U.S. District court Judge Harold Baer has ruled that Allianz S.E. is primarily entitled to recoveries from third parties found liable for damages from the Sept.11, 2001 terrorist attacks. World Trade Center leaseholder Silverstein Properties Inc. challenged the ruling claiming that the $433 million settlement of the $3.55 billion property limit from Allianz S.E. last year was insufficient. Read more
The Wisconsin Supreme Court held in Muller v. Society Insurance Co., decided May 30, 2008, that when an insured and an insurer separately settle claims with a responsible third party, the insured may not seek to recover funds obtained by the insurer from the insurer, even if the insured wasn’t “made whole” by their settlement. Read more
ERISA did not preempt a Louisiana Department of Insurance directive that limits insurer’s subrogation and reimbursement rights to cases where covered individuals have been “made whole”, the 5th U.S. Circuit court of Appeals ruled in Benefit Recovery Inc. v. Donelon, 2008 WL 642972 (5th Cir. March 11,2008). Read more
Just when it appears that a well-drafted subrogation and reimbursement provision of an ERISA group health plan takes precedent over state-law restrictions on the plan’s recovery, we find that the Supreme Court of Mississippi has ruled that ERISA does not preempt a state law that requires approval of a Mississippi court regarding the allocation of a minor’s settlement proceeds from a tort claim. The case is In re Guardianship of Danielle Holmes, 2007 WL 2792491 (Sup. Ct., Miss., Sept. 27, 2007).
Rashan Danielle Holmes, a minor, was injured in an auto accident. She was covered under her mother’s employer’s self-insured ERISA plan, which included a well drafted subrogation and reimbursement provision. The plan made an advance payment of about $46,000 toward her medical expenses. Her claim against a third party was settled for $750,000, the plan asserted a subrogation lien against the proceeds and the amount advanced pending settlement of its claim for reimbursement. Read more
If the summary plan description (SPD) omits important provisions, such as subrogation and reimbursement, that are included in another document, the plan may not be able to compel beneficiaries to follow those provisions. In one such case, a federal judge shot down a plan’s denial after a participant refused to sign a subrogation agreement. The plan tried to impel him to sign the agreement before he had been treated for his injuries, but the SPD was silent on the issue of executing the agreement before submitting a claim. The plan document had the requirement that members must “execute and deliver such instruments and take such actions as the Plan may require to protect the Plan’s rights.” The court rejected plan arguments that inclusion of such language in the plan document complied with ERISA. Read more
by Ron E. Peck, Esq.
In the case of Osborne v. Jauregui, Inc., the Texas Court of Appeals, Third District at Austin, has enforced the holding of Fortis Benefits v. Cantu, 234 S.W.3d 642 (Tex. 2007), and espoused an anti-double recovery policy, (Tex.App. - Austin, Aug. 29, 2007 & April 17, 2008 - No. 03-04-00813-CV). This represents yet one more victory for subrogating insurers, and those that hope to see the costs of insurance remain within reason. Read more
by Ron E. Peck, Esq.
In the case of Ferguson v. Safeco Insurance Co. of America, 2008 WL 854841 (Mont.,2008), the Supreme Court of the State of Montana was asked to determine whether insureds could sue their insurance carrier in a class action suit, suing that insurance carrier for pursuing subrogation / reimbursement opportunities without first confirming that the insureds had been made whole. In Montana, policies regulated by state law may not subrogate or seek reimbursement for claims paid until the claimant is made whole by the tortfeasor or other liable third party first. Ordinarily, courts require the insured (and their attorney) to advise the insurance carrier that the insured has not been made whole, that the made whole doctrine applies, and provide evidence of the insured’s not being made whole. In the case at hand, however, the insured sued the insurance carrier not because it ignored her claim of not being made whole, but rather, failed to investigate on its own whether the insured had been made whole prior to pursuing reimbursement opportunities. Read more
A Louisiana State Law requiring that insureds be made whole before an insurance carrier could seek reimbursement was upheld by the 5th Circuit, Benefit Recovery, Inc. v. Donelon, 2008 WL 642972 (March 11, 2008). Note that the decision only applies to plans that are not self-funded, but will apply to plans that are fully insured, and governmental plans, even if ERISA otherwise applies.
The Texas Made-Whole Rule, adopted in Ortiz v. Great Southern Fire & Casualty Insurance Co., no longer applies to cases where the Plan disclaims the rule and requires full reimbursement in the plan document. 597 S.W.2d 342, (Tex. 1980). In the Ortiz case the insurance carrier relied upon arguments made in equity. The court held that health plans do not have an equitable right to recovery until the plan beneficiary is fully compensated. Id. Read more