In another blog on this site I had addressed Erisa liens and how to block subrogation. There are some other miscellaneous topics that need to be touched on.
Personal Injury Erisa Liens-Miscellaneous-Is there a Duty to Investigate?
Sometimes an issue arises as to whether or not the attorney has an obligation to investigate the merits of a subrogation claim in order to measure what exposure the attorney may have or the client may have. LEO 1865 says that if the client wants no investigation, then no investigation should be done. In spite of that LEO, I think the better practice is to:
- Investigate;
- Determine the merits of the subrogation claim;
- Measure what your exposure is if you fully disburse. In particular could you be sued for fraudulent conveyance under Va. Code § 55.1-400 et seq.?
- Make a full disclosure to the client including that full disbursement could put them in breach of their insurance contract;
- Then make a decision about full disbursement or retaining funds to cover the subrogation amount, less any offsets.
Limitation Periods
Every claim has a statute of limitations. A claim for recovery under an ERISA policy is essentially a breach of contract claim. The breach typically occurs when demand for payment is made and refused. The statute of limitations being based upon a contract would be 5 years in Virginia. As such waiting for the statute of limitations to expire before disbursing money to a client is probably not a sound policy. If the carrier comes out of the woodwork 3 years after you’ve reached a settlement and there’s never been a demand for payment made, then the statute hasn’t even begun to run.
Personal Injury Erisa Liens-Miscellaneous-Disability Plans
Sometimes disability plans will seek subrogation. These may be short-term or long-term disability plans. You need to look at the portion of the plan dealing with “other income benefits”. If they have a right of subrogation, that should be limited to the wage reimbursement that came out of your third party claim. That is, they should not be allowed to offset the entire third party settlement against future disability benefits.
If they try to claim that type of broad subrogation right, then your first argument is that it’s barred by the policy. Your second argument is that there is a lack of consideration. That is, the overall third party settlement includes many components other than loss of income.
Nonpayment by ERISA
Sometimes what ERISA plans will do is refuse to pay medical bills relating to an auto crash. They may assert that you have to exhaust your Med Pay coverage first. That is true in some states. In Virginia however under Va. Code § 38.2-2201, Med Pay only pays based upon what health insurance pays.
If ERISA denies the claim, what you need to do is to get the EOB, appeal the denial (recognizing that you may only have 6 months to do so) and if necessary, sue them in federal court where you can get attorneys’ fees and get the claim paid (§ 502(a)(2)). The limitation period runs from the date your client gets the EOB. As such you need to move promptly to not only get the EOB but then file your appeal. In addition pursuant to 29 U.S.C. 1024(b)(4), you can make a document request to the plan itself. This has to be responded to by the plan and not by their recovery agent or claims administrator.
There are several other blogs on this site dealing with different types of liens:
- Personal injury liens
- Erisa liens limiting subrogation
- Erisa liens miscellaneous
- Medicaid liens
- Medicare liens
- Other issues with Medicare
- Tricare liens
- Workers comp liens
Call or contact us for a free consult about ERISA subrogation. Also for more information on Personal Injury Claims, see the other pages on this site. Also see the pages on Wikipedia for information about ERISA.
