United States Supreme Court to ERISA Health Plans: Injured Party Can’t Be Required to Reimburse After the Money Is Gone

Former Farmers Insurance Attorney Sues Insurer for Gender DiscriminationHave you ever wondered whether someone who wins a lawsuit has to pay back his health insurance company for medical claims it paid on his behalf?  Recently, the United States Supreme Court held that a man who had spent his settlement money could not be required to pay his health plan back.

Robert Montanile was injured in a car accident with a drunk driver in 2008.  After the accident, he had multiple doctor’s visits and surgeries, to which his health insurance plan contributed.  He brought a lawsuit, and he eventually settled his claim against the driver at fault. He spent his settlement money taking care of his family and paying his lawyer.

His health benefit plan brought a lawsuit, seeking to recover about $120,000 for expenses it had paid on his behalf.  His health insurance plan included a provision that purported to require him to reimburse it if he recovered money after being injured by a third party.  The terms of the Employee Retirement Income Security Act, which covered the plan, allow a health insurer to bring a lawsuit for “appropriate equitable relief.”

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The Court held that an ERISA-covered plan could not recover the money because it had already been spent.  The remedies allowable under ERISA were very specific and did not allow the recovery of money that was not in the injured party’s possession.  Had the health plan brought its lawsuit while Montanile still had the money, it would have been able to recover.

This case is significant for both employees and insurance carriers.  Insurers argue that it provides the wrong incentive for injured people, encouraging them to spend settlements quickly to avoid paying back healthcare costs.  Insurance companies allege that their inability to recover back medical expenses will increase their costs, which they will pass on to employees.  Some have even said that they may stop covering medical expenses when employee’s injuries are caused by a third party.

You can read more about this case here. Contact us today to speak with an experienced general labor attorney in Sacramento.

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Labor Law Office, APC

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2017-12-13T21:46:35+00:00 March 1st, 2016|General Labor Law|