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Supreme Court rules against health plan in injured-beneficiary case

Justices say insurer can't sue to recoup settlement funds that were already spent

In a decision handed down Wednesday, the Supreme Court ruled against a health insurance plan that sought to recover medical expense payments from a member who had won money in court to cover his injury-related costs.

In the case, Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, the Court ruled 8-1 in favor of Robert Montanile, who had been severely injured when a drunk driver struck his vehicle in 2008. His health plan paid him more than $121,000 for his initial medical care, and he signed a document agreeing to reimburse the plan for any recovery he obtained from a legal settlement. He later won a $500,000 legal settlement, all but $240,000 of which he used to pay his attorneys.

When Montanile's  attorney and the plan's board of trustees could not reach a settlement regarding reimbursement of the funds he had been paid for his medical care, the board sued him under the Employee Retirement Income Security Act (ERISA). It sought to enforce an equitable lien upon his settlement funds or his property, even though Montanile argued that by that point he had already spent most of the settlement funds. To resolve a conflict among appeals courts about the case, the Supreme Court eventually stepped in.

With the exception of a dissenting opinion from Ruth Bader Ginsburg, the justices agreed that under ERISA, the insurance company cannot sue Montanile once he has spent the settlement money he won. This case and other ones like it mean, as SCOTUSblog contributor Ronald Mann writes, "if ERISA plans want broader remedies, they will have to take their complaints to Congress. The courts are not going to help them."

But in her dissent, Ginsburg wonders what brings the Court to the "bizarre conclusion" that Montanile can escape his reimbursement obligation to the health plan by spending his settlement money quickly and on nontraceable items. In fact, she writes, the court erred in previous cases when it defined ERISA's definition of "appropriate equitable relief."

Just this week, the Court declined to hear another case with implications for insurers, rejecting a challenge to the Affordable Care Act. In addition, it is expected to rule later this term on a case--Gobeille v. Liberty Mutual--that concerns the legality of Vermont's all-payer claims database.

To learn more:
- here's the Court's opinion (.pdf)
- read the SCOTUSblog piece

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Supreme Court rejects case challenging Affordable Care Act
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