In the case of Humana Health Plans, Inc. v. Patti Powell, 07CV385 (W.D. Ky. Feb. 25, 2008), the Western District of Kentucky issued an important decision regarding ERISA preemption of Kentucky Stat. § 441.188. This Kentucky Statute at issue in the case limits a subrogated party’s rights where that party fails to intervene in the state court action. Previously, the Court had decided that this section was not preempted by ERISA, but in this decision the Court reconsidered and reversed itself.

Humana paid about $25,000 under an employee benefit plan as a result of the injuries and sought reimbursement. Powell argued that because Humana did not intervene in the state case, it was barred from seeking reimbursement pursuant to K.R.S. § 411.188. Initially, the Court agreed, but took up the preemption issue on reconsideration.

In this case, the Court relied heavily upon the 3rd Circuit’s preemption analysis in Levine v United Healthcare, 402 F. 3d 156 (3rd Cir. 2005). In that case the 3rd Circuit held that a New Jersey collateral source statute was one of general application not directed at the insurance industry and therefore was preempted by ERISA. The same logic applied to this Kentucky Statute. Accordingly, the Court found that Kentucky’s Statute could not survive an ERISA preemption analysis.

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This entry was posted by Adam V. Russo on Monday, March 23rd, 2009 at 8:17 am and is filed under 3rd, 6th, Kentucky. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.