For many years medical benefit plans have been very aggressive in connection with personal injury claims. The level of aggression and the refusal to negotiate have left many plaintiffs' attorneys looking for ways to get past burdensome plan terms. Sometimes these efforts are successful, and sometimes they are not. An unsuccessful effort was documented in a case recently before the 8th Circuit. (Vercellino v. Optum Insight, Inc., United Healthcare Services Inc. and Ameritas Holding Company Health Plan).
Facts of the Case:
- Nathan Vercellino was riding in an ATV with his friend Connor Kenney. Both were minors. Connor drove a bit negligently, causing a severe accident.
- Nathan received critical care totaling over $600,000 in medical expenses which were covered by the plan Nathan's mother had through her work.
- No lawsuit was filed by Nathan's mother, and the plan never exercised its right of subrogation against Connor or his parents.
- When Nathan came of age, he filed a lawsuit against Connor and his parents seeking general damages.
- Then, he also filed a separate lawsuit seeking a declaratory judgment ruling that the health plan had no right of reimbursement from any of the proceeds recovered in litigation against the Kenneys.
- The plan removed the matter to federal court.
- It then counterclaimed against Nathan with its own declaratory judgment for relief contending that it would be entitled to recover up to the full amount of the medical expenses that it paid in the event of a recovery received by Nathan.
- The federal court ruled for the plan.
- Nathan Vercellino filed an appeal, and he argued in part that the plan waived its right to seek reimbursement from his recovery because it failed to exercise its subrogation rights. It never sought to recover the medical expenses against the Kenneys and now the statute of limitations barred those claims.
- He cited a case out of the 8th Circuit known as Janssen v. Minneapolis Auto Dealers Benefit Fund, for the argument that the statute of limitations that bars a claim for medical expenses also bars a claim by the insurer to seek reimbursement.
- The Eighth Circuit however said that the reliance on this case was misplaced because the Janssen case only pertained to a subrogation right to specific medical expenses and did not include an independent right to reimbursement.
The plan had a specific right to reimbursement and that made the current situation different. Thus, the statute of limitations for medical expenses and any subrogation right, even though it had expired, had no bearing on the plan's right to reimbursement. So the plan here would be entitled to take $600,000 out of the recovery.
The plan clearly had the opportunity here to take on the challenge of recovering the $600,000 in medical expenses through a subrogation claim against the Kenneys. However, apparently, the plan did not want to go to the trouble of filing a lawsuit on its own. Perhaps it did not want to have to pay a lawyer to do that and end up netting less than the full amount. Instead, the plan preferred to wait to see what Nathan did after he came of age, and then it would sweep in on his personal injury lawyer's work to snatch away the recovery. After all, why do all that work if you can simply sit back and take the recovery obtained by someone else? Sounds like the typical hyena strategy where one or more hyenas will watch a hunt by a leopard, and if successful snatch away the meal obtained by the leopard's hunting skills. And it is all legal because of the terms of the plan which the 8th Circuit (and most other circuits) will enforce as written.
If your client is fighting with their medical benefit plan in connection with their personal injury claim, contact an experienced ERISA attorney at The Martin Law Group today. We are very familiar with these types of strategies and games played by insurance companies and can assist you in obtaining the maximum recovery for your client.