During these unprecedented times, Clark, Perdue, & List Co, LPA is here to fully support your needs in a timely and safe manner. COVID-19 should not affect your ability to investigate a personal injury case. We currently remain open and are still accepting new cases. With your safety top of mind, we are scheduling all meetings via telephone or video conference at this time.

Getting a reasonable settlement offer in a personal injury case is often only half the battle. Managing reimbursement rights of the client’s health insurer can be equally important to achieve a good result. Most health insurance plans require reimbursement as a priority over all other claims, including the client’s, even when recovery is limited by the amount of available insurance or the client’s comparative fault. Having a solid strategy to deal with the health insurance lien can mean the difference between success and failure for the client.

In January of this year, the United States Supreme Court added a new wrinkle to the ERISA subrogation debate. Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan. In Montanile, the plaintiff was seriously injured in a car accident. His health insurer paid $120,000 for treatment of those injuries. Montanile’s lawyer secured a $500,000 policy limits settlement from the at-fault driver’s insurance company. The health insurer demanded reimbursement from the settlement. With contract language that has become all too common, the health insurance policy provided that the plan’s right to reimbursement took priority over Montanile’s injury claim:

Amounts that have been recovered by a [participant] from another party are assets of the Plan … and are not distributable to any person or entity without the Plan’s written release of its subrogation interests.

The plan also provided that participants who recover

from another party by award, judgment, settlement or otherwise … will promptly be applied first to reimburse the Plan in full for benefits advanced by the Plan … and without reduction for attorneys’ fees, costs, expenses or damages claimed by the covered person.

Montanile’s lawyer tried to negotiate a reduction of the health insurer’s lien. When those efforts failed, Montanile’s lawyer advised the health insurer of his intent to distribute the settlement proceeds to his client within 14 days unless the health plan objected. The health plan did not respond. Montanile received the settlement proceeds after attorney fees and expenses. Six months later, the health plan sued Montanile seeking reimbursement. Montanile claimed that most of the money had already been spent. Undeterred the health insurer argued that Montanile was liable to reimburse the insurer from his general assets.

Additional subrogation relief is on the way! Ohio Revised Code 2323.44, enacted on September 29, 2015, requires a subrogated entity, including a “self-funded plan providing health, sickness, or disability benefits”, to reduce its interest on a pro rata basis when the injured insured must go without full compensation due to limited liability insurance or comparative fault. Implementation of the statute was delayed until 2017 with respect to health insurance subrogation. See S.B. 223. The statute, however, is immediately applicable for other types of insurance, including medical payments coverage.

The trial court granted summary judgment to the health insurer, and the 11th Circuit Court of Appeals affirmed. But the U.S Supreme Court reversed, finding that the ERISA plan could not recover if the settlement proceeds had been dissipated. The Court noted that the ERISA statute authorizes plans to bring civil suits “to obtain appropriate equitable relief … to enforce … the terms of the plan.” The Court reasoned that an equitable lien attaches only to “specifically identifiable funds” and not the defendant’s general assets. The Court held that, to the extent that Montanile had already dissipated the funds by spending the money, the ERISA plan was unable to enforce it’s lien against.

The Montanile case does not solve all subrogation problems for the injured Plaintiff. This is particularly true when the plaintiff continues to rely on health insurance benefits for ongoing medical care. The plaintiff’s attorney must also be mindful of Rule 1.15(e) of the Ohio Rules of Professional Conduct which requires attorneys to hold in trust funds to which more than one person claims an interest. Montanile, however, is one more tool to consider in representing the personal injury plaintiff.