Victimized Once by the Tortfeasor and Again by Their Own Health Insurer

Health insurance companies have had free reign when it comes to recovering medical payments paid on behalf of their insureds that have been injured by the negligence of a third party.  These companies have successfully carved a niche of unchallenged subrogation reimbursement against their insureds under the auspices of ERISA.  These companies have argued that Congress, through its enactment of ERISA in 1974, considered and endorsed subrogation in the context of health insurance.  Ironically, when Congress passed ERISA, subrogation by a health insurer was non-existent.  Although it was enacted in 1974, it was not until the 1980’s that health insurers began to seek subrogation on personal injury claims.
Recently, the United States Court of Appeals for the Third Circuit has come down with a holding that may begin to level the playing field and require health insurance companies to think twice before they proclaim their unobstructed right to reap the benefit of their insureds’ injuries.  In US Airways, Inc. v. McCutchen, 663 F.3d 671 (3rd Cir. Nov. 2011), James McCutchen was seriously injured in an automobile crash.  His health insurance benefit plan through US Airways paid $66,866 for his medical expenses.  After James recovered $110,000 from third parties, US Airways stepped in and demanded reimbursement of the entire $66,866.  James’ net recovery was less than $66,000.  The Third Circuit concluded that full reimbursement to US Airways, Inc. was inappropriate and inequitable.  The Court further found that full reimbursement would amount to a windfall for US Airways, Inc.  This judgment was appealed and the United States Supreme Court granted certiorari on June 25, 2012.
Time will only tell if our courts will help level the playing field.  In the meantime, it is our job as advocates for the seriously injured to take a stand against the second victimization of our clients by their own health insurance companies.
For more discussion on this topic see “The Revictimization of Personal Injury Victims by ERISA Subrogation Claims” by Roger M. Baron and Anthony P. Lamb. http://fightsubro.com/wp-content/uploads/2012/03/RogerBaron-Revictimization-article2.pdf .