Medical Malpractice and Personal Injury Law Blog

Supreme Court Ruling Changes Compensation Rules for Health Plans

Posted by Briggs Bedigian | May 05, 2016 | 0 Comments

When monetary damages are awarded in personal injury cases they are not always received in full by the victim. Sometimes the victim is required to share the funds with insurance companies that helped to cover the cost of an accident or injury.

A recent Supreme Court ruling has changed the timeline for heath insurance companies aiming to recover some of the damages awarded when a plan holder wins a personal injury case. The ruling imposed a deadline for health companies to negotiate compensation before forfeiting all rights to the money.

The Montanile cause revolves around Robert Montanile who suffered serious injuries when a drunk driver ran a stop sign and hit Montanile's car. Montanile underwent lumbar spinal fusion surgery and other hospital care that totaled $121,044. The health bills were paid for by the National Elevator Industry Health Benefit Plan.

Montanile sued the drunk driver and won $500,000. After attorney fees, he was left with $236,212.

Health plans have previously been allowed to reimburse themselves from settlement awards. In the Montanile case, the health plan could not come to an agreement on an amount. Montanile's attorneys gave a deadline for the health plan to respond, and when no response was given the full settlement was awarded to Montanile.

Six months later the Board of Trustees of the National Elevator Industry Health Benefit Plan sued Montanile for the funds. Montanile argued that the money was mostly gone, and had been spent on a second lawyer and on care for himself and his daughter. The 8-1 ruling on Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan reversed the Eleventh Circuit Court's decision.

The Eleventh Circuit Court ruled that the Benefit Plan had the right to claim money from other assets owned by Montanile. The Supreme Court ruling overturned the lower court's decision and ruled that the health plan was only eligible for the money awarded as settlement funds. If those funds were no longer available, the health plan did not have access to the rest of Montanile's assets.

Justice Ginsberg was the sole dissenter in the case.

The case alters the timelines for health plans to become involved in settlement money. Some argue that the decision might ultimately result in more money paid to victims versus health plans because health plans will be encouraged to settle early and for less.

Health plans are not required to inform the victim if they will assert ownership of some of the compensation funds. This often leads to difficulties and frustrations on the part of the victim who might suddenly face a complete or almost complete loss of a settlement award to a health plan. By changing the timeline and requiring health plans to assert their position earlier, victims of accidents might be able to take more ownership and power in brokering an agreement with the health plans.

About the Author

Briggs Bedigian

H. Briggs Bedigian (“Briggs”) is a founding partner of Gilman & Bedigian, LLC.  Prior to forming Gilman & Bedigian, LLC, Briggs was a partner at Wais, Vogelstein and Bedigian, LLC, where he was the head of the firm's litigation practice.  Briggs' legal practice is focused on representing clients involved in medical malpractice and catastrophic personal injury cases. 

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