Legal Question in Insurance Law in California

medical lien

what is an ERISA lien? I had medical coverage through my employer, am settling my claim with the other party's insurance who hit me (car accident) and they say they have to be named on the entire settlement check.

Asked on 1/29/07, 6:35 pm

3 Answers from Attorneys

Joel Selik

Re: medical lien

the insurance company will claim a right to be repaid what they paid; that amount should be negotiated down.

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Answered on 2/02/07, 7:22 pm
Phillip Cooke Law offices of Phillip A. cooke

Re: medical lien

An ERISA lien is a claim by an insurance company, often reinsured by another insurance company that has collected premiums from you and or your employer to provide group health insurance. As a condition of many but not all of the policies, (read your poilicy) you may have agreed to pay them back if you bring a suit to recover money from a third party and their insurance pays a settlement or a judgment that you obtain after trial. In 2006, the U. S. Supreme Court ruled that such liens were legal and in that particular case it was fair to require reimbursement. There were a number of questions not answered. There are a number of facts that could make a difference as to how the lien should be handled. You should talk to a lawyer that understands the law and can answer the questions posed by that case.

It is very important that you understand that if you have to pay back your health insurance company that you take that into consideration when you decide on a fair settlement.

For example, if you settle a claim for 20,000 and your attorney has incurred $2,000 in litigation costs and charges a 1/3 fee on the net, or $6,000, if you are expecting to get $12,000 but your medical insurance company gets $10,000 you would only net $2,000. Since you went to the trouble and effort to try to get fair compensation for your injury, you can see why it is important to determine the lien rights and how the lien will be settled before you agree on a settlement.

Everyone, particularly jurors need to know that just paying back the "special damages" the medical bills and the wage loss, will not make a person whole if they were injured. When a fair amount is paid for pain and suffering and the effects of the injury on the person's life, there is a much better chance the person will be made whole. People should not be reluctant to award general damages for what a person has to go through when they are injured and their health is significantly affected.

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Answered on 2/02/07, 8:24 pm
Steven Murray Steven W. Murray, APC

Re: medical lien

Health policies frequently provide that the insurer may obtain reimbursement for the medical expenses it paid on your behalf. Federal law (ERISA)applies to empoyer-paid health benefit plans. But although legal, there are sometimes exceptions to the enforcement of the provision. In California, there is a "make whole" rule which requires the insured person to be made fully whole or compensated for injuries or damages before the insurer can be reimbursed. This is because the insurer was paid for the risk it insured, and then paid, but you have incurred uninsured damages which only the third party tortfeasor (the defendant) can be made to pay.

Your lawyer should research the case law to determine whether this state law principle can be applied in your case, as frequently federal law "borrows" state law if it complements federal uniformity.

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Answered on 2/02/07, 8:49 pm

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