If you are injured in a car accident or otherwise and your health insurance coverage is through a group plan with your employer (often referred to as an "ERISA" Plan), it has certain rights of recovery from your personal injury settlement for pay back of the expenses paid on your behalf for your medical care. Often these plans will try to claim 100% reimbursement (referred to as "subrogation"), however, they are usually not entitled to full reimbursement, and in some cases they are not entitled to reimbursement at all. This area of law can be very complicated, the concepts below apply generally to Illinois injury claims.
Subrogation allows the employer health insurance plan to "stand in the shoes" of the participant, in our cases the injured victim is the participant, to recover benefits paid by the plan and transfers to the plan the participant's right to recover from the at fault party and their insurer. This right to reimbursement (subrogation) is a contractual right that must be in the plan documents. Unisys Medical Plan v. Timm, 98 F.3d 971, 973 (7th Cir. 1996).
Important Issues to Consider regarding Plan's Ability to Recover:
The reimbursement language in the health insurance contract. Does it cover just medical expenses from the personal injury? Or does it cover any recovery arising from a personal injury action, such as lost wages, pain and suffering, etc ... ? This is important because if the plan's language is not broad enough it may only be able to recover from medical damages recovered. A broad plan provision for reimbursement from "any recovery relating to injury" or "any funds" creates a right of reimbursement from the participant's entire recovery, not just medical expenses. McIntosh v. Pacific Holding Co., 992 F.2d 882 (8th Cir. 1993).
Is the plan attempting to recover amounts billed or actually paid? An ERISA plan may only recover may recover only the amount it actually paid to healthcare providers, not the amounts billed, since the plan administrator must uphold its fiduciary duty to act solely in the interests of its participants. McConocha v. Blue Cross & Blue Shield of Ohio, 898 F.Supp. 545 (N.D.Ohio 1995).
COMMON FUND DOCTRINE
The most effective way to reduce the amount required to be paid back to the plan is use of the Common Fund Doctrine. "The common fund doctrine permits a party who creates, preserves, or increases the value of a fund in which others have an ownership interest to be reimbursed from this fund for litigation expenses incurred, including counsel fees." Scholtens v. Schneider, 173 Ill.2d 375, 671 N.E.2d 657, 662, 219 Ill.Dec. 490 (1996).
In other words, the injured victim hired a lawyer, went through the cost and expense of litigation, and therefore, the plan should share in that cost and reduce it claimed lien amount to reflect that cost.
The Illinois Supreme Court, in Scholtens v. Schneider, ruled that the the common fund doctrine applies to ERISA liens except when the ERISA plan explicitly provides otherwise. The Illinois Supreme Court interpreted both ERISA and the common fund doctrine in holding that the common fund doctrine applies to ERISA subrogation liens. The common fund doctrine provides that a subrogation claim is to be reduced for the pro rata share of the attorneys' fees and expenses incurred in creating the settlement fund. Additionally, the court rejected arguments that the Common Fund Doctrine is preempted by the ERISA law.
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If you have been involved in an Illinois car crash, motorcycle accident, Illinois bike accident, or other injury you need to contact an experienced Illinois personal injury attorney today. ERISA plan considerations as well as dozens of other considerations must be discussed and handled as early on as possible to maximize your recovery. Call Illinois accident lawyer Ben Sansone today for a free consultation at (314) 863-0500