In 1974 Congress passed the Employee Retirement Income Security Act, better known as ERISA, to protect retiree income for their golden years. ERISA created minimum standards for private pension plans with the goal to protect those plans from abuse and mismanagement. Part of ERISA is regulating health insurance plans where an employer provides such benefits.
When people are injured in accidents, they will often seek to recover an award related to that accident. They will sue the person who caused the accident and that person’s insurance company. These plaintiffs hire lawyers who specialize in personal injury law and aggressively pursue what rightfully belongs to their clients. When ERISA issues factor into personal injury cases, the law becomes more complex.
The Sereboff Case
In 2006, the United States Supreme Court heard the case of Sereboff v. Mid Atlantic Medical Services, Inc. In that case, Joel and Marlene Sereboff, California residents and husband and wife, were covered by a health insurance plan that was administered by Mid Atlantic Medical Services, Inc. (Mid Atlantic). The plan was also subject to ERISA. A provision in the plan referred to “Acts of Third Parties,” which stated that if a third party was responsible for the illness or injury of plan beneficiaries, then those beneficiaries were obligated to reimburse Mid Atlantic for plan benefits from any recovery from that third party. Moreover, a clause in that provision stated that Mid Atlantic’s share of the recovery would not be reduced if a beneficiary did not receive the full damages claimed.
The Sereboffs were involved in a vehicle collision and suffered injuries. Their Mid Atlantic plan paid the couple’s medical expenses. Later, the Sereboffs filed personal injury claims against several parties, seeking compensatory damages for their injuries, which are standard claims in personal injury suits. Shortly after their personal injury litigation saga started, Mid Atlantic informed the Sereboffs that, based on the previously-mentioned provisions under their ERISA plan, it had a right to a lien on the anticipated proceeds from the suits related to medical expenses. Mid Atlantic eventually claimed a number totaling $74,869.37, plus interest. In the meantime, the Sereboffs settled their suits with various parties totaling $750,000, but did not distribute anything to Mid Atlantic.
This case eventually went to the Supreme Court, which ruled that Mid Atlantic was entitled to place a lien on the Sereboff’s anticipated award. The Supreme Court reasoned that Mid Atlantic’s lien was fair and proper because it placed a lien on an identifiable object, which was the applicable award.
The result of this case clarified an ERISA-governed plan’s ability to claim reimbursement from its plan beneficiaries. As such, a person injured in an accident who receives coverage from one of these plans may be forced to reimburse his or her insurance company if that person recovers from the person who caused the accident.
Contact Attorney Joel Williams if You Are Involved in an Accident
If you are involved in an accident, contact the personal injury law firm of Joel Williams, a Cobb County, Georgia lawyer who fights for injury victims. If you have questions or would like to discuss your case, please call our office today at 833 – LEGALGA for a free consultation.