U.S. Supreme Court handed down a victory for the victim of a drunk driving accident and at the same time issued a blow to the Employee Retirement Income Security
Act. Known as ERISA, this law was passed in the 1970s as a system under
which employers can provide benefits like medical insurance and retirement
money to their employees. The question the High Court had to answer in
this case was whether, under ERISA, an employer can get reimbursements
from those who receive benefits.
Insurers and employers would only seek to get reimbursements in situations
where they pay for medical care, and then the person benefiting gets money
from another source to also pay for those bills. This typically happens
in situations where a person gets in an auto-accident, receives medical
care that a company plan pays for, then wins a settlement or verdict from
the person who caused the accident. When that happens, the company will
go after part of the settlement or verdict money to pay for the hospital bills.
What Happened in This Case
In this case, a man was seriously injured by a drunk driver and forced
to rack up over $120,000 in medical bills. Fortunately for him, he had
company-provided insurance that paid for those bills. In addition, he
had a good attorney that filed suit on his behalf against the drunk driver
and the drunk driver’s insurance. When all was said and done, the
man received a $500,000 settlement to pay for his bills, pain, and suffering.
Some time after receiving the settlement, the man spent the entirety of
it on bills, legal fees, and other things. It was at this point the insurer
who already paid for his medical bills started trying to collect from
the benefits he received, but the man had already spent it. The company
sued to get reimbursed, or at least get a judgement against the man, and
the case ended up at the Supreme Court to decide whether the company could
collect from funds that were gone.
Under the law, ERISA only allows a company to collect from funds using
a branch of the law called equity. This means that they could only ask
a court to transfer funds that existed, stop payment, or do some other
action that made it possible to possess the money. The law did not grant
any insurance company a right to collect money damages. This was confusing
to the lower courts who did not all draw a distinction, but the Supreme
The U.S. Supreme Court ruled that a company can only collect from settlement or verdict funds that
actually exist, but not if the money has already been spent.
Critics of this ruling were many, but victims of accidents and injuries
were the clear winners. Now victims will not have to look over their shoulder
for a bill collector when they have spent money won in a verdict or settlement.
Panama City Accident and Injury Law Firm
The Pittman Firm, we fight on behalf of victims of accidents or injuries. If you have been
injured in some way, whether in a car accident, on a company’s property,
or through using a harmful product,
contact us. We will help you understand your legal rights and obligations.
See related blog posts:
Court of Appeals Overturns Millions in Damages;
Top Causes of 18-Wheeler Accidents.