What is ERISA?
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.
ERISA requires plans to provide participants with plan information, including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans, and gives participants the right to sue for benefits and breaches of fiduciary duty. One amendment to ERISA is COBRA, which provides some workers and their families "the right to continue their health coverage for a limited time after certain events, such as the loss of a job." There have been many other amendments to ERISA, including:- Health Insurance Portability and Accountability Act
- Newborns' and Mothers' Health Protection Act
- Mental Health Parity Act
- Women's Health and Cancer Rights Act
- Affordable Care Act
- Mental Health Parity and Addiction Equity Act
Differences between ERISA and a Typical Health Insurance Plan
Your human resources professional should be able to help you distinguish between the health benefits covered by ERISA and those covered by a traditional health insurance company.
ERISA health benefits involve an employer providing all health benefits. These health benefits pay your medical expenses upfront, excluding a co-pay. Your employer may even work with the health care provider to get reduced service costs. In a personal injury case involving an ERISA health insurance plan, a health insurance company may be able to use an ERISA health insurance lien to collect money awarded to an injured employee in a personal injury settlement. In personal injury claims, an ERISA lien can be complicated because it relies on preemption principles which means that "when state law and the federal law conflict, federal law displaces or preempts, state law, due to the Supremacy Clause of the Constitution."What is An ERISA Lien?
An ERISA lien comes into effect if an employee is harmed as a result of another person's negligence and his medical expenses are paid using a health benefits plan administered by ERISA. The employer might be entitled to recoup the money spent on healthcare dollar-for-dollar.
Steps to Take With an ERISA Lien
Dealing with an ERISA lien can be complex, but taking the right steps is crucial to protect your settlement. Here’s how we can help guide you through each phase of the process, ensuring your rights are safeguarded.
1. Understand what an ERISA Lien Means
Our team of highly experienced ERISA attorneys can help you understand what an ERISA lien means. We will first obtain a copy of the contract and read it fully to ensure that your contract is an ERISA-governed plan. If it is not an ERISA plan and is an HMO or PPO plan, we can help you navigate the next steps in that case. Specifically, we will evaluate the following:
- Whether it is a self-funded plan or an insurance plan
- Whether the lean can seek reimbursement from the third-party settlement
- Whether the language of the plan indicates a specific source for recovery
2. Determine Whether you have a Claim
We will evaluate your contract's language to determine your plan's claim for reimbursement and whether you have a right to the claim. We will also determine what settlement funds you can fight for. Factors may limit your recovery.
3. Evaluate Charges
We will help you evaluate the reasonableness of your medical charges. We will also review your co-payments to subtract them from the total lien claim.4. Review What Equitable Defenses can Limit the Lien Claim
There are a few ways we can help reduce the lien claim, including the following:- Comparative Fault — if you were found to be at fault for a percentage of damages, we can use this to negotiate down the lien.
- "Made Whole Doctrine" — If you are not going to be "made whole" by a settlement, we can make an argument to the lien claimant that your settlement does not fully compensate you for your injuries or damages.
- Common Fund Doctrine — Your lien may be reduced by the percentage for attorney's fees. The common fund doctrine allows a litigant to recover attorney fees from a fund created, increased, or protected by that litigant.
What is the Case US Airways v. McCutchen and How Does it Impact My Claim?
ERISA liens have become more common in personal injury cases. In the case of US Airways, Inc. v. McCutchen, before the Supreme Court, the court found that in a particular section of reimbursement action under ERISA based on an equitable lien, the ERISA plan's terms govern. The court determined that the equitable principle will not override the language of the contract. The Supreme Court indicated that a plan is a valid contract, and the parties are only demanding what they bargained for under the contract.
Ensure You Work With an Attorney Specialized in ERISA Liens to Avoid Losing All Settlement Dollars
We are dedicated to protecting your life and finances. ERISA liens are an extremely complicated area of law and should only be handled by an ERISA attorney experienced in working with these types of matters. If ERISA cases are improperly handled, there could be dire consequences of you ending up with little or possibly nothing if there are insufficient funds to be disbursed. Reach out today to schedule a Free Denial Review to discuss your case.
J. Price McNamara
Attorney
Losing my own brother, then my father and sister after long, disabling illnesses just a few months apart drove a career change for me. Before that experience, I never truly understood the place you’re in. I never understood the dramatic impact that receiving (or not receiving) the disability and life insurance benefits you paid for and counted on can have on your life especially when you need to focus on family and healing. What I experienced with my own family now drives the way I view my clients and my work, and I will never forget it!
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