Jarrett & Price – The Lien Resource

Not necessarily. For starters, not every healthcare plan claiming it is an ERISA plan is in-fact an ERISA plan. That is why it is so important to request plan documents on every case involving a healthcare lien. There are many types of employer-based insurance that do not fall under ERISA. 

The most common non-ERISA plans are “multiple-employer plans,” where a group insurance plan services several different employers all paying into the same plan. These are often referred to as “insured” or “fully insured” plans. Because these plans are not governed by ERISA, they don’t pre-empt the state protections against reimbursement that are found in Georgia and some other states. 

How do you know if this is the funding arrangement? The answer is you have to request the plan documents. Often times the Form 5500 will indicate it is a “multiple-employer plan” or the plan documents will refer to multiple employers. If you request documents that ERISA requires plans to file annually, and the plan representatives tell you they don’t exist, this is another red flag that the plan is likely not ERISA.  

Another common exception to ERISA are state and other local government employees. These plans are not federally regulated and don’t have ERISA pre-emption. You often encounter these plans when you deal with employees using the state healthcare plan, such as a public school teacher or county or state employee. 

Other common exceptions are Federal Employees (their reimbursement rights are defined in a separate act, known as the Federal Employees Health Benefits Act (FEHBA)), and plans subject to collective bargaining agreements such as a union-based plan. However, plans that are collectively bargained for can opt in to ERISA regulation by filing certain paperwork. 

Finally, even if you are dealing with an ERISA plan, it is not an absolute that the plan has dollar-for-dollar right to reimbursement. Federal case law has defined certain protections against reimbursements. The 11th Circuit has held that the made whole doctrine is the default rule when analyzing healthcare reimbursement, unless there is “clear and unambiguous language” in the plan that rejects the rule. Cagle v. Bruner, 112 F.3d 1510, 1522 (11th Cir. 1997). See also Adelstein v. Unicare, 31 Fed. Appx. 935 (11th Cir. 2002) and Summerlin v. Georgia-Pacific, 366 F.Supp.2d 1203 (M.D. Ga. 2005) for more explanation by the Court of when the “made whole” rule applies or does not apply to rights of reimbursement claimed by ERISA plans.

Unfortunately, most plans go out of their way to state they reject the made whole doctrine. There are other equitable doctrines that the Courts have held apply unless they are rejected by the plan language, namely the “common fund doctrine” (the idea that the plan must reduce its lien by a pro-rata share of attorneys fees and expenses). 

However, the key to all of these protections is you have to get the plan documents. If you don’t request and review the plan documents you don’t know if a) the plan is really funded like an ERISA plan, nor b) whether the plan has all the necessary contract language to enforce the lien.