The Missouri Bar recently published some excellent CLE materials from a course they offered named: “ERISA Subrogation and Reimbursement: A Step-by-Step Approach” The PDF of the materials can be found here: http://www.mobar.org/esq/sept2/ERISA%20Subrogation%20Ravis%20Revised.pdf
The document linked above offers a comprehensive 8 step approach and we encourage all those interested in the topic to read the article.
After reading the materials, here are our 3 Key Factors about ERISA subrogation, which are the three key takeaways from this article.
3 Key Factors: ERISA Subrogation
- Be very aware and make sure you get every document related to the plan in question and what expenses the insurance company has paid.
- You need the full copy of the plan, not a Summary Plan Description (SPD). The SPD documents do not contain the terms of the plan in their entirety and in order to understand what you are liable for, you need to have the full text of the plan.
- If the plan does not contain terms regarding subrogation, reimbursement and exclusion, those terms cannot be enforced. Each of those terms refers to a different action and each one must be present in the plan to be enforceable.
- Getting a hold of what the insurance company has actually paid is important in the event they are trying to seek reimbursement for expenses that have not been paid yet.
2. If the ERISA subrogation language is in the plan, make sure the that the plan exercises it’s subrogation rights, and if the plan contains a reimbursement clause, analyze it to determine if it contains sufficient language to allow for the plan to recover.
- The author describes “true subrogation” as “the right to step into the shoes of the plaintiff.” Ask the Plan Administrator as to whether or not that right will be taken advantage of by the Plan, because it’s not, there is a legitimate argument to be made that they should lose that right.
- In order for Reimbursement and Subrogation provisions to be effective, they must clearly identify a priority right over partial recovery from a third party.
- If this priority right is not made clear within the plan language, the made-whole rule will apply.
3. If the made whole doctrine is overridden by the plan, identify if the plan contains language that specifies funds out of which the plan can make a recovery and if that recovery constitutes and “appropriate equitable remedy” under ERISA § 502(a)(3).
- The language of the plan must (a) show that the plan is trying to obtain a remedy out of specific funds and (b) that the plan language identifies a specific fund itself. This is a crucial detail because not every plan identifies such a fund.
- According to the author, the Supreme Court issued a Writ of Certiorari to a case from the Eleventh Circuit titled Montanile v. Board of Trustees. In evaluating the case, the Supreme Court will attempt to evaluate ERISA § 502(a)(3) to determine whether “equitable relief” standard is met within the meaning of the statute by a fiduciary trying to recover an over-payment by the plan, if that fiduciary has not specified a fund, possessed and controlled by the Plaintiff, at the time of the fiduciary asserts its’ recovery claim.