Why Reimbursement Agreements in ERISA Plans Matter for Trial Lawyers

When representing injury victims, trial lawyers often find themselves navigating the murky waters of ERISA self-funded plans. A recurring and increasingly problematic issue is the use of reimbursement agreements. Some ERISA plans will refuse to pay claims until the injured party signs one of these agreements. On its face, that may sound routine, but these agreements often contain harsh, one-sided provisions that create major problems for both clients and their attorneys.

What’s in These Agreements?

Reimbursement agreements are essentially a second contract layered on top of the plan documents. They often include language requiring 100% reimbursement of injury-related medical payments, sometimes without consideration of attorney’s fees, costs, or equitable doctrines like “made whole” and “common fund.”

While the requirement to sign a reimbursement agreement appears very commonly in ERISA plan language, there are a minority of plans that are very aggressive about enforcing the requirement Union plans, in particular, will suspend claim payments until the member signs and returns the agreement. This puts injured parties in a bind: either agree to the plan’s terms (sometimes broader than what the plan documents actually allow) or risk having treatment bills go unpaid.

How Courts View These Provisions

For the most part, courts have upheld reimbursement agreements. However, there’s an important caveat: A reimbursement agreement cannot expand a plan’s rights beyond what is contained in the plan documents.

For example, if the plan documents do not expressly disavow the made whole doctrine, the plan cannot insert such a provision into the reimbursement agreement and enforce it. The courts have drawn this line, but the reality is that many participants and their attorneys lack the leverage, or resources, to fight these provisions before payments are cut off.

Why This Matters for Trial Lawyers

The consequences for your clients are real:

• Unpaid Medical Bills: If claims are pending while litigation plays out, clients may be hounded by providers or face credit damage.
• Settlement Delays: Unresolved reimbursement disputes can stall finalizing a case, putting both the client’s recovery and the lawyer’s fee at risk.
• Reduced Net Recovery: Even when settlements are reached, a reimbursement agreement with 100% payback can wipe out large portions of a client’s net.

At its core, the question is: Why force an injured party to sign a reimbursement agreement that simply duplicates rights the plan already has? The answer is leverage. Plans know that by withholding payment, they can pressure participants into signing agreements that tilt the balance even further in their favor.

Protecting Your Clients

Trial lawyers should take several steps when confronted with these situations:

1. Review the Plan Documents First – Before advising a client to sign anything, examine the actual language in the Summary Plan Description (SPD) and master plan. The plan’s rights start and end there.
2. Push Back on Overreach – If a reimbursement agreement attempts to extend rights beyond the plan terms, argue the lack of enforceability. Courts generally will not allow expansion through a secondary agreement.
3. Educate Clients – Explain the risks of signing versus not signing. Clients should understand that refusing may delay claims payments, but signing could lock them into worse repayment obligations.
4. Consider Early Lien Resolution Assistance – Specialists who deal with ERISA and union plans every day can help assess enforceability, negotiate reductions, and push back against overreaching agreements.

Why This Issue Will Keep Growing

Subrogation law continues to evolve, and recovery vendors are relentless. RAND research confirms that healthcare liens are becoming more frequent, more aggressive, and more burdensome for injury victims. As plans refine their strategies, trial lawyers must be equally prepared to protect their clients’ recoveries.

At Synergy, we do see ERISA plans use reimbursement agreements as a pressure tactic. While not every plan enforces them, those that do can cause significant disruption to claim resolution. Understanding the nuances and knowing when to fight can be the difference between safeguarding your client’s net recovery and watching it disappear.