How to Reduce an ERISA Lien

When reaching a settlement for a client in a personal injury case there’s a scenario that often creates a tremendous challenge for attorneys. The ERISA lien, enforced by employee health plans governed under the Employee Retirement Income Security Act of 1974, is often difficult to challenge and beat. Since many employee health plans attempt to enact their right to seek reimbursement regardless of individual circumstance, it’s quite possible that an ERISA lien can take an entire settlement.

This is not a circumstance that any personal injury attorney wants for their clients. To achieve success when dealing with ERISA lien, you need an understanding of the laws and cases affecting ERISA and how to navigate them.

In this article, we will provide background information about ERISA along with a few strategies for protecting the interests of your clients.

ERISA and Previous Court Cases

The ERISA that we see today is largely impacted by two court cases. These cases determine how disputes involving ERISA are settled and serve as the basis for how you can protect your client’s settlement.

Sereboff v. Mid Atlantic Medical Services, Inc.

This case established that a self-funded ERISA benefits plan can seek reimbursement from an entity controlled by an individual. A lien can be used to achieve the reimbursement.

US Airways v. McCutchen

This case established that contract terms will mandate how reimbursement is conducted. When the language of the contract is not clear, the common fund doctrine becomes a default.

Tips for Reducing ERISA Liens

Examine the Plan Language

This is your first stop in creating your defense. Assuming you understand how the plan is funded (self or insured), you can start looking for language that helps assert certain rights of your client. By reviewing the plan, you can determine who has claim rights, which settlement funds can’t be touched, and if the common fund or make whole doctrines apply.

Consider Employing the Make Whole Doctrine

In this doctrine, your client must be fully compensated before the insurer can make a claim. If a settlement doesn’t fully compensate your client and the plan language doesn’t negate the rule, it can used to reduce the claim.

Make Sure Claim is Accurate

If there are medical expenses that do not apply to the insurer’s claim, make sure it is noted. It may seem like a small thing, but the insurer may overlook it and it’s part of protecting your client’s interest.

For more information or to schedule a consultation, please submit our contact request form or call (877) 242-0022.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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