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Attorneys React To High Court ERISA Reimbursement Ruling

January 20, 2016

Law360

The U.S. Supreme Court ruled Wednesday in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan that a retirement plan cannot sue under the Employee Retirement Income Security Act for reimbursement of medical expenses from a third-party settlement that a plan participant has already spent. Here, attorneys tell Law360 why the Supreme Court’s ruling is significant.

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Timothy F. Kennedy, Montgomery McCracken Walker & Rhoads LLP

“This decision significantly weakens an employer’s recovery rights. This is true even where a plan may have strong and effective subrogation provisions. Now that dissipation of settlement proceeds is a viable defense to an ERISA plan’s claim for reimbursement, employers will need to implement more aggressive procedures for tracking and detecting participant settlement amounts. Employers with ERISA plans may also find it necessary to review their coordination of benefits and subrogation provisions to reflect new ways for granting conditional payments. One other interesting point was the fact that the court appears to agree with the 11th Circuit that – in the case of a health plan – the SPD is often the only written document and is therefore enforceable as though it were the plan document. This is a nice clarification for ERISA practitioners after the Supreme Court’s decision in Cigna Corp. v. Amara,holding that an SPD was not enforceable.”

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To view a PDF of the full article, click here.

–Editing by Emily Kokoll.