An ERISA lien is something that you need to be aware of if you are pursuing a personal injury claim. In order to understand how an ERISA lien may impact your settlement, you will need to understand the basics of ERISA.
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 the Health Insurance Portability and Accountability Act, the Newborns’ and Mothers’ Health Protection Act, the Mental Health Parity Act, the Women’s Health and Cancer Rights Act, the Affordable Care Act, and the Mental Health Parity and Addiction Equity Act.
In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers’ compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.
Differences between ERISA and a Typical Health Insurance Plan
Your human resources professional should be able to help with the distinction between health benefits covered by ERISA and the health benefits covered by traditional health insurance. ERISA health benefits have an employer provide 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 services costs.
Liens on Personal Injury Claims
In personal injury cases, liens can occur in the event of an ERISA health insurance plan. 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.”
Steps to Take With an ERISA Lien
1. Understand what an ERISA Lien Means
Our team of highly experienced 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 the plan is self-funded 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. There may be factors that 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 attorneys fees. The common fund doctrine allows a litigant to recover attorney fees from a fund that is 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 with personal injury cases. In the case US Airways, Inc. V. McCutchen before the supreme court, the court found that 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 attorney experienced in working with these types of matters. If this type of case is improperly handled there could be dire consequences of you ending up with little and possibly nothing if there are insufficient funds to be disbursed. Reach out today to schedule a free consultation to discuss your case.