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High Court sides with company in reimbursement case involving victim of underinsured motorist

On Tuesday, the U.S. Supreme Court issued a ruling that helps resolve a conflict among federal courts of appeal on the issue of whether principles of equity, or fairness, should trump a health plan’s terms under the Employee Retirement Income Security Act (ERISA). The case involves a man, an employee of US Airways, who was seriously injured in a 2007 car accident. The airline ended up paying $66,866 for his medical expenses.

The driver responsible for that automobile accident had limited insurance coverage, and the victim ended up settling with her for a meager $10,000. He claimed an additional $100,000 from his car insurance policy, but was left with only $66,000 after his litigation expenses. The airline later demanded reimbursement of the full amount it had paid for the expenses, under the terms of his health plan. When the accident victim refused to reimburse, the company sued under ERISA to have the reimbursement enforced.

The case was sued all the way up to the Supreme Court, where the accident victim appealed to equitable arguments in his favor. His first argument was that the amount recovered from the responsible driver and his own auto insurance policy was only a fraction of his total damages, and that it would therefore be unfair to require him to reimburse US Airways. Secondly, he argued, US Airways should have to carry its fair share of attorneys’ fees.

In short, the high court found that the health plan contract should not be set aside because of equitable principles. The court did find, however, that the contract did not specify how to divide the responsibility for attorneys’ fees in ERISA reimbursement cases, and that US Airways could be forced to pay their share of the legal costs.

Uninsured and underinsured motorists can cost their victims a good deal of money and frustration. Anybody who faces a situation where they have been harmed by such a motorist should contact a personal injury attorney to determine the best way to proceed in their case.

Source: Thomson Reuters News and Insight, “High court says health plan terms prevail in ERISA case,” Terry Baynes, April 17, 2013