It’s not often that a car accident case makes it to the U.S. Supreme Court. But that’s what happened recently in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, an appeal from the U.S. Court of Appeals for the Eleventh Circuit.
This case stemmed from a 2008 drunk driving accident. Here, the victim had health insurance coverage provided by defendants, who paid more than $121,000 for his care. Later, victim sued the at-fault drunk driver in the case and, prior to trial, settled the case for $500,000. Half of that went to attorney’s fees and then the health care insurer asserted it too was entitled to collect reimbursement under the Employee Retirement Income security Act (ERISA).
A federal court judge granted the health care company summary judgment in the amount of $121,000. The 11th Circuit affirmed, finding the health plan had first prior to settlement proceeds from that third-party deal. The U.S. Supreme Court: Reversed.
This could have a substantial effect on North Carolina car accident victims and those across the country.
The court specifically found it erroneous that the lower courts allowed the plan to recover out of plaintiff’s general assets, without any determination of whether he’d kept that settlement fund separate from his general assets, or whether the settlement had been spent entirely on “non-traceable items,” such as services or food.
The court conceded that while Section 502(a)(3) of ERISA does allow the board to bring civil lawsuits in order to assure and enforce appropriate equitable relief, the court questioned how these actions were equitable when there was no effort undertaken to determine how the proceeds of the settlement were spent.
While the defendant may well still have an equitable claim to be made on the injured person’s general asserts, this becomes then a legal remedy, rather than an equitable lien.
The issue was not so much whether the insurer had a right to an equitable lien, but rather the fact that they waited so long to assert it. The board waited until six months after the $500,000 settlement to assert claim to it.
As the injured worker’s lawyer posited, it was up tot eh board to keep track of the third-party lawsuit – it wasn’t his job to keep the board posted. Even so, the court ruled, the board had enough notice of the settlement that it could have taken a number of steps to preserve those funds. In fact, injured worker’s attorney had informed the board he was giving his two weeks notice before dispersement the remaining funds to the worker, and there was no objection and no immediate effort to file a lawsuit.
Some are now speculating that the only way for a company to ensure an employee will repay the plan for a third-party win or settlement is to file a lawsuit or an injunction against the worker while the case is pending.
There will still be an opportunity in this case for the company to get some of its money back. The high court has remanded the case back to to the district court to determine whether the funds from the settlement were kept separate from his general assets.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Supreme Court Reversal in Accident-Payout Case, January 2016, By Barbara Leonard, Courthouse News Service
More Blog Entries:
Bacon v. Universal Insurance Company – Disputing UIM Benefit Denial, Jan. 15, 2016, Charlotte Car Accident Attorney Blog