Supreme Court Ruling Will Impact Recoveries of Injured Victims

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Are ERISA Plans Entitled to Reimbursement of Already-Distributed Funds?

The U.S. Supreme Court heard a very important case that will have a substantial impact on personal injury verdict and settlement recipients. The court heard arguments earlier this month and is expected to release a decision this spring.

The case, Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, involves the question of whether an ERISA fiduciary can recover money the plan claims it overpaid to the injured party/pan participant if the funds are no longer in the participant’s possession and control.

The Case that Could Change Subrogation Rules

Robert Montanile was an ERISA plan member. When he was seriously injured in a car wreck, his ERISA plan paid him $120,000 in medical benefits. With the assistance of a personal injury trial attorney, Montanile won a $500,000 settlement. The ERISA plan then demanded repayment of the $120,000 in a subrogation claim. Montanile and the ERISA plan were unable to reach an agreement and the plan sued.

The trial court ordered Montanile to repay the money, a decision that was upheld by the circuit court. The case has now reached the Supreme Court.

Montanile argued that he could not repay money he had already spent. Instead, he claimed, he should only be responsible for paying back settlement funds that remain in the plan’s possession. The example presented during an exchange with Justice Breyer is that if Montanile’s ERISA plan account contained only $10, then the plan would only be entitled to $10. Since Montanile had already disbursed the money, the plan is not entitled to claw it back.

What Does This Decision Mean for Injured Auto Accident Victims?

A decision in favor of the ERISA plan would set a very bad precedent. Injury victims who win substantial verdicts or settlements would be incredibly burdened if forced to repay benefits they rightfully received from their ERISA plans or insurance agencies. 

A plan participant can lawfully use the funds to pay medical bills, rehabilitation, legal fees and the costs of living. He or she should not have to worry about whether the funds will be then taken back. The participant would not likely be able to recoup the money once its been disbursed to their third parties. So subrogation would land many injured parties in debt.

settlement award may cover medical bills, lost wages, diminished earning capacity, disabilities, pain, suffering and future medical needs. The victim is entitled to this money, needs this money, and should not be automatically forced to hand it over to the plan.

Let’s hope the Supreme Court recognizes the inequitable outcome that would result. 

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