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Crash survivor must reimburse coverage from ERISA-governed plan

Obtaining benefits from a group plan governed by the Employee Retirement Income Security Act can be complex and confusing. Claims can be denied, and benefits can be terminated. It is important to retain a skilled attorney with experience handling the ERISA claims process that will advocate for the rights of an injured or disabled employee unable to work.

A U.S. Airways employee involved in a devastating accident caused by a young driver required emergency surgery to survive the impact. Months of physical therapy and additional surgery rendered the 51-year-old employee unable to work in addition to the mounting medical expenses. The Health Benefit Plan administered and funded by the crash victim's employer covered $66,866 of the medical expenses.

The 51-year-old sued the driver that caused the crash, and was additionally able to collect compensation through uninsured motorist coverage for a total of $110,000 in compensation. When the crash victim secured compensation due to third-party liability, U.S. Airways pursued reimbursement for the $66,866 of coverage afforded the man under the ERISA-governed benefits plan. The employer took this course of action because the language of the Plan stated that reimbursement for coverage would be required in the event of a third-party liability award.

The 51-year-old defended reimbursement would be unfair because after subtracting legal expenses, the man would be paying more than the award even provided him in order to cover the reimbursement. This would mean that the net impact would render him in a financially worse position after pursuing recourse. The crash victim further argued that he had not been compensated for his pain and suffering, or attorneys’ fees under the Plan.

The 51-year-old appealed to the 3rd circuit that ruled it would negate the purpose of the Plan if the victim were required to reimburse the coverage. Unfortunately, the Plan appealed to the U.S. Supreme Court, which rejected the victim’s arguments and required him to reimburse the Plan. However, the court did rule that reimbursement should take into account attorney’s fees, which will reduce the amount owed.

Group employee benefit plans governed by ERISA can be confusing when an individual in New Jersey becomes injured or disabled and unable to work. Benefits are not automatic, so an employee unable to work would do well to speak to an attorney with experience navigating the ERISA process to avoid a dispute, denied claim or termination of benefits.

Source: Claims Journal, "A Victory for ERISA: U.S. Supreme Court Unanimously Holds Equity Doesn't Trump Plan Language," Gary Wickert, May 2, 2013

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