paid out more than $100,000. The employer's plan says it gets first dollar from any recovery, and recovers all of its payments, but is silent about the common fund and made whole doctrines. Do the common fund and made whole doctrines apply in the 9th Circuit when an employer plan does not specifically exempt them?
My recollection of the recent ERISA cases is they say the employer can get reimbursement. Is that correct? If the client-employee was not provided a copy of the contract or a summary plan description, does that have any effect on the insurer's ability to get reimbursement? What if the summary plan description varies from the contract?
-Oregon Attorney
Answer:
If the client is not given a Summary Plan Description (SPD), there may be an equitable defense of "unclean hands" - although I've never seen this used in the decisions I'm familiar with. Certainly if the client requests a copy and the plan administrator refuses to deliver one, then the administrator is in plain violation of ERISA per 29 USC 1024 and 29 USC 1132(c). I would at the very least refuse to honor a reimbursement demand until the plan has provided the SPD and the Form 5500 from the date of injury, since an administrator has to provide those under ERISA (the technical penalty for the failure to do so is a daily fine, but I would argue that so long as they are not compliant with the statute, they're not entitled to an equitable ERISA lien). However, whether this is a solid defense to lien enforcement is a proposal which, to my knowledge, has not been tested by a court.
With regard to differences between the SPD and the actual plan or contract, this depends on which circuit you're in. Some circuits have held that the contract controls, while others have held that the SPD controls. For example, see Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 113-14 (2d Cir. 2003) (SPD controlled); Aiken v. Policy Mgmt. Sys. Corp., 13 F.3d 138, 141 (4th Cir. 1993) (SPD controlled); Branch v. G Bernd Co., 955 F.2d 1574, 1579 (11th Cir. 1992) (plan controlled); Edwards v. State Farm, 851 F.2d 134, 137 (6th Cir. 1988) (SPD controlled).
Tuesday, March 4, 2008
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