Often the most difficult aspect of a NC automobile accident case has nothing to do with who was at fault in the accident, the nature of the injuries or how to find insurance to cover the claim. Increasingly personal injury cases are dominated by efforts to ensure that the recovery goes to benefit the injured person and not to reimburse a third party health plan. This article discusses the increasingly important issue of ERISA reimbursement in NC auto accidents.
In North Carolina, private health insurers are prohibited from seeking reimbursement for payments made for medical treatment when there is a recovery from the person who caused the injury. Such reimbursement is called “subrogation.” Insurers in North Carolina are also prohibited from denying payment for injuries that arise from another’s negligence, like an automobile accident.
Most large employers however provide their employees health benefits through self-funded health plans authorized under the Employee Retirement Income Security Act of 1974 (ERISA). These self-funded plans are exempt from North Carolina’s anti-subrogation law and so are allowed to seek to recover a part, or even all, of any settlement or judgment recovered from an at-fault party.
So, for example, assume an IBM employee is injured in an automobile accident in Cary NC caused by a drunk driver. The IBM employee gets medical treatment for his or her injures, and these medical bills are paid by IBM’s self funded ERISA health plan. IBM will seek to recover the money it has paid in health expenses from the employee’s settlement or judgment with the drunk driver.
To have a right of subrogation an ERISA health plan must be self-funded, that is the employer must put its own money into the plan to pay health claims. If the plan itself purchases health insurance to pay the employee’s medical claims then North Carolina’s anti-subrogation statute applies and the plan is denied a recovery. Also, the plan language must meet certain highly technical guidelines and must plainly provide for subrogation. The right of subrogation applies not only to the employee but to all the beneficiaries under the plan, including typically the employees family members.
When a valid right of subrogation exists it can dramatically affect the rights of the injured driver to recover for their NC automobile accident injuries. Typically, ERISA health plans provide that the plan is entitled to recover all of the money it has paid out before the injured party receives anything. The right of subrogation attaches to the entire settlement, without regard to whether the money is for medical bills, pain and suffering or lost wages.
Plan documents typically allow the plan to file a lawsuit in federal court to recover the medical expenses it has paid that are later recovered from an at-fault party. Additionally, the plans can deny payment on unrelated claims for the injured party as well as for other plan participants.
It is possible to negotiate the right of ERISA reimbursement in NC auto accidents. Key factors in the negotiation will be the exact plan language, the amount of medical expenses paid, and whether the injured party is still covered under the plan. An experienced NC automobile accident attorney will be able to help make sure the recovery benefits the injured party and not the self-funded ERISA health plan.