Attorneys and car accident victims that have had to deal with subrogation rights in the context of ERISA plans have experienced the injustice that occurs when concluding the car accident cases. Georgia law has preempted this unfairness in the health insurance industry by adopting a “made whole” rule which states that there is no enforceable right of reimbursement whatsoever until the insured has first been made whole. In many cases a car accident victim is not made whole by a settlement. Many times, a car accident victim will accept all of the available automobile insurance funds because they know that the at-fault driver would not have any assets to collect. Therefore, when the made whole rule is applied, the victim’s health insurance company would not be entitled to reimbursement at all.
The Employee Retirement Income Security Act or ERISA is a Federal law that sets standards of protection for individuals in most voluntarily established, private-sector retirement plans. ERISA plans are not subject to the laws of the State of Georgia. ERISA plans and their insurers create the right of subrogation through provisions in the plan document. These documents are unilaterally drafted and implemented without oversight by any regulatory authority. As stated above, state law has preempted the insurance industry to prevent the unfairness that occurs in ERISA plans. The ERISA reimbursement language in most document produces a “windfall” to the employer and their insurer, and is tantamount to revictimizing the injured victim. It is as if the victim is reinsuring the health benefit plan by purchasing his underinsured motorist coverage.
I have had cases recently where the client’s only leverage against the ERISA plan was to threaten not to proceed with the litigation. If my client would have received a verdict or a settlement then it would have been too late to negotiate with the ERISA plan administrator. It is imperative to thoroughly evaluate the plan documents early in a personal injury case to properly advise a client. We are experienced in all aspects of car accident and personal injury cases at the Berelc Law Office. Call us today to evaluate your case.