Healthcare benefits provided through your employer come in several flavors. Your employer can offer healthcare benefits by buying an insurance policy through an insurance company. Your employer could also provide benefits by putting its money and assets into an account, which is then used to pay for doctor visits and medical treatment. With this type of healthcare benefits, your employer usually hires another company – Aetna, Blue Cross Blue Shield, United Healthcare, Humana, etc. – to administer claims. For example, if you work for Bob’s Widget Company, and it hires Aetna to administer claims, then Aetna would be responsible for dealing with your doctors and paying your doctor bills, not Bob’s Widget Company. These are called “self-funded” healthcare benefits plans.
Most of the self-funded plans are governed by the Employee Retirement Income Security Act, also known as ERISA, which is a federal law. More often than not, the plan includes language that says that if the plan pays for your medical bills, you have to pay the plan back out of money you get from the person that hurt you. For various reasons, ERISA displaces Georgia law about when health insurance benefits providers can seek reimbursement of medical expenses. Unfortunately, ERISA is complex, difficult to interpret, and convoluted. Even federal courts, at times, have problems figuring out exactly what the U.S. Congress meant ERISA to do and how it was intended to work. Because of the complexity of ERISA, a number of lawsuits involving reimbursement claims have gone to the United States Supreme Court for direction about how and when health insurance benefits providers are entitled to get money back.
Over the years, the U.S. Supreme Court has developed some basic rules governing reimbursement claims. One is that, for the most part, the master plan document controls reimbursement claims. If the master plan says that the plan gets its money back even if that means that the entire amount of the settlement goes to the plan, then that is what happens. To me, that is extreme and unfair, but it is what it is.
Another rule is that if the health insurance benefits provider sues a plan beneficiary (the person whose bills were paid), only money that can be “clearly traced to particular funds or property” can be taken by the benefit provider. So, for example, if you use settlement funds to buy a car, your health insurance benefits provider can follow the settlement funds to the car and take the car. If, however, you use the settlement funds to pay rent on an apartment, or to pay your bill for cable TV service, then the benefits provider can follow the money, but cannot take your apartment (it is not yours) and cannot take your cable TV service. If, however, you combine settlement money with money you already have, the benefits provider can take what is in your account.
An example might help to explain the right of reimbursement. Think of money as water and think of a savings or checking account as a bucket. If you already have a half full of bucket water, then fill the bucket the rest of the way full, you cannot separate out which water molecule was added to the bucket and which was not. If you then pour half of the water into a fish tank, a healthcare benefits provider can take the half of the water still in the bucket as reimbursement. In other words, if you put settlement money in an account with money you already had, the benefits provider can take whatever is in the account to satisfy its reimbursement claim.
Now, assume you have a blue bucket that is half full of water (money you already have in a bank account), then you get a red bucket and fill it half full of water (putting settlement money in a separate bank account). If you trade water from the red bucket to get an ear of corn, then the benefits provider can take the corn as it is a tangible asset you purchased with the water from the red bucket. Now, let us assume that instead of trading for corn, you trade water from the red bucket for a ticket to see the local Monster Truck Rally taking place on the upcoming Sunday, Sunday, Sunday! You then go watch Gravedigger thoroughly demolish several hundred Ford Pintos. When Monday comes around the benefits provider cannot take the Monster Truck Rally (you do not own it) and cannot take the ticket (you already used it) and cannot take the water you have in the blue bucket.
Of course, the law is constantly changing, so by the time you read this, the law might be something different. As they say, “You get what you pay for.” Since you paid nothing for this article, you get no legal advice, you are not being represented by me or Neuberger Law, LLC, and you have no right to assume that anything written above is correct or applicable to you and your specific situation. This stuff is complicated, so nothing written above applies to your case. You probably shouldn’t try to handle a healthcare reimbursement claim on your own. Find an attorney and make sure you tell him or her all of the facts of your situation.