Plan Language Inquiry in the Longaberger Case

Question: I have read with interest, your article on the Garretson Resolution Group website regarding the Longaberger case and its meaning.

I do have a question - suppose in the liability case I did not seek medical expense recovery and settled the case for pain and suffering only. Would the plan still have a claim for reimbursement? I see the wording of the sample given in the article refers to "any recovery" but have any courts weighed in this aspect?

Thanks for your time.

Answer: That is a very good question. Courts have weighed in on this matter and generally they will defer to the express language of the policy and the fact that ultimate discretion will lie with the administrator in interpreting plan language. In using the words "any recovery" it is a pretty safe bet that this includes recoveries which do not specifically provide for past medicals. Many plans do not stop there and will actually have additional provisions that state that regardless of how a settlement is allocated they will still have a right of first recovery and the participant must not do anything to prejudice the plan's rights. Thus the allocation technique is most effective when dealing with plans that limit their rights to recoveries for medical expenses. This is less common but something that we still see. This discussion really emphasizes the importance of carefully evaluating the plan language.

While this may seem to be a bit unjust I believe that this type of issue will be fought out in the coming years. Particularly in the scope of the meaning of "appropriate equitable relief" (as designated by ERISA) and states which limit or prohibit the recovery for medical expenses.

Thanks for the question and please let me know if you have any follow ups.