Tuesday, January 25, 2011

Reimbursement Rights For ERISA

A minor was injured, pays 100% of the Erisa lien. He or she will need future scar revenue 4-5 years later. How is the cost determined for the future part of Medicare lien?

Good morning and thank you for the question. Subrogation and reimbursement rights for ERISA plans are governed solely by the plan language itself. In this case I would look to the recovery elements that the Plan claims an interest. It appears that we are talking about whether or not a Plan is entitled to receive a credit against future benefits. Generally, a Plan will be entitled to reimbursement only for payments made prior to the time the Plan participant settles UNLESS there is specific language creating a right to this credit or the plan has some type of exclusionary language. Assuming that the original agreement between the ERISA plan and the client was a full and final settlement of the plan's claims which arose as a result of the third party injury, the plan would arguably not have a claim for these post settlement treatments.

- Shell v. Amalgamated Cotton Garment, 43 F.3d 364 (8th Cir. 1994)
o No future credit unless specific language (express clause required)
- Qualls v. BC of Cal., 22 F3d 839 (9th Cir. 1994)
o Exclusionary clause can achieve same result as credit
 Refusal to pay tortfeasor caused injuries unless payment considered advancement and granted lien.
 The language stated that benefits would be ADVANCED ONLY to the extent that the plan retained a lien upon a third party settlement. Because there had been a third party settlement and the lien was satisfied, the plan did not have to advance future benefits.

If a plan does not have crystal clear language it would seem there would not be a reimbursement right for future expenses from the settlement funds. Another thing to consider is the language of the settlement agreement. If the settlement funds were allocated for particular damages it could also affect right to future credit (ex. None of these funds are intended to cover future medical expenses/ claims for future medical are waived hence no reimbursement right). I hope you find this helpful and please let me know if you have any additional questions.

Michael Russell, Esq.