A recent federal case highlights the risks to both clients and their counsel presented by ERISA liens. 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 language to categorically deny any obligation to reduce their lien claims, and claim that they are entitled to their entire reimbursement claim regardless of the circumstances of the case.
.In Publix Super Markets v Figareau, 2020 WL 5513344 (M.D.Fla. Sept 14, 2020), the ERISA plan sought reimbursement in the amount of $88,846.39 from tort recoveries totaling $845,000 arising out of medical malpractice claims arising from the birth of an infant plaintiff. The medical malpractice claimant set forth two related arguments to support equitable reduction of the lien: (1) that claimant’s injury have required treatment in the absence of negligence and, consequently, they should only be required to reimburse the ERISA Plan for the treatment relating to the negligence; and (2) that they should only be required to reimburse the Plan for the “reasonable value” of the surgery, which they contended was less than 25% of the lien amount.
This court rejected the victim’s arguments, relying instead upon the broad language in the settlement and release documents executed in the tort actions and, in a stark warning to Plaintiff’s counsel, held that the “reasonable value” of medical services are simply “immaterial” to the rights of reimbursement under the ERISA Plan, which required claimants to “immediately reimburse the Plan . . . the amount . . . paid for the injury,” and entitled the Plan “to first and full priority reimbursement out of any recovery to the extent of the Plan’s payments.”
While this unpublished opinion is not strictly binding as precedent, the case is another stark reminder to personal injury claimants and, perhaps more critically, their counsel, such as a personal injury lawyer in Arlington, VA from The Law Offices of Ryan Quinn, PLLC, to take ERISA liens very seriously and account for their impact on any settlement prospects. As a practical matter, counsel should engage ERISA lienholders in any lien reductions negotiations as early as possible during the course of litigation. Earlier settlement negotiations allow for increased clarity in assessing settlement prospects in the underlying matter. Further, as the Publix case makes clear, counsel should be quite hesitant to rely on judicial intervention to reduce ERISA liens once a case has resolved. By commencing settlement negotiations before a claim is resolved, experienced counsel can potentially leverage the inherent uncertainty of any litigation outcome to maximize their leverage with increasingly aggressive ERISA lienholders.