A recent decision by the U.S. Supreme Court is expected to have a significant impact on ERISA subrogation rights. In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, No. 14-723 (Jan. 20, 2016), the Supreme Court ruled by a vote of 8–1 that an ERISA plan fiduciary has no right of reimbursement for medical expenses paid by the plan, regardless of an agreement between the parties, if the participant spends all the money received from a subsequent third-party action prior to the subrogation claim being filed.
The National Elevator Industry Health Benefit Plan paid its ERISA plan participant, Robert Montanile, approximately $122,000 to cover medical expenses stemming from a car accident in which Montanile was injured by a drunken driver. Pursuant to the Plan’s subrogation clause, the Plan administrator was entitled to reimbursement of the amount the Plan expended from any recovery Montanile received from a third-party action he pursued arising out of the automobile accident.
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