There are few better feelings in my personal injury practice than when I have reached a settlement (or obtained a jury verdict) for one of my clients. In many cases it has been a year or more since the date of the injury - a delay caused by continuing medical treatment, the discovery process, or most recently, the shutdown caused by the Covid-19 pandemic. However, even though the settlement check has been received and the appropriate court documents have been filed, my work is far from over. Now is the time to obtain a final figure for the outstanding medical bills and costs and hopefully negotiate with some of the providers to maximize my client's net recovery of funds needed to compensate them for past and future wage losses, future medical bills and for their pain and suffering.
Those calculations are complicated if a portion of my client's medical bills were paid by employer based insurance known as an "ERISA" plan. It is an acronym for the Employee Retirement Income Security Act which was enacted in 1974. In a recent publication, Synergy Settlement Services set out the mechanism under which the ERISA rules protect the financial stability of the insurance plan by requiring full recovery of the claimed medical bills, and in doing so, can cause an unfair result for the injured party. What happens where a portion of the settlement was intended to pay for lost work, rehabilitation, or non-economic ("pain and suffering") damages? As a result, knowing how to apply the precise language of the Act is crucial in protecting as much as possible the client's net recovery. In the past I have retained Synergy Settlement Services in particularly complicated settlements and will continue to do so in appropriate cases in the future.
The rule of thumb with most non-ERISA providers is that any outstanding balances are reduced at minimum by the attorney's fees and costs which were necessary to obtain the settlement. Any reductions are then added to the client's recovery. Unfortunately, in some cases the available insurance proceeds from the at-fault party are not enough to pay all of the providers and leave an appropriate amount for the client. At those times, I will have extensive discussions with the medical providers to explain the situation and work out an equitable resolution. That is not always possible when ERISA is involved.
Although ERISA usually starts with the premise that the benefits plan must be 100% compensated for the medical treatment provided, a number of states have enacted laws which limit the recovery to ERISA from funds obtained though settlements with third parties. The effectiveness of these state statutes depends upon the manner in which the ERISA plan provides coverage. Are they self-funded, or do they merely obtain coverage through an established insurer, such as Blue Cross or United Health Care to whom they pay a premium?
With that information in hand, it may be possible to reach an agreement, even with the otherwise rigid ERISA rules, that is favorable to the client, which is always our firm's primary goal. Should you have any questions concerning the effect your health insurance plan may have upon a personal injury claim, please contact me at my offices at 727-822-3700 for a no-cost consultation.