September 3, 2024 • 44 mins
ERISA Liens in Workers' Compensation Claims with John Kolb
In this episode, Shane Dawson of Dinsmore and Shohl, LLP and Steve Armstrong of Armstrong & Peake PLLC interview attorney John D. Kolb regarding ERISA liens in workers' compensation claims. John focuses on obtaining recoveries for his clients in ERISA matters, not just in workers' compensation claims, but in other fields as well.
To learn more about DRI and the Workers' Compensation Committee visit www.DRI.org.
#DRILawyer
#DRICommunity
In this episode, Shane Dawson of Dinsmore and Shohl, LLP and Steve Armstrong of Armstrong & Peake PLLC interview attorney John D. Kolb regarding ERISA liens in workers' compensation claims. John focuses on obtaining recoveries for his clients in ERISA matters, not just in workers' compensation claims, but in other fields as well.
To learn more about DRI and the Workers' Compensation Committee visit www.DRI.org.
#DRILawyer
#DRICommunity
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:18):
Welcome back to another episode of the comp Conversations podcast.
This is a podcast developed through the Defense Research Institute,
where we explore the world of workers compensation, including the
personal aspects involved in the realm of work injuries and
its litigation, as well as future trends in every aspect
in between. My name is Steve Armstrong and I'm here
with Shane Dawson of Dinsmore Show. Shane, how are you
(00:41):
doing today?
Speaker 3 (00:42):
Doing great?
Speaker 1 (00:43):
Thank you, Steve, great, and we are delighted to have
Attorney John cob with us here on today's podcast to
talk about Risa Lin's in workers' compensation claims. So John,
welcome to the podcast for our listeners. Can you tell
us about your firm, how long you've been practicing, what
types of cases that you practice?
Speaker 2 (01:03):
Sure, Steve, Shane, thanks for inviting me here today. I
practice with the law firm of Coplear and Arnold, and
our firm focuses its practice on recovering funds for the
insurance industry, usually through subrogation or asserting rights of reimbursement.
(01:24):
We really represent all types of carriers. We do work
for property and casualty carriers when they make payments. We
also work for workers' compensation carriers, asserting leans on third
party actions. But in addition to that, we represent a
lot of health benefit plans, either the insurance companies that
(01:45):
insure them, or we represent the employers that are sponsoring
self funded plans.
Speaker 3 (01:54):
So, John, you talked about kind of all these different areas,
what would you say is your main focus on the
aristic claims? Is it on subrogation, the litigation, or a
mix of both.
Speaker 2 (02:08):
So that's a good question because there are different types
of claims that can be asserted. If I am representing
a help plan that has made payments on behalf of
an insured that is, you know, asserting some type of
workers compensation claim, the first thing that I really need
to look at is what type of health plan I'm
(02:31):
dealing with because that's going to affect what types of
rights we're going to assert. And to know what type
of plan and dealing with, you usually have to look
at where that underlying claimant is receiving its help benefits from.
You know, in America, there are really three primary ways
that people obtain health coverage. Right, they can go directly
(02:54):
to the insurance market and buy a policy from an
sure to ensure them and their families in Those are
called individual plans or marketplace plans, and are probably more
popular now than they have been previously because of the
Affordable Healthcare Act. Another way that people can get their
(03:18):
health insurances is from the government. If they qualify for Medicaid,
then they can receive that coverage through their state, or
if they are eligible for Medicare either through age or disability,
they can get from the federal government under Medicare, But
(03:39):
probably most people in America receive their health coverage through
a group plan sponsored by their employer. So the employer
will sponsor a plan, either by purchasing insurance to cover
their employees or by self funding a benefit plan that
(04:00):
will cover the employee and usually any eligible dependence. If
you are dealing with an individual plan, your right is
primarily governed by state law. So if an individual plan
is made a payment, then you're really going to look
at what the state workers compensation is going to a
(04:21):
law or other potential causes of action under state law
that you would have if you are getting it from
the state, there is going to be either you or
the government, either the state government through Medicaid or the
federal government through medicare there are going to be state
(04:43):
or federal statutory rights that the plan would likely have
to make that recovery. And if you are if the
coverage is coming from the employer itself, then it is
potentially going to be governed by the Employee Retirement Income
Security Act, which will limit the application of state law
(05:04):
and potentially provide other rights under federal law. So, I
know this is a complicated answer to what you probably
think is a simple question. But you have to look
at what rights that plan is going to have. But
then you also have to look at the worker's compensation
law in the individual state. There are some states that
(05:27):
really provide a mechanism for a help plan to participate
in the work comp proceedings. For instance, New Jersey has
a statute that not only allows, but requires help plans
in the case of a disputed work comp plane, to
(05:50):
intervene in that case and present its claim to the
administrative law judge just like the claimant. There are other states,
such as California, which would allow a health plan to
assert a lien. They would essentially file a lien in
the worker's compensation action. The case would proceed as normal,
(06:13):
and then at the end of the case, generally they
may have a lean trial for the lianholder to come
in and present their underlying claim for decision by that
same administrative law judge. But there are a lot of
states that don't really have a mechanism for the for
(06:34):
a health payer to come in and participate within the
work comp arena, and in those states you would have
to look at whether there is any sort of federal
or state statutory right that you may have, or whether
there are other causes of action within that state to
allow the plan to recover directly against the work comp carrier.
(06:57):
If not, then generally we're looking for reimbursement. So in
a worker's compensation case that you know there is a
dispute and instead of going to letting the administrative law
judge make a determination, there is some sort of settlement involved.
(07:19):
If there's not a mechanism to recover directly from the
work off carrier in that instance, then the plans are
generally looking to seek reimbursement from any settlement obtained by
the claimant.
Speaker 3 (07:32):
So, John, what you touched on kind of I think
it illuminates some of the complexity and some of the
variability that you mentioned in terms of you know how
these things will will be impacted by different state laws
and depending on what type of coverage or where that
comes from. For folks, can you just explain to us
(07:54):
the states the jurisdictions that you and your firm practice in.
Speaker 2 (08:00):
So, Mike firm actually does this nationwide, but we certainly
have some states that we practice in more than others.
We have licenses in fifteen states, but then we are
also admitted to some federal courts where we don't have
state licenses, but we're actually allowed to participate in the
(08:22):
federal courts there. And I think we are admitted to
approximately thirty different federal courts around the country. I myself
am admitted to practice in the states of Kentucky, where
my office is located, but also Ohio, Georgia, and Florida.
Speaker 1 (08:40):
Okay, great, and John, if we could back up a
little bit and tell could you tell our listeners what
ARISSA stands for and what is the purpose of ARISA generally?
Speaker 2 (08:53):
Sure, ARISA is a federal statue that governs employee benefit plans.
And I talked about how Americans received their coverage if
they're getting it from their employer unless their employer happens
to be a church or a governmental entity, then their
plan is going to be governed by the Employee Retirement
(09:14):
Income Security Act, commonly called ARISA. ARISA was passed back
in nineteen seventy four, and it was passed because of
growing concerns due to large companies defaulting on their pension plans.
So before ARISA was passed, there was really very little
(09:38):
federal litigation that protected benefits such as pension or medical
or other type of benefits that were promised by employers
to their employees. And back in the early in mid sixties,
there were several accounts of large insurers at or large
(10:01):
companies that defaulted on their pension plans. So you had
employees that had been working, you know, for then diligently
for years, expecting to have a pension at the time
of retirement, and all that went away because the company
either defaulted or the company itself went out of business.
So ARISA was was enacted to provide a federal set
(10:24):
of regulations that were going to govern all employers that work,
with those few exceptions that were offering any type of benefit.
It was mainly directed at retirement benefits such as pension plans,
but it also impacts what they call welfare benefits, which
would include health insurance, mental vision, and other type of
(10:45):
non retirement benefit right and so so. But in addition
to just adding protection for the employees, there was a
second reason ARISSA was an and that was to encourage
employers to offer these types of benefit plans to begin with,
(11:06):
so to make it easier on the employer, one thing
that Congress did was to create this uniform scheme. So
there's one set of uniform regulations that apply to employers
and one set of remedies that would be allowed for
violations of those regulations or enforcement of the plans itself.
(11:31):
And this protected the employers from having to potentially have
their benefit plans subject to the laws of fifty states.
Speaker 3 (11:43):
So John, let me make sure I understand this. So,
as a worker's compensation attorney primarily who doesn't normally look
at the nature of maybe our client's individual health plan
trying to understand what is the difference The main thing
(12:04):
that I would look at to differentiate between a plan
that's going to fall under ARISA versus some other regular
insurance plan that an employer might be provided.
Speaker 2 (12:18):
So if the employer is not a governmental entity or
a church, and they are offering a health benefit plan.
That plan is going to be governed by ARISA. Fortunately,
though you don't have to know as a as a
work comp attorney that much about ARISA, because although the
(12:43):
employer is also offering a work comp plan work compt
benefit plans that you know what the plans paying out
the work comp benefits are exempted from ARISSA. That's a
type of plan that it doesn't have any ARISSA regulations
that are applying to it directly for the purposes of determining.
(13:04):
Though there you know the health plan that is governed
by ARISA, what type it applies, you probably want to
know whether your employer is how they are funding those
health insurance benefits. Health insurance can be funded either by
the employer going out and contracting with an insurer to
(13:28):
ensure the benefits so that the insurance company has the risk.
Those are called insured plans, or the employer itself can
maintain the risk. Those are self funded plans. The reason
why that's important is twofold number one. If the employer
(13:51):
has the risk itself, you know, it would creates some
questions because the employer assuming that the claimant is the
is getting their benefits from the employer's policy rather than
a spouse's policy or something like that. Then you now
(14:11):
have the employer sort of responsible for the help benefits,
either through the help plan or through the worker's compensation plan.
So that can create some some issues potentially. But the
other really important reason is the way that ARISA works.
Remember when I said that ARISA created this uniform scheme
(14:36):
so that employers wouldn't have to worry about the laws
of off fifty states. Well, the way that it did
that is by creating a preemption provision in the statute
which preempts state laws all state laws that relate to
employee benefit plans. So essentially, if a state law has
(14:57):
kind of an impact on enforcement of that employee benefit plan,
it's going to be preempted by ARISSA. However, when ARISSA
was passed, Congress didn't want to take away from the
states the ability to regulate insurance. Regulating insurance was something
(15:19):
that had always been a state function, and through ARISA,
they didn't want to inadvertently take away the state's right
to govern the sale of insurance within their borders. So
the pre emptionine provision specifically states that laws that regulate
(15:39):
the business of insurance are saved from preemption. So if
a state law regulates insurance, it is not going to
be preempted by ARISSA. But they were also aware that
states could potentially find a loophole right they could take
self funded plans that are not purchasing insurance, but write
(16:05):
their definition of insurance in a way that it would
govern those self funded plans. And Congress didn't want that
to happen. So Congress put in the last provision which
says that states cannot deem self funded plans to be
insurance for the purposes of state insurance regulation. So what
(16:27):
does that mean? It creates dichotomy. Excuse me.
Speaker 3 (16:31):
If the.
Speaker 2 (16:34):
Employer is purchasing insurance to fund those benefits, then that
insurer is the one that has the right of subrogation
or has the lean and they are going to be
subject to state laws which regulates insurance. So excuse me.
(16:56):
If you have a state law that impact at when
a right of subrogation or a right of reimbursement can
be enforced and it's directed at insurers, then that state
law is still going to apply to the plan even
though it's an a risk of plan because it's applying
(17:16):
to the insurer that really owns the right. But if
instead of having an insurance company being at risk for
the benefits, if instead the employer is hired you know,
one of those insurance companies or some other type of
third party administrator to simply administrate the claims, but the
(17:39):
company itself is the one that has the risk for
the payments. Those are considered self funded. And even if
a state has a law that regulates insurers rights of
subregation or reimbursement, that law wouldn't apply to the self
funded plan.
Speaker 1 (17:58):
Well, that is a complicated maze there question between that
you talked about, the dichotomy there between you know that
the employer that has its own risk just hires the
ensured to administrate it versus the insurance company itself that's
on the risk. Which of those two, in your experience,
(18:20):
leads to more risa subrogation claims and workers comp matters.
If you can answer that.
Speaker 2 (18:30):
So without question, I think that the first of all,
it comes out for both of them. But I think
when the plan is self funded, it is it probably
creates more issues that you're aware of, because there is
(18:52):
the argument that state law is prompted so that the
self funded plan may have a stronger right. You also
have an employer now that is probably taking into consideration
recovering those funds back for itself rather than an insurer
(19:14):
who has a larger scope. So a lot of these
employers might be more aggressive about enforcing their recovery provisions.
And then you always have the issue of when you
know there is a situation where the employer is on
the hook both ways, where they're they're going to be
on the hook because it's covering under the worker's compensation
(19:39):
policy or benefit, or it's if it's not then it's
still going to be covered by the help plan, and
the employer is responsible both ways. When they are also
self funded for workers compensation, it is possible that they
could be have a self funded medical plan, but I
(20:00):
purchase a work comp policy so that it's the work
comp carrier that has the risk, and then you have
a little bit less of any kind of potential issue
with the same person being responsible both ways.
Speaker 1 (20:15):
John, I seem to get lean letters from the plans,
the arisive plans from self funded employers the most. So
what you're saying there is certainly seems consistent with what
I've experienced personally. I got another question for you, is
the I've read about fiduciary requirements or ariscive plans, Is
(20:38):
that why they have to send out the lean letter
and go after recovery to fulfill their fiduciary duties to
the plan.
Speaker 2 (20:52):
I think that's a big, big part of it. They
do have a fiduciary duty to enforce their plans as written.
If they're plans have exclusions for work comp benefits, or
if their plan requires recovery from you know, a work
comp payment or any type of settlement that their plan
(21:13):
member receives, then they, you know, arguably have a duty
that they have to enforce the terms of those plans written. Now,
they may have discretion, and the amount of discretion they
may have may vary with the written terms of the plan.
But where in my experience you're going to see some
(21:35):
of the most aggressive pursuits and where fiduciary duty probably
comes up the most or situation where the plan is
funded through a trust that is set up rather than
one that is funded through the general assets of the employer,
and a lot of those trust cases you can see
(21:56):
it from regular employers too, but it's the union in
cases where you're definitely going to see a trust where
instead of the employer being the one providing the benefits,
is the union providing the benefits to its members, and
it's receiving those funds from multiple employers. It's going into
(22:19):
the fund. They are very serious about protecting that trust's
assets because in some situations, you know, if that trust
doesn't have enough funds to pay the benefits and they've
got serious problems, and an employer could always just say, well,
we have to get additional money and we have to
(22:41):
pay it into the plan to meet this liability. But
a union would have to go back and negotiate with
those employers to increase the contribution. So it's just a
lot more difficult.
Speaker 1 (22:53):
So John, to touch on that nerve the you know,
the first time I called getting a lean letter with
some kind of a punch to it was from the
Teamsters Union about their health and welfare plan with the
trucking company that I represented, and they brought up the
(23:14):
Serabov case and I had to look that up, and
you know, it was off the races at that point.
I've got a whole new issue on my hands. Again,
this is fifteen years ago, but that's certainly I recall
that lean very clearly because they were really ready to
(23:35):
come after me if they had to. Have you seen
instances like that?
Speaker 2 (23:42):
So let me let me make sure that I understand
your question. I know that the plan asserted the Sarabov case,
and I'm familiar with that case as as a matter
of fact, I've co authored in the Meeks brief to
the Supreme Court back when that case was being argued.
But in that case really dealt with the type of
(24:07):
remedies available to risk the plans under certain circumstances. But
are you saying, is the question just do I see
self funded plans arguing the Serabov case against the work
comp carriers?
Speaker 1 (24:22):
Really do you see? Do you follow? Do you see
Central States or the Team Stirs or other union plans
going after recoveries more aggressively than other groups? I?
Speaker 2 (24:38):
Yes, I think would be my response to that. I
think that the union plans, like I said before, are
in a little bit of a different situation where they
have to really protect the assets of the plan because
it's more difficult for them to get additional funds for
it than it would be a typical employer plan.
Speaker 3 (24:58):
So, John, is it is it the nature of the
funding of that plan that that plays into whether or
not these administrators are then willing to wave some of
these lanes, because it's it seems that some may may
have more of an interest in in waving that that
lean and others, it sounds like, are are going to
(25:19):
take a harder line to assert it.
Speaker 2 (25:21):
Yeah, it's it certainly different arisciplines. So the you know,
your employer itself or if you're talking about a particular union,
are going to have their own feelings about how aggressive
they want to pursue these The plans themselves are often
(25:44):
you know, using third party administrators or other types of
vendors to assert the segregation planes, and you know, each
of those particular vendors may have different processes with respect
to how aggressive of they are. And then of course, frankly,
the facts of each case are really going to determine
(26:07):
how aggressive they may pursue. How much money is at stake,
what the rights of the individual plan is, you know,
in their document or within the jurisdiction that they are,
and kind of what the underlying provisions of the work
comp statute are that are going to apply.
Speaker 3 (26:25):
So the manner of the process in which they assert
these leans is this going to vary from state to state.
Speaker 2 (26:34):
It will kind of as I mentioned before, different states
work comp statutes even may allow pursuit of those claims
within the work comp arena. If they do, then generally,
what my clients do?
Speaker 1 (26:54):
You know?
Speaker 2 (26:54):
The other plans may do it differently, but they will
go ahead and participate within that work comparena by either
intervening or asserting a lean claim whatever is allowed by
the statute. And you know, frankly, that's not a bad
way for those claims to be handled. In states where
there isn't a clear mechanism for those plans to participate,
(27:18):
that's where the plans get creative and will assert causes
of action, either directly against the carriers themselves if they can.
That may vary upon the you know, the jurisdiction or
the language of the plan, or they may simply assert
either their right to deny future coverage under the plan,
(27:41):
which would affect probably the plan participant or the work
claimant the most. Or in the instances where there is
a lump sum settlement, they may try to assert a
lean on that settlement, and under ARISKA specifically, they are
limited to appropriate equitable relief to enforce that lean, so
(28:07):
they have to pursue that claim against the individuals who
are holding those particular funds. So generally that may be
against the claimant themselves or the claimant's council if the
funds are being held in trust, but could theoretically also
be against the work comp carrier if the suit is
(28:29):
filed before the funds are paid out, but after the
agreement is reached.
Speaker 1 (28:34):
John, that is typically what I get is a LEAN
letter during litigation. It's Hey, mister Armstrong or his client,
can you we paid this forty thousand dollars of medical
bills for treatment on what we believe is a work injury.
We need you to pay us or consider us in
your settlement negotiations. And you know is that.
Speaker 2 (29:00):
Uh?
Speaker 1 (29:01):
If let's say that we don't let's say that we
can't sell the case, do you all ever come and
participate in the litigation or do you or or on
the other hand, if we sell the claim and don't
include you, uh, and don't pay your lean what happens? Then?
Speaker 2 (29:22):
So if the underlying case can't be settled, then it's
going to go before an administrative law judge and they're
going to issue a decision on compensability. Generally, if the
if there is a decision saying that these benefits are compensable,
what will happen is the plan may approach the carrier
(29:43):
directly and say, hey, these were compensable, this is what
we paid. Will you pay us back directly and frankly.
Whether that happens or not depends upon the state and
the individual carrier. A lot of times, if the you know,
the work comf fee schedule, maybe more and maybe less
than what the plan is paid. So generally, if the
(30:05):
carrier perceives that they would have paid less under the
fee schedule than what the health insurer paid, then they're
going to say we only want to pay according to
the fee schedule. And many times what will happen in
that instance is that the help plan will go back
to the providers and ask the providers to rebuild the
(30:30):
work comp carrier, and then the work comp carrier will
pay that amount to the provider, and then the provider
will issue a refund to the plan that you know,
sometimes you have to have a provider that's willing to
do that. Depending on how long it took to get
(30:50):
that award of compensibility. It could be easier because if
it happens fairly early on, then the help plan may
have the ability just to retract the payments from the
provider and then tell them to bill work comp and
that resolves it really easy from the help plan's perspective.
(31:11):
But a lot of times it'll be after that period
of time that they can do that, and so they're
really relying upon the help plan too. I'm sorry the
provider to simply agree to go back and rebuild a
work comp carrier and if there's an award out there,
the work comp carrier will generally pay the claims without
any any contention.
Speaker 1 (31:34):
Let's let's say that things don't go well and that
they the employer and the plaintiff stiff you, so to speak.
Do you ever have to drag somebody into federal court
or state court or so before?
Speaker 2 (31:49):
Yes, I had seen that happen. As a matter of fact,
there's one case in this really Arisa really wasn't implicated
in this all though. This was one of those insured
plans that I talked about before, where it was the
health insurer that had the right but it was down
in Florida and it involved the claimant that had been injured.
(32:14):
He actually got got run over by a back ho
while he was in the process of trying to flag
down another vehicle that was going the wrong way down
the street, and it was very severely injured and the
help the work comp carrier denied the claim originally because
(32:37):
the blood tests came back and showed that he may
have been under the influence of a drug. And this
was down in Florida, and the Florida work comp Statute
provides an absolute defense when the employer, I'm sorry the
employee claimant was intoxicated, so they denied the claim. The
(32:58):
health insurer ended up paying in the claim and paid
about one point three million in benefits on their behalf.
During the claimant filed an appeal of the denial of
the work comp claim, and during the course of that proceeding,
the health insurer did make the work comp carrier's council
(33:23):
aware that it had paid these claims and it was
entitled to be reimbursed by the work comp carrier. But
there's not really a mechanism in Florida for the carrier
to come into the work comp arena and participate there.
The work comp attorney in that instance, when working with
(33:46):
the claimant's attorney, said we're not going to we're not
going to address that issue. We're going to you know,
it's too early for us to talk to the health
insurer itself. Let's try to work out a deal. And
eventually the work claimant settled that disputed claim for a
(34:10):
little over six hundred and fifty thousand dollars and the carrier,
the health insurance carrier then went back and said, we're
entitled to be reinbirsed for the one point three million
we paid. And I believe that the carrier said, look,
(34:31):
we're not interested in this. This was a confident. You know,
this was a settlement. It was disputed. The settlement clearly
states that we didn't pay any money for medical expenses.
If you want to recover money, you need to go
back to the claimant and try to recover whatever you
can out of the money they received. Well, the insurer
(34:53):
actually then filed a lawsuit in state court under state
law principles of equitable sebrogation and unjustin Richmond, saying we
paid this because you denied it. We think that you
were the one that was primarily responsible for it, and
so under this state law, your u oe us reimbursement.
(35:16):
And the court held a hearing on the issue and
looked at the underlying reason for the denial and found
that the carrier was wrong to issue the denial in
that circumstance, but then also said that under the principles
of equitable seprogation, that health insurer was entitled to get
reimbursed from the work carrier, despite the fact that the
(35:40):
claimant had weighed all of its claims for the purposes
of the settlement, and the court awarded one point three
million to the health insurre. So, John, I think the
takeaway there, I didn't mean to interrupt. To take away there
is that the strategy of resolving the case. And you know,
(36:04):
if you're a work comp defense counsel and you enter
into a lansome settlement with the claimant that maybe most
of the time you will get away with saying the
lean doesn't apply to us. Don't worry, you know, you know,
go deal with them. We're kind of out of it,
(36:25):
and not worry about it. But that may come back
and bite you if you're not careful in certain situations.
So my recommendation is always to try to maintain that
communication with the health insured that's asserting the right of reimbursement,
(36:47):
make sure that they know what's going on, and address
it on the front end, rather than potentially, you know,
risking a lawsuit for your client on the back end
after you think the case is already.
Speaker 3 (36:59):
Some Well, John, and this kind of dovetails into what
I was going to ask you about because it's it
gets to that coming something coming back to bite you.
And I've read about the provision for double damages in
an instance where a plaintiff the employer, they refuse to
(37:21):
pay UH and they lose it. Can you talk to
that a little bit about there are cases where these
double damages apply and where they don't.
Speaker 2 (37:32):
So when you're when you're talking about double damages, and
I just want to make sure that the first thing
that comes to my mind with respect to double damages
is the Medicare statute. And so if you're dealing with
applaimant who was employed but was also eligible for Medicare
benefits for either age or you know, just you know
(37:55):
a certain type of disability, then you do defin have
to be cognizant that the either the government itself or
a lot of people receive their Medicare benefits from an
insurer under a program called Medicare advantage, and probably over
(38:18):
the last ten years, there have been significant litigation for
Medicare advantage plans asserting lean rights under Medicare itself, and
what the statue provides those Medicare advantage plans is a
right of action directly against the carrier who was responsible
(38:39):
for making the primary payment. You know. Essentially Medicare benefits
are secondary to all other benefits, is what they say.
And if a carrier demonstrates responsibility as being for being primary,
which can be done usually through a settlement with the
Medicare beneficiary. If they settle with that, then under the
(39:01):
federal statute they have demonstrated that they are primary. They
are now subject to reimburse the Medicare plant and if
they don't, then they are subject to a lawsuit where
double damages are automatically awarded. So this is true even
(39:25):
if that carrier has a release from the Medicare claimant
saying they'll satisfy all leans. It applies, you know, regardless
of whether they paid out. Policy limits to that Medicare beneficiary,
there is a a an absolute federal duty to make
that reimbursement. And so recently Congress passed the Smart Act,
(39:49):
which includes, like if a work comp carrier is paying
money for someone who is covered under Medicare, they have
to report to the government that they ventured into that settlement.
And that now includes information regarding Medicare advantage plans, where
it used to only include payments made by by regular Medicare.
(40:14):
So that so the takeaway if it's Medicare, you want
to be, you know, on high alert for a potential
double damage claims if it's not taken care of. Those
are probably relatively rare though that you have someone I've
seen it more often recently, But where someone is under
Medicare and is also has.
Speaker 3 (40:37):
That other that also is.
Speaker 2 (40:39):
Employed under ARISA, there's not really a specific claim for
double damages. So if you have an ARISSA plan that
is asserting some sort of claim under ARISSA itself, they
may be creative. They may try to argue that the
(41:01):
work comp carrier is a fiduciary of the plan because
you know it had a lean on the assets, and
try to sert some sort of fiduciary duty claim against
the carrier, and in that instance there could be damages
awarded that you know, people may say is double damages
because they're over and above what the reimbursement is. There's
(41:23):
also the ability for anybody asserting the claimant or ARISSA
to potentially recover attorneycees. So in that instance that could
be seen as double damages. But ARISA itself doesn't provide
specifically double damages with the assertion of a typical equitable
line clane. Other than that the double damages that they occur.
(41:45):
There may be specific state statutes that penalizes a work
comp carrier that doesn't pay a valid claim with double damages,
and the ARISKA plan could potentially through assignment or otherwise
argue that they're entitled to those damages.
Speaker 3 (42:01):
Okay, but John, I know we're getting close to the
end here, and I you know, our audience is largely
employers and TPAs, insurves and the attorneys that represent them.
And so I guess if there was kind of one,
you know, concept or takeaway that you would you would
(42:23):
want them to have after listening to this today, what
do they need to know when they when they come
across and Arisa lean.
Speaker 2 (42:35):
If they are really if they have any type of
lien asserted by any health plan that's paid benefits, regardless
of whether it's governed by us or not, I think
that they are better off trying to deal with that
upfront as part of the negotiations of the underlying claim.
(42:56):
You know, their duties are going to vary a lot
by the type of plan and by the state law
where the claim is pending, but that you are much
better off working with people upfront. And I think most
of the time, if you are communicating with whoever is
asserting the lean, they are going to be reasonable with you.
(43:21):
Maybe not every time when in people's definition of reasonable
can be different. But my recommendation to carriers asserting those
types of claims is that they try to deal with
it upfront rather than resolving it and hoping for the
best at the end.
Speaker 1 (43:38):
John, thank you for being our podcast today. Thank you
very much. If our audience wants to get in touch
with you, reach out to how would they do that.
Speaker 2 (43:46):
Certainly they could reach me by email. My email address
is j Aolb at KCA legal dot com, or they
could feel free to call me. My number is are
ecode five O two six, one four three seven seven six,
and I am happy to answer any questions. I know
it's a very complicated issue. A lot of times people's
(44:08):
eyes glaze over when I start talking, but you know,
I am am happy to help anyone that has questions.
Speaker 1 (44:17):
Sounds good, but thank you John so much. Thank you Shane.
Speaker 3 (44:20):
Thanks John,
Welcome back to another episode of the comp Conversations podcast.
This is a podcast developed through the Defense Research Institute,
where we explore the world of workers compensation, including the
personal aspects involved in the realm of work injuries and
its litigation, as well as future trends in every aspect
in between. My name is Steve Armstrong and I'm here
with Shane Dawson of Dinsmore Show. Shane, how are you
(00:41):
doing today?
Speaker 3 (00:42):
Doing great?
Speaker 1 (00:43):
Thank you, Steve, great, and we are delighted to have
Attorney John cob with us here on today's podcast to
talk about Risa Lin's in workers' compensation claims. So John,
welcome to the podcast for our listeners. Can you tell
us about your firm, how long you've been practicing, what
types of cases that you practice?
Speaker 2 (01:03):
Sure, Steve, Shane, thanks for inviting me here today. I
practice with the law firm of Coplear and Arnold, and
our firm focuses its practice on recovering funds for the
insurance industry, usually through subrogation or asserting rights of reimbursement.
(01:24):
We really represent all types of carriers. We do work
for property and casualty carriers when they make payments. We
also work for workers' compensation carriers, asserting leans on third
party actions. But in addition to that, we represent a
lot of health benefit plans, either the insurance companies that
(01:45):
insure them, or we represent the employers that are sponsoring
self funded plans.
Speaker 3 (01:54):
So, John, you talked about kind of all these different areas,
what would you say is your main focus on the
aristic claims? Is it on subrogation, the litigation, or a
mix of both.
Speaker 2 (02:08):
So that's a good question because there are different types
of claims that can be asserted. If I am representing
a help plan that has made payments on behalf of
an insured that is, you know, asserting some type of
workers compensation claim, the first thing that I really need
to look at is what type of health plan I'm
(02:31):
dealing with because that's going to affect what types of
rights we're going to assert. And to know what type
of plan and dealing with, you usually have to look
at where that underlying claimant is receiving its help benefits from.
You know, in America, there are really three primary ways
that people obtain health coverage. Right, they can go directly
(02:54):
to the insurance market and buy a policy from an
sure to ensure them and their families in Those are
called individual plans or marketplace plans, and are probably more
popular now than they have been previously because of the
Affordable Healthcare Act. Another way that people can get their
(03:18):
health insurances is from the government. If they qualify for Medicaid,
then they can receive that coverage through their state, or
if they are eligible for Medicare either through age or disability,
they can get from the federal government under Medicare, But
(03:39):
probably most people in America receive their health coverage through
a group plan sponsored by their employer. So the employer
will sponsor a plan, either by purchasing insurance to cover
their employees or by self funding a benefit plan that
(04:00):
will cover the employee and usually any eligible dependence. If
you are dealing with an individual plan, your right is
primarily governed by state law. So if an individual plan
is made a payment, then you're really going to look
at what the state workers compensation is going to a
(04:21):
law or other potential causes of action under state law
that you would have if you are getting it from
the state, there is going to be either you or
the government, either the state government through Medicaid or the
federal government through medicare there are going to be state
(04:43):
or federal statutory rights that the plan would likely have
to make that recovery. And if you are if the
coverage is coming from the employer itself, then it is
potentially going to be governed by the Employee Retirement Income
Security Act, which will limit the application of state law
(05:04):
and potentially provide other rights under federal law. So, I
know this is a complicated answer to what you probably
think is a simple question. But you have to look
at what rights that plan is going to have. But
then you also have to look at the worker's compensation
law in the individual state. There are some states that
(05:27):
really provide a mechanism for a help plan to participate
in the work comp proceedings. For instance, New Jersey has
a statute that not only allows, but requires help plans
in the case of a disputed work comp plane, to
(05:50):
intervene in that case and present its claim to the
administrative law judge just like the claimant. There are other states,
such as California, which would allow a health plan to
assert a lien. They would essentially file a lien in
the worker's compensation action. The case would proceed as normal,
(06:13):
and then at the end of the case, generally they
may have a lean trial for the lianholder to come
in and present their underlying claim for decision by that
same administrative law judge. But there are a lot of
states that don't really have a mechanism for the for
(06:34):
a health payer to come in and participate within the
work comp arena, and in those states you would have
to look at whether there is any sort of federal
or state statutory right that you may have, or whether
there are other causes of action within that state to
allow the plan to recover directly against the work comp carrier.
(06:57):
If not, then generally we're looking for reimbursement. So in
a worker's compensation case that you know there is a
dispute and instead of going to letting the administrative law
judge make a determination, there is some sort of settlement involved.
(07:19):
If there's not a mechanism to recover directly from the
work off carrier in that instance, then the plans are
generally looking to seek reimbursement from any settlement obtained by
the claimant.
Speaker 3 (07:32):
So, John, what you touched on kind of I think
it illuminates some of the complexity and some of the
variability that you mentioned in terms of you know how
these things will will be impacted by different state laws
and depending on what type of coverage or where that
comes from. For folks, can you just explain to us
(07:54):
the states the jurisdictions that you and your firm practice in.
Speaker 2 (08:00):
So, Mike firm actually does this nationwide, but we certainly
have some states that we practice in more than others.
We have licenses in fifteen states, but then we are
also admitted to some federal courts where we don't have
state licenses, but we're actually allowed to participate in the
(08:22):
federal courts there. And I think we are admitted to
approximately thirty different federal courts around the country. I myself
am admitted to practice in the states of Kentucky, where
my office is located, but also Ohio, Georgia, and Florida.
Speaker 1 (08:40):
Okay, great, and John, if we could back up a
little bit and tell could you tell our listeners what
ARISSA stands for and what is the purpose of ARISA generally?
Speaker 2 (08:53):
Sure, ARISA is a federal statue that governs employee benefit plans.
And I talked about how Americans received their coverage if
they're getting it from their employer unless their employer happens
to be a church or a governmental entity, then their
plan is going to be governed by the Employee Retirement
(09:14):
Income Security Act, commonly called ARISA. ARISA was passed back
in nineteen seventy four, and it was passed because of
growing concerns due to large companies defaulting on their pension plans.
So before ARISA was passed, there was really very little
(09:38):
federal litigation that protected benefits such as pension or medical
or other type of benefits that were promised by employers
to their employees. And back in the early in mid sixties,
there were several accounts of large insurers at or large
(10:01):
companies that defaulted on their pension plans. So you had
employees that had been working, you know, for then diligently
for years, expecting to have a pension at the time
of retirement, and all that went away because the company
either defaulted or the company itself went out of business.
So ARISA was was enacted to provide a federal set
(10:24):
of regulations that were going to govern all employers that work,
with those few exceptions that were offering any type of benefit.
It was mainly directed at retirement benefits such as pension plans,
but it also impacts what they call welfare benefits, which
would include health insurance, mental vision, and other type of
(10:45):
non retirement benefit right and so so. But in addition
to just adding protection for the employees, there was a
second reason ARISSA was an and that was to encourage
employers to offer these types of benefit plans to begin with,
(11:06):
so to make it easier on the employer, one thing
that Congress did was to create this uniform scheme. So
there's one set of uniform regulations that apply to employers
and one set of remedies that would be allowed for
violations of those regulations or enforcement of the plans itself.
(11:31):
And this protected the employers from having to potentially have
their benefit plans subject to the laws of fifty states.
Speaker 3 (11:43):
So John, let me make sure I understand this. So,
as a worker's compensation attorney primarily who doesn't normally look
at the nature of maybe our client's individual health plan
trying to understand what is the difference The main thing
(12:04):
that I would look at to differentiate between a plan
that's going to fall under ARISA versus some other regular
insurance plan that an employer might be provided.
Speaker 2 (12:18):
So if the employer is not a governmental entity or
a church, and they are offering a health benefit plan.
That plan is going to be governed by ARISA. Fortunately,
though you don't have to know as a as a
work comp attorney that much about ARISA, because although the
(12:43):
employer is also offering a work comp plan work compt
benefit plans that you know what the plans paying out
the work comp benefits are exempted from ARISSA. That's a
type of plan that it doesn't have any ARISSA regulations
that are applying to it directly for the purposes of determining.
(13:04):
Though there you know the health plan that is governed
by ARISA, what type it applies, you probably want to
know whether your employer is how they are funding those
health insurance benefits. Health insurance can be funded either by
the employer going out and contracting with an insurer to
(13:28):
ensure the benefits so that the insurance company has the risk.
Those are called insured plans, or the employer itself can
maintain the risk. Those are self funded plans. The reason
why that's important is twofold number one. If the employer
(13:51):
has the risk itself, you know, it would creates some
questions because the employer assuming that the claimant is the
is getting their benefits from the employer's policy rather than
a spouse's policy or something like that. Then you now
(14:11):
have the employer sort of responsible for the help benefits,
either through the help plan or through the worker's compensation plan.
So that can create some some issues potentially. But the
other really important reason is the way that ARISA works.
Remember when I said that ARISA created this uniform scheme
(14:36):
so that employers wouldn't have to worry about the laws
of off fifty states. Well, the way that it did
that is by creating a preemption provision in the statute
which preempts state laws all state laws that relate to
employee benefit plans. So essentially, if a state law has
(14:57):
kind of an impact on enforcement of that employee benefit plan,
it's going to be preempted by ARISSA. However, when ARISSA
was passed, Congress didn't want to take away from the
states the ability to regulate insurance. Regulating insurance was something
(15:19):
that had always been a state function, and through ARISA,
they didn't want to inadvertently take away the state's right
to govern the sale of insurance within their borders. So
the pre emptionine provision specifically states that laws that regulate
(15:39):
the business of insurance are saved from preemption. So if
a state law regulates insurance, it is not going to
be preempted by ARISSA. But they were also aware that
states could potentially find a loophole right they could take
self funded plans that are not purchasing insurance, but write
(16:05):
their definition of insurance in a way that it would
govern those self funded plans. And Congress didn't want that
to happen. So Congress put in the last provision which
says that states cannot deem self funded plans to be
insurance for the purposes of state insurance regulation. So what
(16:27):
does that mean? It creates dichotomy. Excuse me.
Speaker 3 (16:31):
If the.
Speaker 2 (16:34):
Employer is purchasing insurance to fund those benefits, then that
insurer is the one that has the right of subrogation
or has the lean and they are going to be
subject to state laws which regulates insurance. So excuse me.
(16:56):
If you have a state law that impact at when
a right of subrogation or a right of reimbursement can
be enforced and it's directed at insurers, then that state
law is still going to apply to the plan even
though it's an a risk of plan because it's applying
(17:16):
to the insurer that really owns the right. But if
instead of having an insurance company being at risk for
the benefits, if instead the employer is hired you know,
one of those insurance companies or some other type of
third party administrator to simply administrate the claims, but the
(17:39):
company itself is the one that has the risk for
the payments. Those are considered self funded. And even if
a state has a law that regulates insurers rights of
subregation or reimbursement, that law wouldn't apply to the self
funded plan.
Speaker 1 (17:58):
Well, that is a complicated maze there question between that
you talked about, the dichotomy there between you know that
the employer that has its own risk just hires the
ensured to administrate it versus the insurance company itself that's
on the risk. Which of those two, in your experience,
(18:20):
leads to more risa subrogation claims and workers comp matters.
If you can answer that.
Speaker 2 (18:30):
So without question, I think that the first of all,
it comes out for both of them. But I think
when the plan is self funded, it is it probably
creates more issues that you're aware of, because there is
(18:52):
the argument that state law is prompted so that the
self funded plan may have a stronger right. You also
have an employer now that is probably taking into consideration
recovering those funds back for itself rather than an insurer
(19:14):
who has a larger scope. So a lot of these
employers might be more aggressive about enforcing their recovery provisions.
And then you always have the issue of when you
know there is a situation where the employer is on
the hook both ways, where they're they're going to be
on the hook because it's covering under the worker's compensation
(19:39):
policy or benefit, or it's if it's not then it's
still going to be covered by the help plan, and
the employer is responsible both ways. When they are also
self funded for workers compensation, it is possible that they
could be have a self funded medical plan, but I
(20:00):
purchase a work comp policy so that it's the work
comp carrier that has the risk, and then you have
a little bit less of any kind of potential issue
with the same person being responsible both ways.
Speaker 1 (20:15):
John, I seem to get lean letters from the plans,
the arisive plans from self funded employers the most. So
what you're saying there is certainly seems consistent with what
I've experienced personally. I got another question for you, is
the I've read about fiduciary requirements or ariscive plans, Is
(20:38):
that why they have to send out the lean letter
and go after recovery to fulfill their fiduciary duties to
the plan.
Speaker 2 (20:52):
I think that's a big, big part of it. They
do have a fiduciary duty to enforce their plans as written.
If they're plans have exclusions for work comp benefits, or
if their plan requires recovery from you know, a work
comp payment or any type of settlement that their plan
(21:13):
member receives, then they, you know, arguably have a duty
that they have to enforce the terms of those plans written. Now,
they may have discretion, and the amount of discretion they
may have may vary with the written terms of the plan.
But where in my experience you're going to see some
(21:35):
of the most aggressive pursuits and where fiduciary duty probably
comes up the most or situation where the plan is
funded through a trust that is set up rather than
one that is funded through the general assets of the employer,
and a lot of those trust cases you can see
(21:56):
it from regular employers too, but it's the union in
cases where you're definitely going to see a trust where
instead of the employer being the one providing the benefits,
is the union providing the benefits to its members, and
it's receiving those funds from multiple employers. It's going into
(22:19):
the fund. They are very serious about protecting that trust's
assets because in some situations, you know, if that trust
doesn't have enough funds to pay the benefits and they've
got serious problems, and an employer could always just say, well,
we have to get additional money and we have to
(22:41):
pay it into the plan to meet this liability. But
a union would have to go back and negotiate with
those employers to increase the contribution. So it's just a
lot more difficult.
Speaker 1 (22:53):
So John, to touch on that nerve the you know,
the first time I called getting a lean letter with
some kind of a punch to it was from the
Teamsters Union about their health and welfare plan with the
trucking company that I represented, and they brought up the
(23:14):
Serabov case and I had to look that up, and
you know, it was off the races at that point.
I've got a whole new issue on my hands. Again,
this is fifteen years ago, but that's certainly I recall
that lean very clearly because they were really ready to
(23:35):
come after me if they had to. Have you seen
instances like that?
Speaker 2 (23:42):
So let me let me make sure that I understand
your question. I know that the plan asserted the Sarabov case,
and I'm familiar with that case as as a matter
of fact, I've co authored in the Meeks brief to
the Supreme Court back when that case was being argued.
But in that case really dealt with the type of
(24:07):
remedies available to risk the plans under certain circumstances. But
are you saying, is the question just do I see
self funded plans arguing the Serabov case against the work
comp carriers?
Speaker 1 (24:22):
Really do you see? Do you follow? Do you see
Central States or the Team Stirs or other union plans
going after recoveries more aggressively than other groups? I?
Speaker 2 (24:38):
Yes, I think would be my response to that. I
think that the union plans, like I said before, are
in a little bit of a different situation where they
have to really protect the assets of the plan because
it's more difficult for them to get additional funds for
it than it would be a typical employer plan.
Speaker 3 (24:58):
So, John, is it is it the nature of the
funding of that plan that that plays into whether or
not these administrators are then willing to wave some of
these lanes, because it's it seems that some may may
have more of an interest in in waving that that
lean and others, it sounds like, are are going to
(25:19):
take a harder line to assert it.
Speaker 2 (25:21):
Yeah, it's it certainly different arisciplines. So the you know,
your employer itself or if you're talking about a particular union,
are going to have their own feelings about how aggressive
they want to pursue these The plans themselves are often
(25:44):
you know, using third party administrators or other types of
vendors to assert the segregation planes, and you know, each
of those particular vendors may have different processes with respect
to how aggressive of they are. And then of course, frankly,
the facts of each case are really going to determine
(26:07):
how aggressive they may pursue. How much money is at stake,
what the rights of the individual plan is, you know,
in their document or within the jurisdiction that they are,
and kind of what the underlying provisions of the work
comp statute are that are going to apply.
Speaker 3 (26:25):
So the manner of the process in which they assert
these leans is this going to vary from state to state.
Speaker 2 (26:34):
It will kind of as I mentioned before, different states
work comp statutes even may allow pursuit of those claims
within the work comp arena. If they do, then generally,
what my clients do?
Speaker 1 (26:54):
You know?
Speaker 2 (26:54):
The other plans may do it differently, but they will
go ahead and participate within that work comparena by either
intervening or asserting a lean claim whatever is allowed by
the statute. And you know, frankly, that's not a bad
way for those claims to be handled. In states where
there isn't a clear mechanism for those plans to participate,
(27:18):
that's where the plans get creative and will assert causes
of action, either directly against the carriers themselves if they can.
That may vary upon the you know, the jurisdiction or
the language of the plan, or they may simply assert
either their right to deny future coverage under the plan,
(27:41):
which would affect probably the plan participant or the work
claimant the most. Or in the instances where there is
a lump sum settlement, they may try to assert a
lean on that settlement, and under ARISKA specifically, they are
limited to appropriate equitable relief to enforce that lean, so
(28:07):
they have to pursue that claim against the individuals who
are holding those particular funds. So generally that may be
against the claimant themselves or the claimant's council if the
funds are being held in trust, but could theoretically also
be against the work comp carrier if the suit is
(28:29):
filed before the funds are paid out, but after the
agreement is reached.
Speaker 1 (28:34):
John, that is typically what I get is a LEAN
letter during litigation. It's Hey, mister Armstrong or his client,
can you we paid this forty thousand dollars of medical
bills for treatment on what we believe is a work injury.
We need you to pay us or consider us in
your settlement negotiations. And you know is that.
Speaker 2 (29:00):
Uh?
Speaker 1 (29:01):
If let's say that we don't let's say that we
can't sell the case, do you all ever come and
participate in the litigation or do you or or on
the other hand, if we sell the claim and don't
include you, uh, and don't pay your lean what happens? Then?
Speaker 2 (29:22):
So if the underlying case can't be settled, then it's
going to go before an administrative law judge and they're
going to issue a decision on compensability. Generally, if the
if there is a decision saying that these benefits are compensable,
what will happen is the plan may approach the carrier
(29:43):
directly and say, hey, these were compensable, this is what
we paid. Will you pay us back directly and frankly.
Whether that happens or not depends upon the state and
the individual carrier. A lot of times, if the you know,
the work comf fee schedule, maybe more and maybe less
than what the plan is paid. So generally, if the
(30:05):
carrier perceives that they would have paid less under the
fee schedule than what the health insurer paid, then they're
going to say we only want to pay according to
the fee schedule. And many times what will happen in
that instance is that the help plan will go back
to the providers and ask the providers to rebuild the
(30:30):
work comp carrier, and then the work comp carrier will
pay that amount to the provider, and then the provider
will issue a refund to the plan that you know,
sometimes you have to have a provider that's willing to
do that. Depending on how long it took to get
(30:50):
that award of compensibility. It could be easier because if
it happens fairly early on, then the help plan may
have the ability just to retract the payments from the
provider and then tell them to bill work comp and
that resolves it really easy from the help plan's perspective.
(31:11):
But a lot of times it'll be after that period
of time that they can do that, and so they're
really relying upon the help plan too. I'm sorry the
provider to simply agree to go back and rebuild a
work comp carrier and if there's an award out there,
the work comp carrier will generally pay the claims without
any any contention.
Speaker 1 (31:34):
Let's let's say that things don't go well and that
they the employer and the plaintiff stiff you, so to speak.
Do you ever have to drag somebody into federal court
or state court or so before?
Speaker 2 (31:49):
Yes, I had seen that happen. As a matter of fact,
there's one case in this really Arisa really wasn't implicated
in this all though. This was one of those insured
plans that I talked about before, where it was the
health insurer that had the right but it was down
in Florida and it involved the claimant that had been injured.
(32:14):
He actually got got run over by a back ho
while he was in the process of trying to flag
down another vehicle that was going the wrong way down
the street, and it was very severely injured and the
help the work comp carrier denied the claim originally because
(32:37):
the blood tests came back and showed that he may
have been under the influence of a drug. And this
was down in Florida, and the Florida work comp Statute
provides an absolute defense when the employer, I'm sorry the
employee claimant was intoxicated, so they denied the claim. The
(32:58):
health insurer ended up paying in the claim and paid
about one point three million in benefits on their behalf.
During the claimant filed an appeal of the denial of
the work comp claim, and during the course of that proceeding,
the health insurer did make the work comp carrier's council
(33:23):
aware that it had paid these claims and it was
entitled to be reimbursed by the work comp carrier. But
there's not really a mechanism in Florida for the carrier
to come into the work comp arena and participate there.
The work comp attorney in that instance, when working with
(33:46):
the claimant's attorney, said we're not going to we're not
going to address that issue. We're going to you know,
it's too early for us to talk to the health
insurer itself. Let's try to work out a deal. And
eventually the work claimant settled that disputed claim for a
(34:10):
little over six hundred and fifty thousand dollars and the carrier,
the health insurance carrier then went back and said, we're
entitled to be reinbirsed for the one point three million
we paid. And I believe that the carrier said, look,
(34:31):
we're not interested in this. This was a confident. You know,
this was a settlement. It was disputed. The settlement clearly
states that we didn't pay any money for medical expenses.
If you want to recover money, you need to go
back to the claimant and try to recover whatever you
can out of the money they received. Well, the insurer
(34:53):
actually then filed a lawsuit in state court under state
law principles of equitable sebrogation and unjustin Richmond, saying we
paid this because you denied it. We think that you
were the one that was primarily responsible for it, and
so under this state law, your u oe us reimbursement.
(35:16):
And the court held a hearing on the issue and
looked at the underlying reason for the denial and found
that the carrier was wrong to issue the denial in
that circumstance, but then also said that under the principles
of equitable seprogation, that health insurer was entitled to get
reimbursed from the work carrier, despite the fact that the
(35:40):
claimant had weighed all of its claims for the purposes
of the settlement, and the court awarded one point three
million to the health insurre. So, John, I think the
takeaway there, I didn't mean to interrupt. To take away there
is that the strategy of resolving the case. And you know,
(36:04):
if you're a work comp defense counsel and you enter
into a lansome settlement with the claimant that maybe most
of the time you will get away with saying the
lean doesn't apply to us. Don't worry, you know, you know,
go deal with them. We're kind of out of it,
(36:25):
and not worry about it. But that may come back
and bite you if you're not careful in certain situations.
So my recommendation is always to try to maintain that
communication with the health insured that's asserting the right of reimbursement,
(36:47):
make sure that they know what's going on, and address
it on the front end, rather than potentially, you know,
risking a lawsuit for your client on the back end
after you think the case is already.
Speaker 3 (36:59):
Some Well, John, and this kind of dovetails into what
I was going to ask you about because it's it
gets to that coming something coming back to bite you.
And I've read about the provision for double damages in
an instance where a plaintiff the employer, they refuse to
(37:21):
pay UH and they lose it. Can you talk to
that a little bit about there are cases where these
double damages apply and where they don't.
Speaker 2 (37:32):
So when you're when you're talking about double damages, and
I just want to make sure that the first thing
that comes to my mind with respect to double damages
is the Medicare statute. And so if you're dealing with
applaimant who was employed but was also eligible for Medicare
benefits for either age or you know, just you know
(37:55):
a certain type of disability, then you do defin have
to be cognizant that the either the government itself or
a lot of people receive their Medicare benefits from an
insurer under a program called Medicare advantage, and probably over
(38:18):
the last ten years, there have been significant litigation for
Medicare advantage plans asserting lean rights under Medicare itself, and
what the statue provides those Medicare advantage plans is a
right of action directly against the carrier who was responsible
(38:39):
for making the primary payment. You know. Essentially Medicare benefits
are secondary to all other benefits, is what they say.
And if a carrier demonstrates responsibility as being for being primary,
which can be done usually through a settlement with the
Medicare beneficiary. If they settle with that, then under the
(39:01):
federal statute they have demonstrated that they are primary. They
are now subject to reimburse the Medicare plant and if
they don't, then they are subject to a lawsuit where
double damages are automatically awarded. So this is true even
(39:25):
if that carrier has a release from the Medicare claimant
saying they'll satisfy all leans. It applies, you know, regardless
of whether they paid out. Policy limits to that Medicare beneficiary,
there is a a an absolute federal duty to make
that reimbursement. And so recently Congress passed the Smart Act,
(39:49):
which includes, like if a work comp carrier is paying
money for someone who is covered under Medicare, they have
to report to the government that they ventured into that settlement.
And that now includes information regarding Medicare advantage plans, where
it used to only include payments made by by regular Medicare.
(40:14):
So that so the takeaway if it's Medicare, you want
to be, you know, on high alert for a potential
double damage claims if it's not taken care of. Those
are probably relatively rare though that you have someone I've
seen it more often recently, But where someone is under
Medicare and is also has.
Speaker 3 (40:37):
That other that also is.
Speaker 2 (40:39):
Employed under ARISA, there's not really a specific claim for
double damages. So if you have an ARISSA plan that
is asserting some sort of claim under ARISSA itself, they
may be creative. They may try to argue that the
(41:01):
work comp carrier is a fiduciary of the plan because
you know it had a lean on the assets, and
try to sert some sort of fiduciary duty claim against
the carrier, and in that instance there could be damages
awarded that you know, people may say is double damages
because they're over and above what the reimbursement is. There's
(41:23):
also the ability for anybody asserting the claimant or ARISSA
to potentially recover attorneycees. So in that instance that could
be seen as double damages. But ARISA itself doesn't provide
specifically double damages with the assertion of a typical equitable
line clane. Other than that the double damages that they occur.
(41:45):
There may be specific state statutes that penalizes a work
comp carrier that doesn't pay a valid claim with double damages,
and the ARISKA plan could potentially through assignment or otherwise
argue that they're entitled to those damages.
Speaker 3 (42:01):
Okay, but John, I know we're getting close to the
end here, and I you know, our audience is largely
employers and TPAs, insurves and the attorneys that represent them.
And so I guess if there was kind of one,
you know, concept or takeaway that you would you would
(42:23):
want them to have after listening to this today, what
do they need to know when they when they come
across and Arisa lean.
Speaker 2 (42:35):
If they are really if they have any type of
lien asserted by any health plan that's paid benefits, regardless
of whether it's governed by us or not, I think
that they are better off trying to deal with that
upfront as part of the negotiations of the underlying claim.
(42:56):
You know, their duties are going to vary a lot
by the type of plan and by the state law
where the claim is pending, but that you are much
better off working with people upfront. And I think most
of the time, if you are communicating with whoever is
asserting the lean, they are going to be reasonable with you.
(43:21):
Maybe not every time when in people's definition of reasonable
can be different. But my recommendation to carriers asserting those
types of claims is that they try to deal with
it upfront rather than resolving it and hoping for the
best at the end.
Speaker 1 (43:38):
John, thank you for being our podcast today. Thank you
very much. If our audience wants to get in touch
with you, reach out to how would they do that.
Speaker 2 (43:46):
Certainly they could reach me by email. My email address
is j Aolb at KCA legal dot com, or they
could feel free to call me. My number is are
ecode five O two six, one four three seven seven six,
and I am happy to answer any questions. I know
it's a very complicated issue. A lot of times people's
(44:08):
eyes glaze over when I start talking, but you know,
I am am happy to help anyone that has questions.
Speaker 1 (44:17):
Sounds good, but thank you John so much. Thank you Shane.
Speaker 3 (44:20):
Thanks John,
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