Signed Subrogation Agreements
The United States District Court for the Eastern District of Texas recently presided over a case involving a plan’s denial of claims due to a lack of signed subrogation agreement. Don Burgett, Et. Al. v. MEBA Medical and Benefits Plan, 2007 U.S. Dist. LEXIS 70934, (September 25, 2007). The Plan in this case lost, and the court determined the Plan’s conditioning payment of claims on the signing of a subrogation agreement was not supported by the summary plan document (“SPD”). The court held that the language of the SPD controls and additional agreements cannot create new rights for the Plan.
If the SPD contradicts the signed subrogation agreement either the SPD will control and the agreement is ignored, or, both SPD and agreement are void. Furthermore, by sending an agreement to the insured, you minimize the importance of the SPD and exaggerate the importance of the agreement. Lastly, if the agreement is mandatory for the payment of claims, it must have some legal relevance and that by withholding it from the Plan, the attorney must be stripping the Plan of some right to recover. While neither of these statements is true, it is better to avoid creating the false impressions in the first place.
We advise utilizing language in your plan documents that states it is the Plan Beneficiary’s obligation at all times, both prior to and after payment of medical benefits, to cooperate with the Plan in protecting its rights, providing the Plan with pertinent information regarding the accident, and to take such action and execute such documents as the Plan may require. These terms make it clear that the Plan’s right to reimbursement is not dependant upon the signed agreement. Meanwhile, the Plan is free to process claims with or without a signed agreement and seek signed agreements at any time during the process.
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