In many personal injury lawsuits, the plaintiff’s medical care is paid by his or her private health insurance. In most states, the health insurance company (the insurer) can assert a lien on plaintiff’s recovery, i.e., any verdicts or settlements, to reimburse the insurer for the health benefits it paid out. New York is one of the few states that passed legislation preventing this type of lien, with one exception: self-funded ERISA liens (explained below) may still assert a lien on the recovery. However, a recent decision by the United States Supreme Court in Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 136 S. Ct. 651, may have major implications for self-funded ERISA plans asserting liens on personal injury actions.
Self-funded ERISA plans are health benefit plans under which covered employees’ health care expenses are paid directly by their employer. Unlike traditional insurance plans, an insurance company does not guarantee payment of medical bills in exchange for premiums, although an insurance company or other company may be hired to manage the ERISA plan’s funds. When an ERISA plan participant is injured and brings litigation to recover for his or her injuries, the injured participant may be required to pay back the related health care expenses paid by the ERISA fund. Unfortunately, that money comes directly from the person who needs it most: the injured plaintiff.
The United States Supreme Court’s decision in Montanile could severely hamper an ERISA plan’s ability to recover from injured plaintiffs. The Court held that when a plaintiff has obtained the proceeds of litigation and has spent it on nontraceable assets or otherwise made those specific funds indiscernible from the plaintiff’s general assets, the ERISA plan cannot seek recovery of the funds from plaintiff’s general assets. Its right to recover is directly and solely affixed to the proceeds of litigation and once those funds have been dissipated, no recovery can be had.
Of note, the Montanile decision will have no effect on other types of liens, including liens asserted by Workers’ Compensation, Medicare and Medicaid.
The full effects of this relatively recent decision have yet to be felt. However, one can presume that ERISA plans that sit on their rights to recover and then assert them after recovery and dissipation may be out of luck, to the benefit of the injured party.
Trief & Olk has extensive experience dealing with and negotiating a variety of liens in order to benefit our personal injury clients. It is our goal to obtain the most amount of recovery possible for our clients, and fighting liens is part of that process. If you have questions about your potential personal injury claim and its related liens, contact Trief & Olk by telephone or via our website’s submission form.