Many employer provided health plans are covered by a federal law called ERISA (Employment Retirement Income Security Act). This Nixon-era law was originally meant to keep union plans from being stripped by unscrupulous institutions.
Important fact: If your employer provided health plan paid for your accident injury medical care, ERISA may cause problems in your personal injury claim if you aren’t prepared up front.
Many ERISA health plans have language that require reimbursing the insurance company for any money they paid out for accident injuries if there is recovery from a third person.
In other words, if you settle your claim for $100,000 and the medical expenses are $110,000, you could wind up owing the insurance company $10,000 more than you settled for. Depending on the language in your health plan, you might not even get to deduct the money you paid your attorneys or the costs of settling the claim.
That might sound unfair, but it’s the law according the the U.S. Supreme Court. US Airways v. McCutchen, 113 S.Ct. 1537 (2013).
We’ve had these cases and the trick is to get with the insurance company at the very beginning and try to negotiate a fair deal. You have leverage before you settle your claim that you don’t have once the money is in the bank.
The takeaway? Hire an attorney who is familiar with the ins and outs of ERISA. If you’re interviewing a lawyer, have an employer-provided group health plan and your prospective attorney doesn’t know about US Airways, you might want to think about looking elsewhere.
Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA. A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association. Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine. Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.