ERISA Plan Named on the Settlement Check?



Can a carrier demand that an ERISA plan be named on the settlement check – even if that plan has not provided any notice of a lien?

Question: I have a case pending in Nevada, with an adverse carrier insisting that it must name the ERISA subrogation claim holder on the settlement check. The carrier has not given notice to the Plaintiff, the Defendant, or his carrier. Following our ethical rule 1.16, I have placed the ERISA carrier on notice of the potential claim and will get the matter resolved. Does the insurance company have standing to demand it place the ERISA plan's name on the settlement check when the claim is equitable/contractual in nature between it and my client? I would like to avoid the plan being named as a payee on the settlement check.


Answer: Simply put, I don’t believe there is any standing, under ERISA or Nevada insurance law, for an insurer to make this demand. Here’s why…

An ERISA plan’s federally based right to reimbursement is only against its plan member and therefore it has no rights against a defendant. ERISA only provides for “appropriate equitable relief” through the enforcement of a contractually based agreement and an action against a plan member, not a defendant. No case has held that an ERISA plan can bring an ERISA claim against a defendant who has settled with a plan beneficiary. That is because an ERISA claim can be brought only against a specifically identifiable fund that is within the “possession and control” of the plan beneficiary or its representative. See Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot & Wainsbrough, 354 F.3d 348, 356 (5th Cir.2003); Admin. Comm. of Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan v. Varco, 338 F.3d 680, 687 (7th Cir.2003); Calhoon v. Trans World Airlines, Inc., 400 F.3d 593, 598 (8th Cir.2005). Furthermore, a defendant does not have a duty to an ERISA plan even when the defendant is on notice of a beneficiary's obligation to the ERISA plan. T.A. Loving Co. v. Denton, 723 F.Supp.2d 837 (EDNC,2010). Trustees of Central States, SE and SW Areas Health and Welfare Fund v. State Farm, 17 F.3d 1081 (7th Cir. 1994).

It also worth noting that unlike some states (AL, AR, CO, DE, DC, FL, GA, HI, IL, IN, IA, KY, LA, MD, MA, MN, MS, NE, NH, NM, ND, OH, OK, RI, SC, TX, UT, VT, WA, WV, WY), we are unaware of any Nevada authority which would allow a subrogating health plan to maintain its claim against a defendant who has settled with the injured insured. Thus it naturally follows that the argument exists that once the insured settles the underlying claim the insurer’s right to subrogate (or step into the insured’s shoes and pursue the tortfeasor) is extinguished, even if notice had been provided to the defendant.

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