Supreme Court To Weigh In On Personal Injury And ERISA Issues

Supreme Court To Weigh In On Personal Injury And ERISA Issues

Next week, the United States Supreme Court will hear oral arguments on a potentially important case dealing with personal injury and ERISA issues. The case will determine whether injured parties will have to pay back their insurance company for medical bills after they have sued and recovered financial compensation for their injuries. The case in question is Montanile v. National Elevator Industry Health Benefit Plan and it has the makings of a true game changer for ERISA cases. ERISA, or the Employee Retirement and Income Security Act of 1974, is arguably one of the most complex parts of the U.S. Code. That is why this case is so interesting to those watching. Other issues included are insurance payouts, money, a drunk driver, and recovering funds after a personal injury case. The facts of the case are surprisingly simple. Robert Montanile was injured in a car crash by a drunk driver. After the accident, his medical expenses (approximately $121,000) were covered by his elevator industry benefit plan. Like most people injured in accidents, he also hired a personal injury attorney to sue the drunk driver. Montanile's lawyer recovered $500,000 in a settlement for his client. The lawyer took $200,000 of the recovery fee and Montanile paid about $64,000 in expenses related to the case. After the fees were taken out, he was left with $236,000. The elevator benefit plan, then asked for him to reimburse the money it had paid out for Montanile's medical expenses. Montanile disagreed with this request and hired an ERISA attorney. That attorney informed the elevator benefit plan that it was not entitled to reimbursement for the money it had paid out. The benefit plan responded by insisting that Montanile had signed a written agreement promising to pay back any part of his medical expenses that was paid out if he won his lawsuit against the drunk driver. The benefit plan then sued Montanile for the money. While all of this was going on, the personal injury lawyer disbursed the funds to Montanile who immediately spent the money. In normal contract cases, the money would have to be paid back if a party agreed in writing to do so. But ERISA law describes a whole range of permissible lawsuits and remedies that directly related to funds obtained in any type of ERISA action. Interestingly enough, despite extensive details on many other issues, ERISA law does not allow for a benefit plan to recover damages from a member, even if that member signed a contract promising to pay the plan back.

What Is Equitable Relief?

This is where a legal remedy called "equitable relief" comes into play. This concept is one that harkens back to the early English legal system. Common law for that period was very rigid and required exact forms of practice and pleading. Once parties saw that the legal system failed to provide substantial justice in some cases, the crown created a special court, that parties could approach if they already exhausted common law remedies. This special court was then authorized to give justice by fixing or adjusting common law to produce an outcome that is now referred to as equitable relief. The American legal system also took on this concept and added it to its available remedies for some types of legal recovery. ERISA law also specifically says a party can seek "appropriate equitable relief." It would seem that this would be the end of this case, since the benefits company is allowed to seek equitable relief. However, equitable relief generally allows for the restoration of a specific object or money in the possession of one of the parties. More specifically, it does not usually apply to general damages. In this case, Montanile does not have the money he owes the plan anymore because it has already been spent.

Potential Outcomes

In this case, if they find for the benefits company, the justices would have to interpret the ERISA statute broadly. This would mean expanding "appropriate equitable relief" beyond its traditional definition. Montanile's lawyers could then point to precedent which says that parties cannot obtain equitable relief if they are attempting to get "some funds" rather than "particular funds." The benefit plan could then use a 2006 precedent if it was so inclined. This precedent allows for the argument that the money was identifiable when the plan began its attempts to recover it. And because the funds were being held in trust by the personal injury lawyer, this should be sufficient ground to prove that the funds were satisfactorily “particular” and can thus be recovered. No doubt there will be a strong suspicion here that Montanile's lawyer was attempting to circumvent proper payment options when he dispersed the funds directly to his client. Courts also tend to side with the insurance industry in many instances because of the fact that they success of many plans depends on reimbursement if funds are available. Indeed, if the benefit plan loses its case, it could set a negative legal precedence for personal-injury lawyers who could then find ways to pay off their clients before insurers are able to seek proper reimbursements. On the other hand, a ruling against Montanile would require a more broad-based interpretation of "appropriate equitable relief". This would require a looser statutory interpretation and would empower lower court judges to have the authority to do likewise. But today's conservative supreme court justices are not such big fans of equity, they like hard and fast rules. This case should be particularly interesting as we learn whether the justices will rule for Montanile or decide to work around the rules to allow for a broader interpretation of equitable relief.

J. Price McNamara Can Help With Your ERISA Case

ERISA is a complex area of law that can be time consuming and expensive. That is why you need to get an attorney that has extensive experience with ERISA cases. If you have an ERISA issue and you live in the Houston area, J. Price McNamara has the skills and knowledge you need to help resolve your case. Call us now for a free case review and get an experienced legal team working for you.