ERISA Reimbursement Liens

Ever since the 2006 U.S. Supreme Court decision in Sereboff v. Mid Atlantic Medical Services, more and more employer-based health plans have been demanding reimbursement for medical benefits when an injured beneficiary is compensated by the party that caused the injury. The practice applies to self-funded, employer-based insurance plans governed by ERISA, the federal Employee Retirement Income Security Act.

Before the Sereboff decision, many courts held that ERISA plans could not pursue reimbursement because the governing statute merely allows them to seek "appropriate equitable relief" from plan beneficiaries, not legal damages. These courts further reasoned that allowing reimbursement would be inequitable because the ERISA plans had already been paid premiums to cover employees' medical expenses for accident-related injuries, and thus any reimbursement would constitute an unfair "windfall" for the plans.

Since Sereboff, however, the plans insist that whenever injury victims receive any compensation from a third party, they must repay all of their medical expenses first -- even if they owe others for uncovered expenses and have only obtained partial compensation for their injuries. Under some circumstances, that leaves injured employees worse off -- and ERISA plans better off -- than if the employees had received no compensation in the first place.
 

What Public Justice Is Doing

In two precedent-setting cases handled by Public Justice, the U.S. Courts of Appeals for the Third and Ninth Circuits placed clear limits on employer-based insurers' ability to recover medical benefits from injury victims -- the first courts in the country to do so. These landmark rulings in U.S. Airways v. McCutchen and in CGI v. Rose represent watershed victories for employee rights and injury victims across the country.

The U.S. Supreme Court granted review of the Third Circuit's decision in McCutchen, and Staff Attorney Matt Wessler argued the case in November 2012.