Supreme Court To Decide if Insurers Can Recover Expenses
The U.S. Supreme Court has agreed to decide whether the Employee Retirement Income Security Act, which governs employee benefit programs, allows insurers to sue a customer for reimbursement of medical expenses after that customer has received money through a lawsuit or settlement, the New York Times reports (Greenhouse, New York Times, 11/28). The case originated when Robert Ellis, an employee of Reynolds Metal Co., incurred "massive injuries" after a 1994 auto accident. His company's employee-benefit plan paid for more than $560,000 in medical expenses. Ellis also sued the driver of the vehicle that struck his car, settling in 1997 (Greenberger, Wall Street Journal, 11/28). Reynolds attempted to get Ellis to reimburse the company using the settlement funds, pointing to an insurance plan provision that states, "If the plans paid for health care services, supplies or treatment and you receive payment from a third party, you must reimburse the plans." Furthermore, the company stated that according to ERISA, plan fiduciaries can seek "appropriate equitable relief ... to enforce any ... terms of the plan" (Bloomberg News Service/Richmond Times-Dispatch, 11/28).
The "so-called subrogation provisions help keep down overall plan costs and are an alternative to cost controls," Reynolds stated. For his part, Ellis maintained that he is "entitled to the benefits he received from the plan as a beneficiary." Both the U.S. District Court for the Central District of California and the U.S. Court of Appeals for the Ninth Circuit in San Francisco agreed with Ellis (Wall Street Journal, 11/28).