Many Texas residents have health insurance through an employer plan, and these plans are often governed by the federal Employee Retirement Income Security Act. Such health plans typically cover any medical expenses that a policyholder incurrs if injured due to another person's negligence.
However, in many cases when someone is injured due to someone else's negligence--in a car accident, for example--the injured person sues the negligent person for compensation. In those cases, many health insurers then require the policyholder to reimburse the insurer for any related claims that have been paid out. This prevents injured people from obtaining double recovery, but this has been somewhat controversial.
Last month the U.S. Supreme Court heard a case that involved this very issue. The case involved a U.S. Airways employee who was seriously injured in a car accident, in which one person died and two other people suffered brain injuries. The man's health plan, administered through U.S. Airways, paid $66,866 in medical expenses on his behalf.
The man went on to file a lawsuit against the person who caused the car accident, ultimately obtaining a third-party recovery that amounted to $110,000. Forty-percent of this was due to his attorney's fees so he was left with less than $66,000--which became very problematic when U.S. Airways then demanded reimbursement for the $66,866 it had paid for the man's medical expenses.
The man refused to pay the insurer back and U.S. Airways sued him, claiming he was required to reimburse the plan for anything he recovered from a third-party. The court ruled in favor of the plan, but an appeals court then ruled in favor of the injured worker.
The Supreme Court ultimately ruled unanimously in favor of the Plan in this case. It found that the plan was written very clearly, and as such it could not be subject to certain defenses that the worker tried. The court did, however, note that because the plan did not address attorney's fees, there was a contractual gap. So, the case was handed back to the district court to determine how much the reimbursement should be decreased to reflect attorney's fees.
While this case is very complex, it essentially establishes that well-drafted plans can generally be upheld. Reimbursement provisions are enforceable, but it is up to the plan's sponsors to decided whether plans should require reimbursement in cases of double recovery and whether it will share in attorney's fees.
Nonetheless, ERISA is a complicated matter. Those who have ERISA concerns, or employer health plan concerns, may benefit from talking with an ERISA attorney.
Source: claimsjournal.com, "A Victory for ERISA: U.S. Supreme Court Unanimously Holds Equity Doesn't Trump Plan Language," Gary Wickert, May 2, 2013