High Court Lets Plans Share In Patients' Recoveries

AHIP, NAM and the ABC wrote in the brief they filed in support of Mid Atlantic Medical that employee health benefit plans governed by the Employee Retirement Income Security Act collect hundreds of millions of dollars or more each year through reimbursement recovery mechanisms.

"The ability of ERISA plans to seek reimbursement of benefits from plan participants who have recovered funds from third parties is important to their continued financial security," the groups wrote in their brief.

A ruling in favor of the Sereboffs would increase plan expenses and let injured plan members be unjustly enriched by keeping double recoveries, the groups wrote.

The trial court ruled in favor of Mid Atlantic, and the 4th U.S. Circuit Court of Appeals upheld the trial court decision.

In 2002, the Supreme Court ruled against Great-West Life and Annuity Insurance Company, Greenwood Village, Colo., when Great-West tried to collect reimbursement from a woman who was left paraplegic by a serious accident. In that case, the funds awarded to the woman were placed in a "special needs trust" and were not in the woman's possession.

Chief Justice John Roberts, the author of the Sereboff opinion, writes in the opinion that Mid Atlantic was in a stronger position than Great-West because it was trying to recover from a specifically identified fund within the control of the Sereboffs.

The court holds in the opinion that a benefit plan fiduciary may bring a civil action to bring equitable relief to enforce the terms of the plan, and that Mid Atlantic's claim is an equitable claim.

A copy of the Sereboff opinion is on the Web at Document Link