Supreme Court Agrees to Hear Great-West Suit
The U.S. Supreme Court agreed Monday to hear an appeal from California employee-benefit plans seeking to collect medical benefits paid to an employee who later recovered those same expenses from a third party, Dow Jones Business News reports. Health plans Great-West Life & Annuity Insurance Co. and Earth Systems Inc. paid Janette Knudson's medical bills totally $411,157 following a 1992 car accident that left her a quadriplegic. Knudson later won a settlement with those she claimed mere responsible for the accident, netting her $650,000, of which $13,828 was designated for medical expenses on settlement terms. Knudson paid the $13,828 to Great-West, but the health plan sued in Los Angeles' 9th U.S. Circuit Court of Appeals for the full $411,157. The circuit court ruled against Great-West, saying "such suits weren't contemplated" by the Employee Retirement Income Security Act. In appealing to the Supreme Court, Great-West said that the circuit court ruling "was at odds with other U.S. appellate courts that have ruled on the issue." Central States, Southeast and Southwest Areas Health and Welfare Fund, a union benefit plan that covers more than 300,000 individuals in 36 states, also backed the appeal, stating that its reimbursement program has saved the health plan about $62 million since 1984. Attorneys for the fund said, "The inevitable result of the 9th Circuit ruling will be a loss in ... recoveries for the welfare fund and other plans, and the consequent loss of benefits for plan participants." The Supreme Court will likely hear the case in October (Ritter, Dow Jones Business News, 1/22). A similar case, involving Reynolds Metal Co. Inc. and an employee who had an auto accident in 1994, was dismissed by the Supreme Court earlier this month at the request of both sides (American Health Line, 1/3).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.