In my time as a subrogation attorney, I have felt the prevailing sentiment that negotiating ERISA claims and ERISA liens in general is a source of great frustration and dismay for personal injury counsel. One reason the ERISA statute is in place is to protect self-insured, self-funded insurance plans, as well as ultimately keeping premiums low by allowing the Plan to recover where legislation has deemed it fair. Self funded ERISA plan subrogation negotiation is an essential part of this process. But understandably, many plaintiffs do not have a firm understanding and appreciation of what the ERISA classification means and why they have a legal obligation to repay portions of their settlement to the insurance Plan they have already paid premiums to. During the course of ERISA negotiations this can lead to discord between plaintiff counsel and plaintiff, and ultimately subrogation counsel and plaintiff counsel.
In the interest of smoothing the waters between subrogation and plaintiff counsel, I’ve put together a few pieces of friendly advice in how to navigate the occasionally rocky world of ERISA lien negotiation:
1) Be Prudent Early to Save Time Late
Understand from the moment an injured client first enters your office that if an insurance or benefit plan has paid bills, there is a chance that their contract includes rights for this payee to reimbursement. Therefore, it can save a lot of headaches down the road if personal injury attorneys attempt to discover outstanding lien amounts proactively. Most any insurance plan or employee benefit plan will have contacts to easily be reached to explain whether they are asserting a right to reimbursement from the beginning.
2) Communication Is Important
Initial contact with the Plan (or their subrogation counsel such as myself) will often lead to the most important part of this process—dialogue! Almost daily I will have conversations with Plaintiff counsel that answers all their questions in a succinct and efficient manner. Is this ERISA Plan self-funded and self-insured? What amount is being asserted? Is the Plan willing to negotiate or take a reduction? Can you share the contract language for review? This is a good time to discuss the law in more detail.
3) Pass It On, Advance the ERISA Negotiation
These types of conversations can help plaintiff attorney to not only get the answers needed to properly advocate and represent their client, but also provide easier explanation so that they can in turn explain to a client their legal obligations. This prevents client being blindsided at settlement time. It is important to remember that doctrines such as “common fund” allow attorney fees and costs to be accounted for. In many jurisdictions, plaintiff attorney does not lose personal compensation. Unless of course those liens that go unaccounted for come to light down the road long after settlement has been disbursed.
4) Be Straightforward
Finally, as a plea to the common ground of being an attorney, remember subrogation counsel have their own clients to please and answer to in the same fashion as any personal injury attorney. Advocating in a straightforward manner has always been my personal goal, and is in my opinion the only way to do business. As in any area of law, this only stands to make future dealings more productive.