When you suffer harm due to someone else’s negligence, you will likely have medical bills to pay. Hopefully, you have health insurance. There are a lot of different options for health insurance these days, ranging from public programs (like Medicare and Medicaid) to private health coverage through an employer.
Yet, if your insurance pays for your injury-related losses, it has a right to request reimbursement for what it paid you. A Long Island personal injury lawyer can weigh your options when negotiating a settlement, taking into consideration the amount owed to your health insurance company.
They will also consider how relevant laws apply to your case, such as the Employee Retirement Income Security Act of 1974 (ERISA).
What Is ERISA?
In a nutshell, ERISA is a federal law designed to protect employees of large companies. It was originally created to establish minimum standards so that individuals would have access to affordable and fair health plans.
Sadly, these companies have utilized the law and turned it into an aggressive collections tool. Today, ERISA is used by large self-funded insurers to sometimes take advantage of injured people.
What Is an ERISA Lien?
When your ERISA health plan pays for your medical care, it has a right to be paid back whatever it paid toward your care. So, if you recover money from the at-fault party, then you may have to refund your health insurer.
Many health plans will use companies like Equian, First Recovery Group, Optum, and Rawlings Company (among others) to go after plaintiffs and their attorneys for payment of these liens. These companies will often cite language from ERISA and demand the full cost of what they paid – regardless of what you recovered from the at-fault party. Yet, this is only part of the story.
Common Fund and Unjust Enrichment Claims
Most states, New York included, have specific legal principles, such as the theory of unjust enrichment and common fund doctrines. In short, if your Long Island accident attorney recovers compensation for your healthcare expenses, compensation should account for the lawyer’s attorney’s fees.
Unfortunately, federal courts have favored ERISA plans, saying they are not subject to state laws in this way. There are some limited exceptions, and your attorney can explain how you can reduce the impact of a true ERISA lien.
However, whether an ERISA lien applies to you depends on the type of insurance you have. In general, there are two kinds of employer group health plans – self-funded plans and insured plans.
Self-Funded Plans vs. Insured Plans: What’s the Difference?
Here are some differences between self-funded plans and insured plans:
- A self-funded plan is one where the employer pays to be part of an insurance group, like Blue Cross Blue Shield, Aetna, Cigna, and so forth. Healthcare payments go from the employer’s pool to the hospitals and providers. Premiums are collected through payroll and placed into a pool from which expenses are paid. These plans are generally not subject to state laws.
- An insured plan is what most of us think when we imagine employer-sponsored plans. Premiums are collected by the employer and passed to the insurance company, which in turn makes payments to providers directly. These plans are generally subject to state law.
Is My Health Plan Covered By ERISA?
Only a small percentage of all employer health plans are truly covered by ERISA, yet almost all group plans use ERISA as a tool for collections. To know whether you have a self-funded plan or an insured plan, ask yourself:
- Is your health plan directly funded by the employer? If the employer funds the plan, then it is likely a self-funded plan and not subject to state laws.
- How large is the employer? If you work for a smaller employer, chances are, it is not a self-funded plan. Small companies typically partner with third-party insurance providers.
- Do you work for the government or a church? Most government employees and clergy people do not have self-funded ERISA plans.
A report from the Kaiser Family Foundation (KFF) notes that the best way to learn about your insurance plan is to ask your employer directly. In the future, the government may create software that gives specific information about your care plan.
Why Consider Partnering with Our Law Firm
Pursuing compensation after getting hurt is complicated. Not only do you have to file a claim, but you have to gather evidence, understand your damages’ value, and handle pushy claims adjusters.
On top of that, you may wonder whether you have to pay your insurance company back. With our team on your side, you don’t have to worry about anything. We will do everything your case requires, from proving negligence to paying back your insurance company.
Begin Your Free Case Review with Our Injury Firm in NY
If you’re wondering whether ERISA liens apply to your settlement, our lawyers can review your situation and answer your questions. We can also handle your injury case in its entirety.
The Law Office of Cohen & Jaffe, LLP works hard to reduce the impact of healthcare liens and ERISA liens on our clients. The more we are able to save, the more you are able to keep. During your free case review, you can discuss your options at no obligation.
To connect with our team, dial (516) 358-6900.
