In today’s litigation environment, many health insurance carriers, including Medicare, are seeking reimbursement for medical expenses from successful plaintiffs in personal injury cases. Recently, the United States Supreme Court in Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 136 S. Ct. 651 (2016) prohibited a retirement plan from suing a plaintiff under the Employment Retirement Income Security Act (“ERISA”) for reimbursement of medical expenses from a settlement the plaintiff reached with a third party where the plaintiff had already spent the settlement monies that were not earmarked for the reimbursement of medical expenses.
In Montanile, plaintiff was injured in a car accident by a drunk driver. Plaintiff’s health carrier (the “Plan”) paid approximately $122,000 to cover plaintiff’s medical expenses. Montanile settled the drunk driving case for $500,000, but spent the settlement monies before the Plan could recover the medical expenses it paid. The Court barred the Plan from recovery stating that the Plan could only obtain a recovery from the dissipated settlement proceeds and not from the plaintiff’s general assets. In so doing, the Court found that the Plan was on notice of the settlement, but failed to seek timely relief.
The recovery of paid medical bills by insurance carriers from third party settlements is a hot button topic which is being litigated in many different courts. Insurance carriers and practitioners need to appreciate the complexities of such a recovery and the duty to act quickly and efficiently with respect to these claims.