Car Wreck Victims Get Rare Victory
In a unusual ruling in favor of accident victims, the U.S. Supreme Court decided today that an ERISA plan cannot pursue funds that the plan participant has already spent on untraceable items.
In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, an decision also surprising by its 8-1 vote, the Court considered whether an ERISA fiduciary was entitled to money the plan claimed was overpaid to the injured party if the funds were no longer in the participant’s possession and control. The Supreme Court said no.
The plan could only place a lien against identified funds that remained in the plan participant’s possession and control or against traceable assets that he purchased with the funds. The plan is not permitted to place a lien against the participant’s general assets.
Protection from Subrogation Rules
The case involved Robert Montanile, the victim of a serious 2008 drunk driving crash who was a participant in an employee benefits plan regulated by ERISA.
The plan paid him $120,000 in medical benefits (so his medical bills were at least twice that amount) and his personal injury trial attorney negotiated a $500,000 settlement.
Montanile quickly spent most of the funds he received on various nondisclosed expenses.
The ERISA plan was chided by the court for ignoring the plaintiff’s attorney’s request to object before he disbursed the money to his client. The justices also noted that the plan waited six months to file its lawsuit to demand repayment of the $120,000. It is not clear if the court would have affirmed the lower court’s if these two events had not happened.
The district court ruled in the plan’s favor, a decision upheld by the circuit court. The Berenson Injury Law blog covered the case when the U.S. Supreme Court heard the case in November.
The court ruled that the district court should determine whether Montanile kept his settlement fund separate from his general assets and whether he spent all the money on non-traceable assets. If so, the lower court must decide in Montanile’s favor.
This decision is important for injured vehicular accident victims to have closure after receiving their settlements and benefits. That money is often desperately needed to pay medical bills and costs of living, especially when injuries keep an crash victim from working.
Injury victims may in certain cases not have to worry that their health insurance company or ERISA plan administrator will sue them to get the money back. This decision — and others supporting the rights of injured victims — is long overdue.