ERISA liens are quickly becoming one of the biggest sources of frustration for personal injury attorneys. ERISA is the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. which governs most employee health plans. Many ERISA plans rely on preemption principles to assert that they are under no obligation to reduce their lien claims, and purport that they are entitled to their entire reimbursement claim regardless of the circumstances of the case. Needless to say, this does not bode well for clients, who may end up with very little out of their personal injury settlement, particularly if the third party has a limited policy.
Under section 502(a)(3) of ERISA, a civil action may be brought by a fiduciary to obtain appropriate equitable relief to redress violations of the plan or to enforce any provisions of the subchapter or the terms of the plan.
Medicare, and Medicaid liens can remain in place up to 6 years after settlement and can be a nasty surprise for plaintiffs a settlement has been spent. It is often easier to negotiate a reduction in liens prior to settlement than following completion of the case as considerations for hardship can be addressed with lien holders. Plaintiff's may not be fully aware of the impact a lien may have until after receiving settlement and if not addressed properly can result in higher than necessary liens. Therefore, it is critical to ask potential plaintiffs the amount of their medical bills and who paid the bills, prior to taking the case. If the entity that paid the bills has a lien that exceeds the policy limits available in the action contacting the lien claimant to determine a certain percentage of the recovery prior to settlement. When liens are addressed early, the attorney will not need to reduce fees to satisfy the lien and ensure clients are able to recover appropriate award amount.
SLR Risk Managers will help you resolve subrogation liens and allow your clients to recover larger settlements.