Before Your Client Signs ERISA Subrogation Agreement, Read the Plan Language Carefully
In personal injury cases, many ERISA health plans are asking their injured participants to sign so-called subrogation agreements. These "agreements" almost always require the participant to promise to re-pay the claimed ERISA subrogation or reimbursement lien on a priority basis from the proceeds of the personal injury case. More and more ERISA plans are refusing to pay the injured participant's health benefits until the subrogation agreement is signed.
Given the recent wave of cases holding that ERISA plans cannot sue plan participants under ERISA to recover plan payments (due to a lack of jurisdiction), the plans are apparently seeking another avenue to recover the amount of their health benefit payments.
Plaintiffs' lawyers should view these "subrogation agreements" with suspicion. The injured client should not have to sign a purported "contract" when no additional consideration is provided. Moreover, the injured client should not be faced with obligations that are not set forth in the plan itself. A recent decision of the Tenth Circuit illustrates this point.
In Gorman v. Carpenters' & Millwrights' Health Benefit Trust Fund, 2005 WL 1349955 (June 8, 2005), the Court held that an ERISA plan could not require the plan beneficiary to sign a subrogation agreement when the applicable plan language did not require him to do so. Among other things, the Court held that the plan was attempting to impose a new requirement on the beneficiary as a condition to receive benefits.
The next time your personal injury client is faced with a "subrogation agreement," you may want to send the ERISA plan a copy of the Gorman decision.