Lien Reduction Policies

Posted by Matthew Garretson and Elizabeth Vish Schad

Question:
What is the status of lien reduction policies?

-Recent Seminar Attendee

Answer:
There are several lien reduction considerations in private liens. The best place to start is to determine the type of plan. First, identify whether the plan is self-funded or insured. Self-funded plans which pay for healthcare out of the employers assets are exempt from state insurance regulation and defenses. They are governed solely by ERISA and state law defenses are not available. Insured plans are governed by ERISA and the state insurance plan. If you are dealing with an insured plan, state law defenses are available to reduce or defeat the lien. To determine whether the plan is self-funded or insured request and review the plan’s annual report to the Department of Labor which has to declare the plan’s funding status.

Further reduction tactics include, review of the Specific Fund Doctrine for applicability, the Made Whole Doctrine, the Common Fund Doctrine and case law. Under Sereboff, a lien is enforceable against the settlement of the injured beneficiary on whose behalf benefits were paid. They are not enforceable against the settlements of others. All of these strategies are explained in our article, Beware the ERISA Healthcare Lien.