Do I have to reimburse my health insurance plan after my case is settled?
After an accident, you may get medical care for your injuries that is paid for by your personal health insurance. And if you recover money from a settlement or a lawsuit for your injuries, you may be required to reimburse your insurance company for the amount it paid for your care.
ERISA, or the Employee Retirement Income Security Act of 1974, provides the standards for healthcare benefit plans and retirement plans in the private industry. It requires your private health plan to provide employees with the details of the plan, which may explain the insurance company’s subrogation rights over your personal injury recovery. In short, where the plan benefits allow, the health plan may be entitled to collect complete compensation for any money it has paid, even if that amount makes up all or most of a settlement or recovery from a personal injury lawsuit.
SELF-FUNDED OR INSURANCE-BACKED?
The first key to evaluating the reimbursement necessary from your settlement, if any, is to determine if your health plan is insured or self-funded. Employees who pay a premium to an insurance company are likely covered under an insured health plan. When there is a claim in an insured health plan, the health insurance company pays the costs for care. Self-funded plans pay for care out of a company’s funds, whether collected from its employees’ premiums or from other means. Self-funded plans are subject to ERISA, as the federal law completely preempts state law, while insured plans are subject to any applicable state laws that regulate the health insurance industry.
Florida law permits insurance companies to seek reimbursement only after a participant is “made whole,” meaning the participant has recovered all of his or her actual damages. Anything above that may be viewed as “double recovery.” See Humana Health Plans v. Lawton, 675 So.2d 1382 (Fla. 5th DCA 1996). Thereafter, an insurer is only entitled to be reimbursed for the amount it paid and nothing greater. See DeCespedes v. Prudence Mutual Casualty Co. of Chicago, Ill. 193 So.2d 224, 227 (Fla. 3d DCA 1966), cert. denied 202 So.2d 561 (Fla. 1967).
LANGUAGE OF THE PLAN MATTERS
ERISA does not provide a guaranteed right for reimbursement. ERISA §502(a)(3) states:
a civil action may be brought by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the Plan, or (B) to obtain other appropriate equitable relief (i) to redress [] violations [of ERISA or the terms of the plan] or (ii) to enforce any provisions of this subchapter or the terms of the plan.
Thus, in order to be valid, the plan must only provide for an equitable recovery. However, as the statute does not define what language is considered equitable, the courts have been left to interpret the same. In Montanile v. Bd. Of Trustees of Nat. Elevator Indus. Health Benefit Plan, 136 S.Ct. 651 (2016), the court found that reimbursement from the participant’s general assets was not
equitable, nor is the attempt to collect reimbursement from personal assets considered equitable. See also Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002).
Courts have also narrowed the language that must be included in the plan documents to have a valid claim for reimbursement. A two-step test to ensure equitability was created. The plan must:
1) identify the funds it intends to seek reimbursement from, and
2) limit the portion of the funds that it intends to collect. See Sereboff v. Mid Atl. Med. Servs., 547 U.S. 356 (2006). Plans that provide a subrogation right for “that portion” of the recovery necessary to reimburse the plan for “benefits paid” have been held to uphold the test. Id.
This language sufficiently identifies:
1) the funds they intend to seek reimbursement from (i.e. “that portion”), and
2) specifies the portion of which it intends to collect (i.e. the benefits paid). Id. Further, “any payment” from “any Responsible Party as a result of an injury, illness, or condition” is adequate to meet the plan’s burden. See Airtran Airways, Inc. v. Elem, 767 F.3d 1192 (2014). Interpretation of the language in the plan is limited to the language’s ordinary meaning unless otherwise defined within the plan document with any ambiguities construed against the plan. See Primax Recoveries v. State Farm Mutual, 147 F. Supp. 2d 775 (2001).
If your health insurance plan has paid medical bills for injuries caused by the wrongdoing of another, it may be entitled to reimbursement from any money you recover from the wrongdoer.
The experienced attorneys at Romano Law Group can help you evaluate your health insurance policy and negotiate insurance liens. Call us today!
Authored by Marjorie H. Levine, Esq.
