My office receives calls daily from employees, executives and managers in Chicago who claim their health insurance will not pay for a procedure. Some of the time, the plan does not even dispute that the claimed treatment or procedure is covered by the plan. So why won’t the plan pay? The answer is two words: reimbursement and subrogation. The plan claims that it once paid benefits due to an injury caused by a third party and you recovered for that injury. I have seen plans withhold benefits years after the purported overpayment.
After Great-West Life & Annuity Insurance Co. v. Knudson and Sereboff v. Mid Atlantic Medical Services, Inc., many plans have gotten particularly aggressive in enforcing subrogation and reimbursement rights. Nearly all plans include language to the effect that if the plan pays benefits for an injury caused by a third party, and you recover anything from the third party, by judgment or settlement, then the plan must be reimbursed. They also often state that in enforcing the reimbursement, the plan can withhold future benefits. Personal injury lawyers are familiar with plans asserting liens on judgments in personal injury cases where the plan expended money for health care caused by the third party. But just because there is no lien in your personal injury or workers compensation case does not mean you won’t have to pay the plan back someday, especially if the plan is self funded or a collectively bargained multi-employer health plan.
If you have a personal injury or workers compensation case pending in Illinois or the Midwest, the best course of action is to be proactive and learn whether your ERISA covered health plan paid any benefits that can be recovered from the third party. Even if you settle the case for less than your actual damages, the plan could enforce full repayment. Consult an ERISA lawyer sooner, rather than later, and avoid the later hassles of your plan withholding benefits.