UnitedHealth Group v. Harvey – Battling for Auto Insurance Coverage

A federal judge is asking the Third District Court of Appeal for clarification regarding how to proceed when there is legal wrangling among a health insurer, an injury lawyer and an injured person following a car accident.caraccident7The case, UnitedHealth v. Harvey, involves the kind of convoluted legal question that often crops up when a health insurer pays for medical treatment following a collision and then the injured party hires an attorney to sue the at-fault driver for damages. The federal judge wants the 3rd DCA to make a determination on whether the health insurance company is shielded from lawsuits for legal fees by a policyholder’s attorney if the health plan includes a provision requiring total reimbursement of benefits in the case of a third-party settlement.

Here, the accident attorney sued the health insurer for legal fees after it obtained a $150,000 judgment from an at-fault driver on behalf of an insured. Much of that money went to reimburse the health insurer. Should the health insurer be allowed to benefit from the legal legwork of the plaintiff and her attorney without having to chip in for those legal costs? The injury lawyer says no, but the health insurer said language in the policy protects it from having to pay those legal fees.

Under her health insurance plan from ERISA, or the Employee Retirement Income Security Act, the insurer paid $50,000 of the woman’s medical bills following the crash. The insurance company then received full reimbursement from the settlements obtained by the woman’s injury lawyer. However, the insurer has refused to pay any portion of the woman’s legal fees, citing a portion of the plan in which it stipulates policyholders must fully reimburse the insurer in cases like this.

A U.S. District judge, weighing these arguments, said more clarity from the higher court is required in order to parse through the complicated legal questions that arise here. The judge then certified a question to the 3rd Circuit, asking whether the terms of an ERISA plan mandating full reimbursement without first reducing for attorney’s fees preempts or supersedes a claim that is filed by a third-party attorney against the insurance company for unjust enrichment under a legal theory called the “common fun doctrine.”

The common fund doctrine holds that a person involved in a lawsuit who creates, discovers, increases or preserves a fund to which others also have a stake in the claim is entitled to recover the costs of attorney’s fees and litigation from that fund. The intention is to prevent unjust enrichment.

Although these kinds of cases can be complex and there are often a lot of facts to sift through, they do tend to arise rather frequently. Just this summer, a federal judge in Nevada ruled that a health insurance company providing coverage to airline employees didn’t have to chip in attorney’s fees because a portion of the health insurance policy gave the airline No. 1 priority over any third-party settlements. Another case with a similar fact pattern was weighed by the U.S. Supreme Court three years ago, with the court saying such matters will be taken on a case-by-case basis.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Clarity Sought in Three-Way Legal Fights Following Car Accidents, Sept. 26, 2016, By Jacklyn Wille, BNA.com

More Blog Entries:

North Carolina Bus Crash Kills 4 – Including 10-Year-Old – and Injures More Than 40, Sept. 19, 2016, Greensboro Car Accident Lawyer Blog

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