Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
July 6 — A health plan that paid benefits of almost $30,000 following a participant's car accident can't seek reimbursement from the lawyers who helped the participant settle claims with the other driver, a federal judge ruled.
After plan participant Carolyn Avera obtained a $50,000 settlement for her injuries, the health plan filed suit against Avera, her attorneys and the other driver involved in the accident, seeking to recoup the benefits it paid out on Avera's behalf.
The lawyers argued that they couldn't be liable to the health plan under the Employee Retirement Income Security Act because they weren't a party to the plan in question.
The judge agreed, saying that “an attorney's knowledge that a client was party to a subrogation agreement does not give rise to a claim against the attorney under [ERISA.]” (quoting T.A. Loving Co. v. Denton, 723 F.Supp.2d 837 (E.D.N.C. 2010)).
The judge also rejected the health plan's attempt to bring state law conversion and tortious interference claims against the attorneys, finding that they failed under North Carolina law.
However, the judge allowed the health plan to bring an ERISA-based subrogation claim against Avera based on language allegedly contained in the plan document. The judge also granted the plan's motion for default judgment against the other driver involved in Avera's accident, noting that she failed to respond to the claims brought against her.
The July 1 decision was written by Judge Terrence W. Boyle of the U.S. District Court for the Eastern District of North Carolina.
The health plan was represented by Cranfill Sumner & Hartzog LLP. Avera was represented by Essex Richards PA. The law firm was represented by Janik LLP.
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