The U.S. Supreme Court has agreed to decide whether a man must repay health insurance benefits he received following an auto accident from funds he secured from a personal injury lawsuit – funds he already spent.
The man was injured by a drunk driver and later successfully secured $500,000 through a settlement agreement with the at-fault driver’s insurance company. Unfortunately, that amount was insufficient to cover all of his medical bills, lost earnings, pain and suffering and legal fees resulting from the accident.
While he had been fighting that battle, he incurred some $120,000 in medical fees, which were paid by his employment health insurance company, as governed by Employee Retirement Income Security Act (ERISA). After the man paid off his legal fees and used the settlement money to care for himself and his young daughter, his insurance company demanded he personally reimburse the company. The case is Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan.
Most federal appeals courts have ruled ERISA requires plaintiffs to reimburse insurers for health benefits, giving insurance companies first dibs on any awarded damages, settlement money or federal benefits. However, two federal appeals courts – the Ninth and the Eighth – have held if the money is already spent, the insurer can’t put an equitable lien on it because it’s already gone.
The Montanile appeal comes from the U.S. Court of Appeals for the Eleventh Circuit.
Plaintiff in this case did attempt to negotiate with the insurance company after they demanded reimbursement, but those negotiations were ultimately fruitless and the company pursued litigation.
The district court sided with the insurance company, noting ERIS grants health insurance plans the right to equitable relief to recover money from the beneficiary of the plan. Equitable relief is judge-ordered relief intended to spare the insurance company from the expense of a civil lawsuit, the outcome of which would be uncertain, as well as any collection efforts. Instead, some courts have taken the view that this burden should be placed on the insured.
Still, the Eleventh Circuit affirmed the district court, and plaintiff appealed to the U.S. Supreme Court.
In one of the cases in which a federal appeals court decided with an injured person was Bilyeu v. Morgan Stanley Long Term Disability Plan. In that case, an accident victim received $30,000 in Social Security Disability Benefits. This was after she had received disability benefits from her employer health insurance plan. However, when the insurance company sought reimbursement and she’d already spent the money, the Ninth Circuit ruled she would not have to pay it back. In its ruling, the court cited two other U.S. Supreme Court decisions in which the court declined to order collection of money that was no longer in the debtor’s possession.
Where the U.S. Supreme Court lands on the issue could have major implications for those injured in motor vehicle accidents and others who rely on employer-issued health insurance plans.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, March 27, 2015, U.S. Supreme Court
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Cline v. Homuth – Accident Settlement Covered All Third-Party Claims, April 10, 2015, Fort Myers Vehicle Accident Lawyer Blog