Do you know all the information on your insurance policy?
This week the Supreme Court of the United States handed down an important decision facing all personal injury litigants and the attorneys who represent them. McCutchen was a US Airways employee who was injured by a third party. McCutchen had a company health insurance policy that paid his medical bills. The policy is one commonly referred to as an ERISA policy. These types of policies typically call for 100% reimbursement of benefits paid as a result of the negligence of a third party.
Non-ERISA policies follow the Medicare reduction formula. These types of reductions, in most instances, result in some recovery for the injured party. The ERISA policies can often result in no recovery for the injured after attorney’s fees and costs are accounted for.
In the McCutchen case, US Airways wanted the entire settlement to cover its benefits paid, leaving nothing for the injured/insured or the attorneys. US Airways attempted to take the entire settlement amount by asserting priority over attorney’s fees and costs. In denying this claim, the Court stated that unless the policy language specifically eliminated the attorney’s fees and costs, then the court would not disturb the concept of a common fund, which up to this point protected attorney’s fees and costs. However, the message the Court has sent is that the drafters of the ERISA policies are left open to creating policy language that could prevent the recovery of attorney’s fees and costs.
It is expected that more and more of these policies will contain this language. The fallout from this is that many injured people will have a hard time finding counsel if they have an ERISA policy that contains a pure 100% reimbursement clause. This has a downside for the carrier as well. Without counsel for the insured, the carrier has no chance of reimbursement. This is a classic case of “be careful what you wish for”…you may get it.
