Erisa Reimbursement Claims

Most health insurance plans provided through an employer are governed by ERISA, which stands for the Employee Retirement Income Security Act of 1974.  It is a comprehensive statute that regulates employer provided health and pension plans, including limitations on how a plan can be reimbursed for benefits provided to a beneficiary.  ERISA’s reimbursement rights interact with worker’s compensation claims when the employee is injured on the job as a result of an accident and the employer denies the claim.  If an employee suffers an injury and receives medical benefits under a self-funded ERISA plan, and later settles a worker’s compensation claim arising out of that injury, the ERISA plan may claim the right to recover from the employee all benefits paid.

Which Plans Are Not Covered by ERISA Law?

Some employee benefit plans are specifically excluded from ERISA coverage.  These include:

• Church plans (unless they elect to be covered)
• Plans established or maintained by government entities
• Multiple Employer Welfare Arrangements (MEWA) that do not provide pension benefits or plans maintained solely to comply with worker’s compensation, unemployment compensation or disability insurance laws
• Plans maintained outside the U.S. (primarily for non-resident aliens)
• Unfunded excess benefit plans (maintained to provide benefits in excess of the maximum permitted benefits)

Unfunded plans maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or solely for retired or deceased partners are excluded from coverage under ERISA’s fiduciary rules.

Determining Whether a Plan is Self-Funded or Insured

Employee benefit plans can either be fully insured, or self-funded.  A self-funded plan is where the employer puts the money into a trust fund that is overseen by strict federal regulations and that trust fund pays the claims and keeps any profits on behalf of the workers to offset future expenses.  When an employer self-funds the plan, it is generally not subject to state laws and regulations. 

Under a fully insured employee benefit plan, the employer purchases commercial health coverage from an insurance company, and the insurance company assumes the risk for payment of claims. 

If the employer purchases an insurance policy and pays a premium and the insurance company assumes all the risk, then it is an insured plan.  If the financial risk falls in any way to the employer, then it is a self-funded plan.

Enforcing Reimbursement Rights Under ERISA Law

To assert an equitable lien, the ERISA plan must meet several prerequisites.  When the entity paying the injured party’s medical bills is not a health insurance company but a self-insured employer, the reimbursement is subject to ERISA.  This federal legislation pre-empts or nullifies state anti-subrogation statutes.  Subrogation is defined as the substitution of one person or group by another in respect of an insurance claim, accompanied by the transfer of any associated rights and duties.  Subrogation arises when one party pays the debt of another party and succeeds to all rights of the creditor against the debtor.  The plan’s subrogation provision requires the participant to reimburse the plan for medical expenses after the recovery.

Under ERISA, workers and their families are entitled to receive a summary plan description (SPD).  This document gives information about the plan, what benefits are available under the plan, the rights of the participant and beneficiaries under the plan and how the plan works.

ERISA Doctrines

Insured plans are subject to state laws such as the “make whole” doctrine and the “common fund” doctrine.  The make whole doctrine stipulates that an injured party may be compensated for all damages before medical providers or insurance companies can recover any payment made as a result of their agreement for insurance services with the injured party.  The common fund doctrine allows a plaintiff’s attorney to recover attorney’s fees and costs.

How a Disability Lawyer Can Help

If you have been denied employer-provider disability, health or life insurance benefits, you should speak with an experienced disability attorney.  ERISA issues can be complex, requiring an in-depth understanding of federal statutes and case law.  A lawyer can help you navigate this complicated process to obtain the benefits you are entitled to.