SCOTUS Boosts Plaintiffs’ Chances of Collecting on Personal Injury Lawsuits

Accidents and injuries occur all the time. In many cases, someone else is to blame. Our laws recognize the injustice of this and allows injured persons to seek remedy through the civil court system. driving8

There, plaintiffs have a chance to be compensated for their losses and their pain. But sometimes, even plaintiffs who prevail in their personal injury lawsuits may end up collecting less than what they are awarded. This often has to do with plaintiff’s health plan claiming all or some of it for reimbursement for money it spent on medical expenses.

There is nothing illegal about this, and the reasoning behind it is sound: If a person keeps the money intended for reimbursement of health care expenses, he or she is essentially being paid twice – once by having the health care expenses covered and then again by the defendant in the injury lawsuit.

The problem is sometimes there isn’t enough money to go around. The total compensation after legal expenses may not be enough to cover one’s loss of wages, pain and suffering, etc. – in addition to medical bills. 

Now, a recent decision by the U.S. Supreme Court may give those injured the ability push back in some cases.

In the case of Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, the U.S. Supreme Court ruled that health plans that wish to assert their rights to reimbursement need to do so promptly. What’s more, the court made it clear that health plans aren’t allowed to seize a person’s general assets in order to pay themselves back for medical expenses. And finally, the decision could improve plaintiffs’ odds of getting a larger chunk of their settlement or jury award by pushing health care insurers to negotiate early on.

In the Montanile case, plaintiff was seriously injured when a drunk driver ran a stop sign and struck him. He underwent a lumbar spinal fusion surgery and incurred medical bills for this and other treatment that exceeded $120,000. This was paid for by his employer health care plan.

Plaintiff then filed a personal injury lawsuit against the drunk driver. He ultimately secured a settlement for $500,000. However, per the contingency fee agreement, he paid $264,000 in attorney fees and court costs. That left him with $236,000.

In stepped the health care plan, arguing it was entitled to reimbursement.

Plaintiff then hired another lawyer to negotiate with the health care plan, but they reached an impasse. Plaintiff’s lawyer sent notice to the plan trustees that if they did not respond within two weeks, the remaining settlement money would be released to plaintiff. The plan didn’t respond and the lawyer released the money to plaintiff.

Later, the plan sued plaintiff for that money. But by then, it had all been spent – on his second lawyer but then also to help care for himself and his minor daughter.

Lower courts ruled the plan was entitled to reimbursement via seizure of plaintiff’s assets. The U.S. Supreme Court, however, disagreed. In an 8-1 ruling, the court held that if the health plan could trace settlement funds to specific assets, then they could seek to recover from those specific assets. Otherwise, however, the health plan’s actions were too little too late. Had it responded to the plaintiff’s demand letter in two weeks, it might have received the money.

The clear message is that if health plans do want to collect on these judgments, they need to make that clear right away. If plans fail to notify beneficiaries and/or their lawyers of their stake or interest in the potential award, they risk losing out on the ability to collect on those awards if the money is already gone by the time they do so.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, Jan. 20, 2016, U.S. Supreme Court

More Blog Entries:

Pitt-Hart v. Sanford USD Med. CTR. – Medical Malpractice or General Negligence? April 26, 2016, Spartanburg Personal Injury Attorney Blog

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