Along with a deep understanding of personal injury law, a personal injury lawyer should also be acquainted with the Employee Retirement Income and Security Act (ERISA). This federal statute, which governs employee benefit plans, can significantly impact the outcome of personal injury settlements. It’s imperative for attorneys to understand not only some key provisions of ERISA but also its limitations. This guide provides an exploration of the ERISA lien statute of limitations, offering insights and practical recommendations for attorneys handling personal injury cases.
What is ERISA Subrogation?
ERISA, or the Employee Retirement Income and Security Act, is a federal statute that regulates certain employee benefit plans, including health insurance plans. ERISA subrogation or ERISA lien refers to the ERISA health plan’s right to recover proceeds paid out related to a plan participant’s third-party injury.
It is now commonplace that if a health insurance plan pays out benefits related to a personal injury, it will demand to be paid back if the injured person recovers proceeds in a personal injury action. This is often referred to as “subrogation,” “reimbursement,” or a “health insurance lien.” In any case, it relates to the requirement to reimburse the insurer after proceeds are recovered from the third party.
The extent of the health plan’s recovery is outlined in the insurance policy and is usually constrained by state laws. However, self-funded ERISA plans can escape state laws that would constrain the subrogation lien.
ERISA Plan Document Must Include the Subrogation Right
Under ERISA, employee benefit plans must be maintained pursuant to a “written instrument.” ERISA 402, 29 USC 1102(a)(1). This written instrument is commonly referred to as the “plan document.”
ERISA does not provide a right of subrogation – this must be written into the plan document.
This plan document is essentially a contract between the ERISA plan and the plan participant. The plan document sets forth all the terms of the relationship, including the ERISA plan’s right to subrogate or seek reimbursement from the participant’s personal injury settlement.
To obtain the correct and most recent plan document, you should issue a 29 USC 1024(b)(4) request directly to the plan administrator.
ERISA Plan Documents are Enforced Pursuant to ERISA 502(a)(3), 29 USC 1132(a)(3)
To enforce the terms of the plan document, including the right to recover from the personal injury settlement, an ERISA plan must file suit in federal court pursuant to ERISA 502(a)(3), 29 USC 1132(a)(3):
(a) Persons empowered to bring a civil action
A civil action may be brought—
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;
ERISA 502(a)(3), 29 USC 1132(a)(3)
ERISA Does Not Contain a Statute of Limitations for Lien Claims
The Employee Retirement Income and Security Act (ERISA) is a broad statute that touches on all aspects of employee benefit regulation. It contains statutes of limitations for certain types of claims:
- ERISA Section 413 provides a statute of limitations for claims involving a breach of fiduciary duty. ERISA 413, 29 USC 1113.
- ERISA Section 4301 provides a statute of limitations for multiemployer plans relating to disputes with employers or unions. ERISA 4301, 29 USC 1451.
But ERISA does not contain a statute of limitations for claims brought under ERISA 502(a), 29 USC 1132(a), including ERISA lien subrogation claims.
Similarly, ERISA does not contain a statute of limitations for denial of benefit claims brought by plan participants against the plan.
ERISA Lien Statute of Limitations
When determining what statute of limitations to apply for an ERISA lien claim, a federal court will either use a statute of limitations outlined in the plan document or look to state law to supply the statute of limitations.
Plan Document Might Contain the Statute of Limitations
The specific terms and conditions of the ERISA-governed plan document may outline the time frame within which the plan must assert its lien rights. In general, courts will apply the contractual limitations period in the plan document if it is deemed reasonable. Doe v. Blue Cross & Blue Shield United, 112 F.3d 869, 874 (7th Cir. 1997) (the statute of limitations included in the plan document will apply if it is “reasonable.”); Cole v. Aetna Life & Cas., No. 3:97CV2272 (DJS), 2002 US Dist. LEXIS 19656, at *16-18 (D. Conn. Mar. 28, 2002); Koert v. GE Grp. Life Assurance Co., 416 F. Supp. 2d 319, 321-22 (ED Pa. 2005) (citing 42 Pa. Cons. Stat. Ann. § 5501(a) (2005)) (contractual limits on statutes of limitations will be valid if they are not “manifestly unreasonable.”)
Most Analogous State Statute of Limitations
If the plan document does not outline a limitations period, when determining the statute of limitations for an ERISA lien, federal courts will “borrow the most analogous state statute of limitations.” Admin. Comm. of Wal-Mart Stores, Inc. v. Soles ex rel. estate of Hollander, 336 F.3d 780, 781 (8th Cir. 2003).
Typically, this will be the state’s statute of limitations for breach of contract claims. Id.; Blue Cross & Blue Shield of Alabama v. Sanders, 138 F.3d 1347 (11th Cir. 1998); Wang Laboratories, Inc. v. Kagan, 992 F.2d 1126 (9th Cir. 2002); Manginaro v. Welfare Fund of Local 771, IATSE, 21 F. Supp. 2d 284, 300 (S.D.N.Y. 1998); Lincoln Gen. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 425 F. Supp. 2d 738, 743 (ED Va. 2006).
Not Always the Same SOL as Breach of Contract
While the court must apply the most analogous state statute of limitations, it may determine that the most analogous limitations period differs from the one for breach of contract.
For example, in Blood Sys. v. Roesler, the court determined that Arizona’s one-year statute of limitations applicable to employment contracts, as opposed to the six-year catch-all breach of contract statute, should apply to bar the ERISA plan’s subrogation claim. 972 F. Supp. 2d 1150, 1156 (D. Ariz. 2013). Contrast this with a later decision where a court applied Arizona’s six-year breach of contract statute of limitations to an ERISA plan’s subrogation claim. JDA Software, Inc. v. Berumen, 2015 US Dist. LEXIS 192888, at *10 (D. Ariz. Jan. 8, 2015).
Similarly, a federal court applied Florida’s three-month probate limitations period to bar an ERISA plan’s subrogation lien claim against a deceased participant’s estate. Admin. Comm. of the Wal-Mart Stores, Inc. Assocs’ Health & Welfare Plan v. Mooradian, 2006 US Dist. LEXIS 10665, at *11-12 (MD Fla. Mar. 1, 2006).
Recap and Key Takeaways
In conclusion, ERISA does not contain a statute of limitations for lien claims. If the plan document contains a limitations period, the court will apply it if deemed reasonable. If not, the court will use the most analogous state statute of limitations, usually the limitations period for a breach of contract claim. However, courts may apply other statutes of limitations if they consider it more analogous to the subrogation claim.
Tips for Personal Injury Lawyers
- Issue a 29 USC 1024(b)(4) request to the plan administrator and obtain a copy of the plan document.
- Look to see if the plan document contains a limitations period. If it does, would the federal circuit in which you practice consider this limitations period reasonable?
- If there is no limitations period in the plan document, look to federal cases in your circuit to determine which analogous statutes of limitations a federal court will apply. Usually, this will be the state statute of limitations for breach of contract.
- In your research, you may not find an ERISA lien case in your jurisdiction that hinges on the statute of limitations. If you cannot find a case on point, search for ERISA denial of benefits cases. ERISA plan participants must bring denial of benefit claims under ERISA 502, and the statute of limitations will mirror the ERISA subrogation claim under ERISA 502.
