ERISA Subrogation (Continued from page 14)
medical expenses. Finally, the client re- ceiving the low verdict or settlement may also decide to sue for legal malpractice based on the failure to submit such evi- dence.
V. NEGOTIATING THE LIEN WITH THE PLAN AND SETTLEMENT OPTIONS
It would appear that the best time to negotiate the lien with the plan is at the end of the discovery period and prior to trial of the underlying tort action, if a de- fendant cannot file or realistically win a motion for summary judgment. By wait- ing to the end of discovery, a plaintiff will have a full opportunity to properly and assess the issues of liability and damages, and determine the value of a case. Dis- covery will provide insights into the extent of future medical treatment and expenses. If the case goes forward to trial without resolution, a potential settlement and attorney’s fees are in jeopardy from either an adverse result in a jury trial or a subse- quent proceeding brought by the plan. In cases where summary judgment is a
real possibility, the best time to negotiate would be after the summary judgment motions are ruled on by the trial court. If there is no liability from a third party, the
health insurance plan will continue to be responsible for all medical expenses. In terms of the settling the lien, claimant’s counsel must first carefully con- sider the ramifications of whether or not there is health insurance available to cover future medical expenses in permanency cases. Although in Great West, the claim- ant was able to retain the complete proceeds in the settlement trust, the issue of whether or not the claimant, a quad- riplegic, would have insurance to cover future medical treatment was never dis- cussed. Health insurers such as Great West are still permitted to use self-help mea- sures to avoid their obligation to pay for future medical treatment if its lien has not been satisfied. The Supreme Court’s de- cision in Sereboff will have no effect on self-help measures, no matter how the case is decided. The fact that Sereboff is pend- ing at the Supreme Court may provide a limited window of opportunity in some permanency cases to negotiate repayment of the lien based on more favorable terms to the claimant. The only safe settlement strategies in permanency cases with exten- sive future medical expenses is either to pay the health insurer’s lien in full or to obtain an agreement in writing from the health insurer to provide for future medi- cal expenses. With respect to non-permanency cases or cases not involving extensive future medical expenses, there are far more op-
tions available in dealing with recalcitrant ERISA health insurers that will not re- duce liens. The attorney may be able to leverage the fact that Sereboff is pending at the Supreme Court to obtain a reduc- tion or elimination of the lien. With regard to the structuring of a settlement agreement with the tortfeasor or wrong- doer, a trust, special needs trust or an SSI trust, are valuable tools in dealing with the health insurance plan in light of Great West and Sereboff. The attorney and/or law firm handling the underlying civil litiga- tion should not draft or be involved in any way in setting up the trust. The plan will directly challenge the trust if the law- yer has previously signed a lien letter. Another valuable tool is a structured settlement with an extended payment to the claimant or a delayed larger monetary payment to the claimant. The settlement agreement should also provide a break- down for each element of monetary and non-monetary damages. The annuity providing the stream of income payments should not be in the name of the claim- ant or the claimant’s relatives, but belong to the insurer that issues the annuity. Other possibilities exist that should be considered concerning the terms of the settlement agreement. First, counsel should consider breaking down each item of damage based on written documenta- tion, including attorney’s fees, and list all items in the settlement agreement. Addi- tional amounts could be set aside for loss of consortium as well. A mutual non-dis- closure provision could also be added providing for damages if the liability car- rier discloses the settlement without the consent of the injured party. Further, in cases that are settled at mediation or settlement conferences, the court record could be sealed. The danger with respect to using these methods is that the plan will challenge the entire settlement, in- cluding the attorney’s fees that are set forth in the settlement agreement.
VI. CONCLUSION The Supreme Court’s decision in Great
West and the forthcoming decision in Sereboff has and will change the landscape for subrogation liens concerning ERISA health insurance plans. Claimant’s attor- neys have more opportunities to negotiate more favorable terms in non-permanency cases and perhaps, permanency cases. However, there are still significant prob- lems that must be overcome to properly represent clients.
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