I was recently in a car accident that required medical intervention. My medical bills were mostly paid for by my employee-provided ERISA health insurance, and I've learned that they may be entitled to money from any auto insurance settlement. Am I legally obligated to inform my health insurance company about a settlement? How do they find out about a settlement?
In many cases the Insurance company will submit a demand for payment, or claim the existence of a "lien" on your right to recover an automobile settlement. In other cases, he health insurance company will not actively pursue the matter. Many such insurance policies have clauses stating that the insurance company has a right to demand reimbursement, and some say that you are supposed to let the insurance company know about claim, after which the company will handle any claim according to its own process. Many of these rights of reimbursement are either never asserted, and if asserted, the rights are usually negotiated down based upon the attorneys fees and costs incurred in making the recovery in the automobile case. Every attorney I know will handle the resolution of the health insurance claim as part of your automobile claim and settlement. I encourage you to retain an experienced personal injury attorney, and request that said law firm handle your auto claim and the issue related to your health insurance. It will be worth it to you.
Brad C. Brereton
The short answer to you question: yes. The small print in the insurance policy requires that you notify them if you are making a 3rd party claim and get settlement. If you fail to notify them, they have the right to sue you - and if the policy is an ERISA policy, the lawsuit is Federal Court.
Your best course of action is to consult with a personal injury lawyer in your area.
ERISA plans are entitled to recovery from a third party liablity settlement based on plan documentation. Under the plan you do have an obligation to notify them of settlement. The thing with ERISA self-funded plans is that they can recover 100% of the money they paid out. Therefore it is in your best interest to notify them early and negotiate a settlement early on so you're not short on the back end. Did you have an attorney handling this claim?
Most plans have language that require you to notify them. Failure to do so can constitute a breach of contract. Plans hire companies to handle liens/reimbursements. They will contact you and try to get the info directly. They could fine out if your lawyer requested medical bills or records from providers. There is also a nationwide database of claims, and most ins cos will report claims to the database. If the health ins colector searches the database, they could find out about your pending case. they then have the info as to who your lawyer is/was, who the deft's ins co is/was, claim numbers, and sometimes even the settlement amount. You should talk to your current/former atty about it.
ERISA insurance almost always subrogates against the recovery made by an employee when they have made payments because you were injured in an accident caused by another.
ERISA coverage is provided through your employer and may often be administered by an insurance carrier. Chances are your employer or coworkers know that you have been involved in an accident and have retained an attorney or are working on a settlement. Your employer has an incentive to make sure that the ERISA coverage administrator knows about your recovery, as repayment to ERISA through subrogation helps to keep your employer's medical expense costs down.
If you read your insurance policy given to you by your employer, you will see that you have obligated yourself legally to notify them and reimburse them. If you do not, you are subject to suit.
If you do not currently have an attorney, I suggest you retain one so that your ERISA lien and any other lien obligations etc. will be appropriately handled and not come back to bite you years down the road. Your attorney may be able to negotiate a reduction in the pay back to ERISA, although ERISA subrogation situations are often tougher than other types of medical insurance coverage to deal with. ERISA is generally governed by federal law and some of the State law subrogation defenses may not be available because the federal ERISA statute preempts state law.
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Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.
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