ERISA LIENS AND YOUR PERSONAL INJURY SETTLEMENT
After you struggle through all the investigation, settlement negotiations, litigation, medication, and perhaps a trial you have another hurdle to cross: liens. Liens come in all shapes and sizes. I want to focus on what is called ERISA Liens. ERISA is a federal law the Employee Retirement Income Security Act, ERISA for short. Passed in 1974 we are still litigating and asking the courts what the language actually means as it applies to various situations. We are concerned here with how it will help or hurt our personal injury settlement. If the ERISA health plan paid medical for the underlying injury in your personal injury claim they are entitled to be reimbursed from your recovery.
The Federal law applies if this is a self-funded plan where the employer is funding the plan. This can be confusing because often the customer will only be having dealings with the administrator of the fund which is often an insurance company. If the employer is paying an insurance premium to an health insurance company who pays the medical bills laws other than ERISA apply.
This is a complicated area of law and we will not be dealing with all the ends and outs in this short article.
The ERISA fund can enforce the lien under section 502(a)(3)(B) against the person holding the funds . See Sereboff v. Mid Atlantic Medical Services, inc. (2006) 547 U.S. 356
The U.S. Supreme Court held:
“1 the ERISA plan’s terms, not unjust enrichment or other equitable principles, govern a plan administrator’s action to enforce an equitable lien by agreement, abrogating and
2 the common-fund rule informs interpretation of a plan’s reimbursement provision and, where a plan is silent on the allocation of attorney fees, the doctrine provides the appropriate default”US Airways, Inc. v. McCutchen, 569 U.S. 88, 88 (2013)
The court in Arkansas Dept. of Health and Human Services v. Ahlborn (2006) 126 S.Ct. 1752 reduced the lien because the plaintiff’s recovery was less due to comparative fault.
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