LIENS
Welcome to Synergy’s blog page dedicated to the topic of lien resolution. Our team of subrogation experts share their InSights and knowledge on the latest developments and best practices in lien resolution. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complexities of lien resolution.
This case involves a deceased Medicare beneficiary who was injured and
eventually died as a result of medical malpractice. The date of the malpractice was December 1999, the case settled in 2003. Counsel for the heir began disputing and negotiating with Medicare immediately after settlement, but in 2005 Medicare referred the case to an attorney at the Department of Health and Human Services to begin prosecuting Medicare’s Conditional Payment recovery rights. In the following eight (8) years plaintiff’s counsel engaged a second attorney to assist with the Medicare conditional payment issue but this to prove futile and Medicare continued to demand a repayment. The second attorney retained over $42,000 of the original settlement in his firm trust account for the entire 8 years. In searching for options to resolve this matter, counsel engaged Synergy’s Lien Resolution Service. Employing experience and expertise, Synergy was able to obtain a complete waiver and file closure letter from Medicare within 90 days of beginning work. After waiting a decade from the end of the original litigation ,the heir is now able to finally put this matter to rest and is able to enjoy an additional amount of settlement proceeds previously thought lost to Medicare.
Employing experience and expertise, Synergy was able to obtain a
complete waiver and file closure letter from Medicare within 90 days of
beginning work. After waiting a decade from the end of the original
litigation ,the heir is now able to finally put this matter to rest and is able
to enjoy an additional amount of settlement proceeds previously thought lost to Medicare.
On April 16, 2013, the United States Supreme Court clarified how equitable principles interact with the plan language of self-funded ERISA health plans. The question presented to the Court was: Should the principles of “common fund,” often referred to as a reduction for attorney fees, and “made whole,” the principle requiring full compensation to the injured party before subrogating parties are allowed to recover, overcome express plan language abrogating those principles? Sadly, the Court has ruled that they should not. This ruling effectively turns back the clock on the rights of the ERISA plans to their status from 2006 (Sereboff v. Mid Atlantic Medical Services, Inc., 126 S. Ct. 1869 (2006) until 2011 (US Airways v. McCutchen, 663 F.3d 671 (3rdCir. 2011). With clear, express plan language, the ERISA plan can demand a full repayment for medical benefits it has paid on behalf of the injured plaintiff. (U.S. Airways v. McCutchen, 569 U. S. (2013); See, Zurich American Insurance Co. v. O’Hara 604 F .3d 1232 (11th Cir. 2010), Admin. Comm. of Wal–Mart Stores, Inc. Associates’ Health & Welfare Plan v. Shank, 500 F.3d 834 (8th Cir.2007); Administrative Committee of Wal–Mart Stores, Inc. Assocs.’ Health & Welfare Plan v. Varco, 338 F.3d 680 (7th Cir.2003); Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir.2003)).
The ruling in this case unifies the Circuits and will likely empower recovery vendors to press for larger recoveries and many may cease to reduce their demands even in the most inequitable circumstance. This ruling makes addressing and resolving self-funded ERISA liens a significant issue for the plaintiff’s bar. The argument raised by Mr. McCutchen, and the circumstance in which he found himself are ones which many plaintiff’s attorney have experienced.
“In January 2007, McCutchen suffered serious injuries when another driver lost control of her car and collided with McCutchen’s…McCutchen retained attorneys, in exchange for a 40% contingency fee, to seek recovery of all his accident-related damages, estimated to exceed $1 million. The attorneys sued the driver responsible for the crash, but settled for only $10,000 because she had limited insurance coverage and the accident had killed or seriously injured three other people. Counsel also secured a payment from McCutchen’s own automobile insurer of $100,000, the maximum amount available under his policy. McCutchen thus received $110,000—and after deducting $44,000 for the lawyer’s fee, $66,000.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 2).
“[] US Airways paid $66,866 in medical expenses for injuries suffered by [] McCutchen … The plan entitled US Airways to reimbursement if McCutchen later recovered money from the third party [including his own insurance] … US Air-ways demanded reimbursement of the full $66,866 it had paid. When McCutchen did not comply, US Airways filed suit under ERISA [requesting the $41,500 being held in an escrow account and $25,366 more in McCutchen’s possession].”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., syllabus).
Counsel for McCutchen raised the arguments that every plaintiff attorney raises with logic and equity on their side.
“McCutchen rais[ed] two defenses… First, he maintained that US Airways could not receive the relief it sought because he had recovered only a small portion of his total damages; absent over-recovery on his part, US Airways’ right to reimbursement did not kick in [read as “made whole” doctrine]. Second, he contended that US Airways at least had to contribute its fair share to the costs he incurred to get his recovery; any reimbursement therefore had to be marked down by 40%, to cover the promised contingency fee [read as “common fund doctrine].”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 4).
Though it is not addressed by the court, I think most plaintiff’s attorneys would note the extra sting of repayment in this case where 90% of the settlement funds come from the plaintiff’s own first party insurance.
The Court ruled that the terms of the plan control since the contract for health benefits between an ERISA plan and its participants is a “bargained for exchanged” and equitable principles will not trump express plan language.
“McCutchen [] cannot rely on theories of unjust enrichment to defeat US Airways [] plan’s clear terms. Those principles, as we said in Sereboff, are ‘beside the point’ when parties demand what they bargained for in a valid agreement.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 9).
“The agreement itself becomes the measure of the parties’ equities; so if a contract abrogates the common-fund doctrine, the insurer is not unjustly enriched by claiming the benefit of its bargain.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 11).
“[If] [t]he express contract term … contradicts the background equitable rule … the agreement must govern.
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 14).
These are dire words for the plaintiff’s attorney as the insurance industry has spent the years since Sereboff drafting plan language to address just these specific equitable principles. However, there is a glimmer of hope in that the court has made it clear that the language abrogating these doctrines must be clear and express.
“[If] the plan is silent on the allocation of attorney’s fees, []in those circumstances, the common-fund doctrine provides the appropriate default. In other words, if US Airways wished to depart from the well-established common-fund rule, it had to draft its contract to say so …”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 12).
“The words of a plan may speak clearly, but they may also leave gaps. And so a court must often “look outside the plan’s written language” to decide what an agreement means. CIGNA Corp. v. Amara, 563 U. S. , (slip op., at 13); see Curtiss-Wright, 514 U. S., at 80–81.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 13).
“To be sure, the plan’s allocation formula—first claim on the recovery goes to US Airways—might operate on every dollar received from a third party … [b]ut alternatively that formula could apply to only the true recovery, after the costs of obtaining it are deducted.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 14).
The Court significantly bolsters the argument that absent plan language the “common fund” doctrine applies.
“A party would not typically expect or intend a plan saying nothing about attorney’s fees to abrogate so strong and uniform a back ground rule. And that means a court should be loath to read such a plan in that way”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 15).
“The rationale for the common-fund rule reinforces [the] conclusion [that] [t]hird-party recoveries do not often come free: To get one, an insured must incur lawyer’s fees and expenses. Without cost sharing, the insurer free rides on its beneficiary’s efforts—taking the fruits while contributing nothing to the labor.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 16).
Yet despite their clear support and understanding of the need for the equitable principle of the “common fund” doctrine, they impose a Draconian result on Mr. McCutchen and all plaintiffs who are participating in self-funded ERISA plans. The result is so self-evident that the Court acknowledges it themselves.
“[I]n some cases—indeed, in this case—the beneficiary is made worse off by pursuing a third party. Recall that McCutchen spent $44,000 (rep resenting a 40% contingency fee) to get $110,000, leaving him with a real recovery of $66,000. But US Airways claimed $66,866 in medical expenses. That would put McCutchen $866 in the hole; in effect, he would pay for the privilege of serving as US Airways’ collection agent.”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 16).
The lesson for the wise plaintiff’s lawyer is to address resolution of your client’s self-funded ERISA plan early on in the case. It would be an unhappy client who spent years in litigation, depositions, hearings, mediations, and even trials to learn that it had all been for the benefit of the “health insurance company” they had been paying “premiums” to for potentially years prior and during the litigation. The plaintiff’s attorney must now evaluate accepting cases at all that have large self-funded ERISA liens and limited recovery potential.
“When the next McCutchen comes along, he is not likely to relieve US Airways of the costs of recovery. See Blackburn v. Sundstrand Corp., 115 F. 3d 493, 496 (CA7 1997) (Easterbrook, J.) (“[I]f . . . injured persons could not charge legal costs against recoveries, people like [McCutchen] would in the future have every reason” to make different judgments about bringing suit, “throwing on plans the burden and expense of collection”).”
U.S. Airways v. McCutchen, 569 U. S. (2013)(slip op., at 16).
The plaintiff’s bar is now thrust back to the future and must forego arguments of equity and return to the contract based arguments that were fashioned pre-McCutchen. Remember that the burden is on the ERISA plan to be clear in its plan language, the requirements of Sereboff still are enforceable, and the Plan Administrator must still comply with the demands of 29 U.S. 1024(b)(4). These and other statutory and contractual arguments remain for the plaintiff’s attorney who must confront a subrogation/reimbursement claim from a self-funded ERISA plan. However, the luxury of dealing with “lien issues” at the close of litigation is one that can no longer be enjoyed by the wise plaintiff’s attorney.
On April 16, 2013, the United States Supreme Court clarified how equitable principles interact with the plan language of self-funded ERISA health plans. The question presented to the Court was: Should the principles of “common fund,” often referred to as a reduction for attorney fees, and “made whole,” the principle requiring full compensation to the injured party before subrogating parties are allowed to recover, overcome express plan language abrogating those principles? Sadly, the Court has ruled that they should not.
By Director of Lien Resolution
Families and individuals injured by Vioxx may still have lien claims to resolve despite the Lien Resolution Administrator’s attempt to manage these claims. In a December 4, 2012 ruling the United States District Court, E.D. Louisiana denied the motion of approximately forty six (46) insurance companies to have their lien claims resolved from the Vioxx settlement fund. These companies sought to have their ERISA, Medicare Advantage, and FEHBA claims for reimbursement added to the multi-jurisdiction litigation taking place in the Eastern District of Louisiana. Though nearly twenty five thousand (25,000) liens were resolved under the Court’s management of the litigation, there are still several thousand outstanding reimbursement claims that must be satisfied before the Vioxx plaintiffs can realize their net settlements.
This case relates to the multidistrict products liability litigation for the prescription drug Vioxx. On May 20, 1999, the Food and Drug Administration approved Vioxx for sale in the United States. It is estimated that 105 million prescriptions for Vioxx were written in the United States between May 20, 1999 and September 30, 2004. Based on this estimate, it is thought that approximately 20 million patients have taken Vioxx in the United States. Vioxx remained publicly available until September 30, 2004, when Merck withdrew it from the market after data from a clinical trial indicated that the use of Vioxx increased the risk of cardiovascular thrombolytic events such as myocardial infarction (heart attack) and ischemic stroke.
Consequently, thousands of individual suits and numerous class actions were filed against Merck, the maker of Vioxx, in state and federal courts throughout the country alleging various products liability, tort, fraud, and warranty claims. On November 9, 2007, Merck formally announced that they had reached a Settlement Agreement for an overall amount of $4.85 billion. Pursuant to the requirements of federal and state laws creating statutory liens under the Medicare and Medicaid programs, the Settlement Agreement provided that a “Lien Resolution Administrator” establish “procedures and protocols . . . to identify and resolve Governmental Authority Third Party Payor/Provider Statutory Liens.”
On April 14, 2008, approximately forty-six (46) insurance companies (the “Plan Plaintiffs”) filed suit against settlement fund (among others) asserting claims for reimbursement under ERISA, and asking for an injunction to stop the disbursal of settlement funds. The Court found that the prerequisites for an injunction were lacking in all respects. The Plan Plaintiffs sought review at the Fifth Circuit, which affirmed the lower court’s denial of an injunctionl. Avmed Inc. v. BrownGreer PLC, 300 Fed. App’x 261 (5th Cir. 2008) (“AvMed III“). Despite this ruling, the court remained aware of the ERISA reimbursement issue and on January 22, 2009, the parties announced at the monthly status conference an agreement establishing a program to assist with resolving private Vioxx-related lien issues (“the Private Lien Resolution Program” or “PLRP”). The Court authorized a nationally known private company to administer the program as Lien Resolution Administrator.
Despite their best efforts, the Lien Resolution Administrator did not address all the claims for reimbursement that could be brought against the class members. Thus, Plan Plaintiffs sought leave to amend their complaint to add members of ERISA plans who did not participate in the Private Lien Resolution Program and to add claims for reimbursement under the Medicare Secondary Payer Act and the Federal Employee Health Benefits Act
The court denied the motion to add these claims since the Plan Plaintiffs’ brought different claims pursuant to different health benefit plan language in different factual circumstances. This diversity between the claims of the individual Plan Plaintiffs means that the rights to relief asserted did not arise out of the same transactions or occurrences and did not present common questions of law or fact. (AvMed II, 2008 WL 4681368, at *5-8). The Court recognized the risk of “transform[ing] this litigation into an action against approximately 15,000 defendants, each of whom has entered into a separately negotiated health plan contract and each of whom has received medical benefits under highly individualized factual circumstances.” (Id. At 8). The court concluded that “the proposed amendment is procedurally unworkable, for the same reasons set forth in AvMed II, and again poses the risk of expanding this litigation into a procedural morass.”
The court continued with the analysis of their denial of the motion by pointing out that pursuant to 29 U.S.C. § 1132(e)(2), ERISA claims may be brought “in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.” The proposed amendments would add a dozen defendants from different districts, none of them located in the Eastern District of Louisiana. It was also not clear from the record that any of Plaintiffs’ plans were administered in the Eastern District of Louisiana. Finally, the alleged breaches, if any, were centered on the location of the defendants. Though the Court supervised the PLRP with respect to active cases, the personal injury actions underlying the proposed amendment had been resolved and stipulations of dismissal filed in the Court. Thus, the opportunities for economies of scale were no longer as apparent. In short, the Court found that considerations of “judicial economy and the most expeditious way to dispose of the merits of the litigation” counsel against hosting these disputes in the MDL.
According to this ruling, plaintiff’s who recover funds from the $4.85 billion dollar settlement may need to resolve outstanding reimbursement claims before for they can realize their individual settlement. Thousands of plaintiffs must now confront plan administrators, third party administrators, and recovery agents in order to resolve outstanding ERISA, Medicare Advantage and FEHBA claims for reimbursement. Though judicial economy weighs against handing these matters as part of the Vioxx multiple district litigation, it leaves many plaintiffs in a troubling, and possibly inequitable situation. The result of failing to anticipate lien issues may leave some Vioxx plaintiffs in a far less advantageous position than others. If the Vioxx plaintiff lives in jurisdictions where defenses to these claims exist then the portion of the settlement apportioned to this claimant is greater than and equal apportionment to a plaintiff living in a jurisdiction where repayment to these plans will be mandatory.
Families and individuals injured by Vioxx may still have lien claims to resolve despite the Lien Resolution Administrator’s attempt to manage these claims. In a December 4, 2012 ruling the United States District Court, E.D. Louisiana denied the motion of approximately forty six (46) insurance companies to have their lien claims resolved from the Vioxx settlement fund.
By Tal A. Wollschlaeger
Medicare Lien Analyst
Everybody expects to get paid back one way or another. Whether someone owes you money because you bought him or her lunch when times were tough or you owe money on your credit card bill and its past due, when money is owed there is an expectation on the other end to be paid back in some way shape or form, and Medicare is no different. The difference between Medicare and the preceding examples is that Medicare employs a recovery agent known as the Medicare Secondary Recovery Contractor (MSPRC). The MSPRC website has defined its role in the following manner: “The MSPRC protects the Medicare trust fund by recovering payments when another entity had primary payment responsibility and the MSPRC accomplish this under the authority of the Medicare Secondary Payer Act. MSPRC is tasked with identifying and recovering Medicare payments that should have been paid by another entity under either a group health plan or as part of a Non-Group Health plan. These plans include but are not limited to Liability insurance, No-Fault Insurance, and Workers’ Comp. MSPRC does NOT pursue supplier, physician, or other provider recovery.” As one can imagine this process is a long and arduous one but pretty straightforward and this post will outline said process from A-Z.
In order for Medicare to know about the potential recovery situation, they need to be informed of such by the parties to litigation. This is done by the beneficiary themselves or their representative notifying the Coordination of Benefits Contractor (COBC) via telephone. During this call information such as Name, Address, Date of Accident, Injuries sustained by beneficiary, Insurance coverage, and the Beneficiary’s Attorney’s name and address is given to COBC so they can report the claim properly to MSPRC. It typically takes 24-48 hours for the claim to be reported to MSPRC, during that time it is imperative that if the Beneficiary has an attorney or representative, he or she must send the MSPRC proper proof of representation in order for the MSPRC to release information to the representative. At this point in the process the case has been established and there is an authorized representative assisting the beneficiary with this matter. Now that this has been accomplished it’s time for MSPRC to begin identifying claims.
MSPRC only begins identifying claims for recovery when it receives notice of a pending no-fault, liability, or Workers Comp matter. As MSPRC is seeking out claims, Attorney’s for the injured party are trying to secure settlement with the at fault parties insurance carrier. MSPRC will NOT issue a formal demand letter until settlement, judgment, or award; instead they will produce the Conditional Payment Letter (CPL). The CPL lists all the claims paid to date that are related to the claim reported to the COBC. Claims are presented in a code format known as ICD-9 codes; these codes can be deciphered by inputting them into a code converter which can be found at the following link (http://www.aapc.com/icd-10/codes/index.aspx). These codes range from 3-5 digits and once they are plugged into the converter the diagnosis will be generated. For example, the code 4019 is associated with hypertension/high blood pressure and 7231 is associated with Neck Pain. Given that the letter doesn’t provide a final demand amount; Medicare might make additional conditional payments while the claim is pending. The CPL has no minimum and no maximum amount and tends to include unrelated claims frequently. For example, if the injuries reported to COBC were back and neck injuries and MSPRC includes a charge for chest pain, the chest pain would be considered an unrelated charge. However, fear not! The next step in the process can help take care of situations such as the one presented.
It is common practice when a CPL comes in for the representative to audit the bill using an ICD-9 Code Converter online and search for unrelated claims. Following the audit it can be determined whether or not the CPL contains unrelated charges or not. If all charges are related, then all MSPRC needs is settlement info and they will produce a Final Demand. Conversely, if there are unrelated charges found and the beneficiary/representative believes that those claims should be removed, then they must send correspondence to the MSPRC establishing that the claims are not related to what was initially claimed. Additionally, they must forward a copy of the CPL in question and circle any and all unrelated claims. If this is done then MSPRC will take between 30-45 days to review and process the dispute. They will either adjust the CPL amount to account for anything they agree is not related to what has been claimed, or they will send a letter notifying you that they disagree with the dispute and to please refer to the most up to date CPL. If the latter occurs, an additional dispute is not out of the question should the beneficiary or representative wish to pursue one. Basically, the process would be repeated however this time around MSPRC asks that you send them additional evidence or documentation such as medical records to support the dispute. This process can go on back and forth until the beneficiary/representative is ok with the amount and wants to go forward with the disbursement of settlement funds. Speaking of settlement that leads us to the final step in the recovery process, and that is the Final Demand Letter.
Earlier in this post it was mentioned that once MSPRC is notified of a settlement/judgment/award that it will produce the final demand letter. It is expected that the beneficiary/representative send the settlement documentation to the MSPRC. This information must clearly identify the date of settlement, the settlement amount, the amount of attorney’s fees and other costs. Upon receipt of this information MSPRC will identify any related (THUS THE IMPORTANCE OF AUDITING FOR UNRELATED CHARGES) claims provided up to and including the settlement date and will issue the formal demand letter. The final demand letter will include the beneficiary’s name and Medicare Health Insurance Claim Number (HICN); the date of incident, the date of incident, a summary of payments made by Medicare, the total demand amount which (in most cases) will always be less than the CPL amount, and information on the beneficiary’s waiver and appeal rights. All checks must be made payable to Medicare and include the beneficiary’s name and HICN. However, a Demand is like a ticking time bomb and needs to be taken care of by a certain date. Failure to respond within the specified time frame will result in interest accruing, and ultimately all debt will be referred to the Department of the Treasury. Interest will begin to accrue from the date of the demand letter but will only be assessed if the debt is not repaid within in the time period specified. When the deadline hits, interest is due and payable for each full 30-day period the debt remains unpaid. Interest will continue to be assessed on unpaid debts even if a beneficiary is pursuing an appeal or waiver, that’s why it’s vital to pay the demand amount in a timely manner even if you decide to fight. Better yet if the waiver/appeal is granted the beneficiary will receive a refund, thus it makes very little since to not pay Medicare within the time frame specified in the demand letter.
Hopefully, this information helped shed some light on what MSPRC does for Medicare and cleared up any confusion about the entire process. As noted earlier, this process can take quite some time but if one is mindful of deadlines and diligent in their work then it won’t be as painful as it ultimately can be.
Learn more about the Medicare recovery process under the MSP.
One of the keys to properly defending against an asserted subrogation or reimbursement claim from an ERISA plan is making requests to the plan administrator. ERISA places certain responsibilities upon the plan administrator to assist with the proper management of ERISA qualified employee welfare-benefit plans and to promote communication with the plan beneficiaries. One of the major responsibilities of the plan administrator, as to dealing with the providing of information to beneficiaries, is contained in 29 U.S.C. 1024(b)(4).
This section of the statute deals with requests for information made upon the plan administrator:
29 U.S.C. 1024(b)(4)– The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.
In attempting to determine the existence and validity of the purported ERISA subrogation or reimbursement claim, obtaining the items listed in 29 U.S.C. 1024(b)(4) is of the utmost importance. Attorneys should make a formal request under 29 U.S.C. 1024(b)(4) as the requested documents will establish the funding status, identify the plan sponsor, and establish the limits of the health plan’s recovery rights. However, attempting to obtain all of these documents can be fruitless and very frustrating. The U.S. District Court for North Carolina dealt with this issue in Strickland v. AT&T Benefit Plan, 2012 WL 4511367 (W.D.N.C.). In this case the court ordered the plan to produce its “plan document,” recognizing that terms of a Summary Plan Description are not, in and of themselves, enforceable under Cigna v. Amara, 131 S.Ct. 1866. You can use this case to your advantage with ERISA plan administrator or recovery agent.
The ERISA statute mandates that the Summary Plan Description be written in an understandable manner so as not to be confusing to the beneficiary.
29 U.S.C. § 1022(a) – [The SPD] shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.
In Cigna v. Amara the Supreme Court ruled that “taken together we conclude that the summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan” This language seems to make it clear that under 29 U.S.C. 1024(b)(4) the court would find that the plan administrator has an obligation to produce the Master Plan Document (MPD) as well as the Summary Plan Document (SPD).
Typically a claim summary and a SPD are the only documents returned to the requesting beneficiary, or their attorney following their 29 U.S.C. 1024(b)(4) request. In light of the recent string of cases following Cigna v. Amara, which speak to the need to compare the SPD to the MPD, the plaintiff attorney should insist that the plan administrator is required to provide both under 29 U.S.C. 1024(b)(4).(See Also, McCravy v. Metropolitan Life Ins. Co., Nos. 10–1074, 10–1131, 2012 WL 2589226 (4th Cir. Jul. 5, 2012); Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d 1162 (9th Cir.2012); Israel v. Prudential Ins. Co. of Am., No. 7:11–793–TMC, 2012 WL 3116544, at *5 (D.S.C. July 31, 2012)). In fact, the clear language of 29 U.S.C, 1024(b)(4) requires that “any…contract or other instrument under which the plan is establish or operated” be provided to the requesting beneficiary.
Under ERISA 502(a)(3), the self-funded ERISA qualified health plan only has the authority to enforce “the terms of the plan.” The cases cited above make it clear that to determine the “terms of the plan” the MPD must be compared with the SPD in order to establish the obligations of the beneficiary. It logically follows that the plan beneficiary must have the MPD to do this evaluation. The mechanism for the beneficiary to obtain these documents is 29 U.S.C. 1024(b)(4), so the educated plaintiff’s attorney will not agree that the plan administrator has complied with 29 U.S.C. 1024(b)(4) until he has possession of both documents.
These cases illustrate the need for the plaintiff attorney to make his 29 U.S.C. 1024(b)(4) requests early. This will not only allow the early evaluation of the alleged ERISA plan’s recovery rights, but also begins the penalty timer. It is our belief that failure to provide both the SPD and MPD within the 30 day time limit causes the $110.00 per day penalties under 29U.S.C. § 1132(c)(1)(b) & 29 CFR § 2575.502c-1 to begin.
Demand what your client is owed from the plan administrator. Do not accept the SPD as “good enough” from the ERISA plan administrator or their recovery agent. Use their lack of compliance as a tool to reduce the amount your client must pay back to the ERISA plan. Put some teeth in your 29 U.S.C. 1024(b)(4) requests by starting the penalty timer ticking.
One of the keys to properly defending against an asserted subrogation or reimbursement claim from an ERISA plan is making requests to the plan administrator. One of the major responsibilities of the plan administrator, as to dealing with the providing of information to beneficiaries, is contained in 29 U.S.C. 1024(b)(4).
The 8th Circuit Court of Appeals handed down its decision in Treasurer, Trustees of Drury Industries v. Sean Goding, No. 11-2885. This is a situation where the ERISA plan doggedly pursued the law firm which had represented the ERISA beneficiary in securing a tort recovery. The law firm had disbursed the settlement funds by paying its attorney fee to itself and releasing the remainder of the funds to the client (ERISA beneficiary) who eventually declared bankruptcy. Because the reimbursement claim of $11,423.79 was uncollectible from the beneficiary (due to the bankruptcy), the ERISA plan sued the law firm in federal court “asserting theories of equitable lien by agreement, restitution, imposition of a constructive trust, tortious interference with contractual relations, and conversion.” The federal trial court ruled against the plan. The plan would not accept the ruling, however, and “stretched out the litigation more than a year after the initial decision for no legitimate reason.” The trial court again ruled in favor of the law firm and assessed attorney fees against the plan. The ERISA plan then brought this appeal. This opinion “affirms the district court on all issues,” holding that
Although [the law firm] acknowledged the existence of the lien against the settlement proceedings, it never agreed with [the ERISA plan] and [ERISA beneficiary] to honor the Plan’s subrogation right. Because [the law firm] was not a party to the subrogation agreement, [the ERISA plan] cannot enforce that agreement against [the law firm].
Prior 8th Circuit case law, the Ford case, had imposed liability on an attorney, but the Ford case was distinguished by virtue of the fact the attorney in Ford had agreed “to honor the plan’s subrogation right.” In this case, there was no such agreement. A mere acknowledgement of a lien assertion is not tantamount to an agreement to “honor the plan’s subrogation right.” This decision lines up with the 9th Circuit decision of Hotel Emps. & Rest. Emps. Int’l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995).
As to the award of attorney fees in favor of the law firm, the ERISA Plan argued, “ERISA does not permit the award of attorneys’ fees to attorneys that act as counsel to their own firms.” This opinion rejects that argument and finds that the trial court “did not abuse its discretion in awarding attorney’s fees in this case.”
Click HERE to view the opinion.
Reprinted with permission from Roger Baron
The 8th Circuit Court of Appeals handed down its decision in Treasurer, Trustees of Drury Industries v. Sean Goding, No. 11-2885. This is a situation where the ERISA plan doggedly pursued the law firm which had represented the ERISA beneficiary in securing a tort recovery.
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