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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"Synergy is an invaluable partner in the mediation process. They have extensive expertise in Medicare, Medicaid and Structured Settlements and the ability to explain the impact of these complex concepts to my clients in simple, clear and understandable language. This allows me to focus on obtaining the best possible result in the settlement process."

Michael J. Winer, Esq.
President Florida Workers Advocates (FWA)

"I recently engaged Synergy to assist with a complicated PTD settlement involving a substantial Medicare Set Aside. The claimant’s wife has been providing full time attendant care which is not Medicare covered. The Synergy nurse was able to do a full analysis of non-Medicare covered expenses which far exceeded the value of the MSA analysis performed by the carrier’s contracted MSA provider. The non- Medicare figures became the main focus of the settlement negotiations and more than doubled the value of the case. Although I could estimate the attendant care figures, the nurse added in other items that I would not have routinely considered. I also asked Synergy to evaluate the EC’s MSA as well as their prescription review. Synergy offered insight about the prescription donut hole which I did not have a clear understanding about. Again, their insight and information added a great deal of value to the overall settlement. Not only did I learn from Synergy but was able to educate my clients in the process. These are very complex and complicated areas; I will use Synergy again and again!"

Rosemary Eure
Lancaster & Eure

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