ERISA and Health Insurance Subrogation Claims
To explain ERISA (The Employee Retirement Income Security Act of 1974) and how it affects your medical bills and financial recovery in a simple fashion can be challenging, but its important to understand. ERISA is the law that governs the rights of health insurance carriers. If your medical bills from injuries in a car accident were paid by health insurance of an employer’s health plan, the insurance company or plan may want you to reimburse it out of any personal injury recovery.
The gist of all ERISA law is that if we, the health plan, pay medical expenses which were caused by someone’s else’s negligence and you recover a personal injury claim from any source, we have a right to recover from you. Legally speaking, the right of the insurance company to recover medical expenses they’ve paid from your personal injury claim settlement or verdict is called “reimbursement” or “subrogation.”
ERISA law generally tries to claim that it is controlled by Federal Law and preempts state law to the contrary. Your injury attorney must understand the implications of ERISA on your case.
Almost every health insurance plan, whether it be private, Medicare, Medicaid or state-funded, has a provision in it that says they have a right to recover the medical bills they pay on your behalf if you recover on your personal injury claim. This right is not limited to recoveries from third-parties but rather, includes recoveries made through uninsured motorist coverage, underinsured motorist coverage and no-fault benefits. Also, most health plans have contract language saying that they don’t owe attorney fees on the amount they recover and that they are a first-priority lien that trumps your rights no matter how badly you are hurt.
The law regarding health plans is ever-changing. Therefore, I have to limit my discussion to say you need to understand that your health plan has a right to recover what they paid out in medical expenses as a result of your motorcycle crash, car or truck accident. I know it is not fair and yes, I agree that they should not be allowed to recover anything since that is what we pay the health insurance premiums to cover. However, it is the law.
For my practice, I have to identify early on the interests of the health plan and look at their terms of the health insurance plan to determine the extent of their legal rights. Unfortunately, the health plan can legally come in and eat up much of a client’s recovery. This is why I have to try and negotiate a reasonable settlement with them as every dollar that does not go into their pocket, goes into my client’s pocket. This is also the reason why it is so important to have an experienced personal injury attorney like me working on your injury case.
The bottom line is for those of you who are trying to handle a personal injury claim, make sure you address the interests of the health plan. The last thing you want to happen is to settle your claim and get sued by your health plan several years after the settlement. I invite you to contact me or call me on my phone at [number].
