In lien resolution (or subrogation, or reimbursement) ERISA means nothing. Let’s get that out of the way. Health plans can scream “ERISA!” at the top of their lungs. It still means nothing.
- April 1, 2012: LRS sends settlement information and claims dispute to a Subrogation Company (we’ll call them “Subro”). LRS states the case-related payments are $1800 and requests a reduction for attorneys’ fees and costs. LRS asks for plan language/summary plan document.
- April 22, 2012: Subro agrees to LRS claims dispute. Offers $1200 to settle the Subro interest and provides plan language.
- May 3, 2012: Following review, LRS requests proof the plan provides for reimbursement, or, in the alternative, that Subro accept $400 to close its file.
- June 1, 2012: Subro offers to accept $1000 to settle the Subro interest. Subro sends a 2nd copy of the plan language but does not provide proof of or point to reimbursement provisions.
- June 10, 2012: LRS again asks for proof of the plan’s reimbursement provisions. LRS notes the following:
- The plan is silent as to both subrogation and reimbursement;
- Statements that the beneficiaries have certain rights under ERISA are seen in the plan language;
- ERISA does not create any subrogation-type interests. It is silent as to subrogation. “The only provision of the ERISA statute that comes close to dealing with subrogation or reimbursement is 29 USC 18 §1102(b)(4), which states, ‘Every employee benefit Plan shall specify the basis on which payments are made to and from the plan.’ ” Emphasis Added;
- Without any subrogation or reimbursement language, look to State law for such rights:
- This case would have been venued in Michigan. Michigan law’s most applicable statute seems to be MCL 550.1401(5), which allows health plans to contract for subrogation rights in policy terms. It does not create those rights where the plan is silent;
- We thought the most applicable Michigan common law (case law) was Steinnman v. Dillon, where the plan language included a subrogation right for the subrogation company, but did not include a right to reimbursement. 670 N.W. 2d 249 (Mich. App. 2003). The court refused to write in a reimbursement right where it was not provided for in the plan language.
- We concluded with a statement that the Subro offer amount was being held in trust until a time where it proved its reimbursement rights, and we stated, “Please provide proof that such reimbursement interests legally exist within the [Insurance Co.] plan language.” (we wrote that in bold).
- June 11, 2012: Subro reply letter reiterates offer of $1,000 and includes the Form 5500 filings to help prove ERISA status. No direct reply to LRS questions.
On June 12, 2012, we wrote back to “Subro.” We neatly organized a timeline in a fashion similar to the timeline above. We closed the letter with:
As we have noted on numerous occasions, ERISA status does not create a reimbursement right. Only plan language can do so. As a result of the foregoing, it is our decision to withdraw all offers of payment to close your file. We have requested proof that reimbursement is legal and proper in this case. You have not provided anything beyond proof that the plan is an ERISA plan.
We are closing our file and distributing to [beneficiary’s] estate. All other offers are withdrawn. Thank you for your prompt responses to our previous letters.
We are awaiting an apply from “Subro.” Obviously they will disagree. Nonetheless, the file is closed, funds will be distributed by court order soon.
How do you think our young attorney did? I think that went pretty well. The key to this situation is not that it is an ERISA lien situation. In fact, these arguments would have worked for a private health lien that is not ERISA. The key is the plan language. This plan was completely silent as to reimbursement or subrogation.
So it’s not ERISA, ERISA, ERISA. It’s Plan, Plan, Plan!
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