Many health plans (both insured and self-funded) have vigorously pursued their subrogation and reimbursement rights. Those rights are generally written in broad and sweeping terms. The provisions may allow plans to recover from settlements with liable third parties the entire amount of the medical benefits paid on behalf of the participant, irrespective of whether the participant was made whole for injuries suffered or that a sizeable portion of any recovery was paid to the participant’s attorney as fees and expenses for prosecuting the case. State anti-subrogation laws may adversely impact a self-insured plan’s ability to enforce the policy’s subrogation and reimbursement provisions. But a self-funded plan is not subject to state insurance laws and thus courts had generally upheld the provisions as written under ERISA §502(a)(3).
This article describes (1) the development of the law by the Supreme Court regarding the remedies that may be available to plans to enforce their subrogation and reimbursement provisions; (2) the most recent reimbursement case in which the Supreme Court heard oral arguments and the anticipated outcome of that case; and (3) best practices for plans to protect their subrogation and reimbursement rights under ERISA.
