ERISA Health Plans Continue To Prove There Is No Free Lunch For Malpractice Plaintiffs
[Image: "Men and women employees on the 'swing shift' of North American's Inglewood, Calif., aircraft plant enjoy their lunch periods," October, 1942, from the Franklin D. Roosevelt Library & Museum.]
I previously wrote here about the growing trend for healthcare payers to pursue claims against their beneficiaries for the proceeds of malpractice settlements, relying upon subrogation provisions in their health plan documents. Medicare has begun to adopt this approach as well, as reported here. These cases highlight the importance of accounting for potential subrogation claims when negotiating the settlement of these disputes, and bringing all of the potential claimants to the bargaining table.
Last week I read in Health Plan Law, a blog on ERISA group health plan law and administration, that ERISA heath plans are riding a wave of successful court decisions making it clear that these subrogation claims are here to stay. In his ERISA Group Health Plan Subrogation Update, Roy F. Harmon, III, digests several cases already decided in 2008 that build upon the foundation laid in the U.S. Supreme Court's decision in Sereboff v. Mid Atlantic Med. Serv., Inc., 126 S. Ct. 1869 (2006). Although he notes that plans have encountered some problems "involving decedents and their estates, and in the perennial disputes over the adequacy of plan language," in the 2008 cases he reviews, "the health plans have by and large prevailed." But contrast the outcome in Benefit Recovery, Inc. v. Donelon, a Fifth Circuit case involving state insurance regulation of subrogation rights of an insured plan, as discussed by the same author just yesterday.
Rich - There is a recent decision from the DNJ touching on this issue and the furor arising out of the widely publicized WalMart matter. Judge Simandle filed an opinion in Rhodia, Inc. v. Bollinger on March 20, 2008. As has happened before, this health plan paid medical expenses and had a subrogation/reimbursement provision in its plan in the event of a tort liablity claim being filed. There was a wrongful death case brought, which was eventually settled.
Judge Simandle denied a 12(b)(6) motion to dismiss but noted that the equitable remedy might not be available if in fact because of New Jersey's collateral source statute (NJSA 2A:15-97 - which is sometimes incorrectly cited in the opinion as 2A:15-197) there had been no recovery for medical expenses. Essentially it's a matter of there being nothing that the plan could have been subrogated to since the plaintiff could not have recovered those expenses. However, this determination required going beyond the pleadings. So stay tuned for further clarification and comment on the issue.