PENSION PROTECTION ACT OF 2005 IN CONFERENCE COMMITTEE

We previously reported to you on the proposed Pension Protection Act of 2005, which has the potential to eviscerate of the confusion and damage inflicted on health insurance subrogation and reimbursement actions by the Great-West Life Insurance Company v. Knudson decision of 2002. On December 15, 2005, House Republicans mustered a majority to pass H.R. 2830 (Pension Protection Act of 2005) after refusing to allow a vote on a Democratic alternative offered by Representatives Charles Rangel and George Miller. The Bill, sponsored by Representative John Boehner (R) of Ohio, includes ' 307, entitled "Recovery by Reimbursement or Subrogation with Respect to Provided Benefits". That section reads as follows:

(a) In general - Section 502(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(a)) is amended by adding, after and below paragraph (9), the following new sentence:

"Actions described under paragraph (3) include an action by a fiduciary for recovery of amounts on behalf of the plan enforcing terms of the plan that provide a right of recovery by reimbursement or subrogation with respect to benefits provided to or for a participant or beneficiary."

(b) Effective date - Amendment made by Subsection (a) shall take effect on January 1, 2006.

The report of the Committee on Ways and Means indicates that the intent of this Amendment is to nullify "recent court decisions that have undermined the ability of health plans to recover costs paid out to participants that are awarded additional damages for the same claim". The report indicates that H.R. 2830 is an attempt to clarify that health plans and employers are able to enforce their routine reimbursement provisions with greater certainty.

The Senate did not pass ' 307 in its version of the Pension Reform Bill, and a conference committee is working on final language. It is unclear when the conference committee will complete its work, but make no mistake about it - trial lawyers are working overtime and spending big dollars to see to it that ' 307 does not find its way into the final version of the Bill. Below is a "Congressional Recess Alert" I received today as a member of the Association of Trial Lawyers of America (ATLA). As you can see, trial lawyers are lobbying conferees on this bill to keep ' 307 out of the final version of the bill - and for obvious reasons. They believe the Knudson decision helps them destroy and eliminate your health insurance subrogation and reimbursement rights - and they are right.

As subrogation professionals, I believe we have a responsibility to actively lobby our elected representatives by letting them know how important it is that our reimbursement rights accurately reflect the benefit of the bargain set forth in our plan language. They should be reminded that subrogation/reimbursement is not a windfall for large, wealthy insurance companies - it is a significant tool of underwriting used to hold down insurance premiums and ensure the viability of health insurance for all Americans. The underlying and often ignored philosophy behind the doctrine of subrogation is that if the plan does not recoup benefits it pays out where a third party is responsible, the injured party receives a double recovery by recovering once from the plan, and again from the tortfeasor. Instead of passing the cost of the injuries or damage on to the negligent party responsible for the loss, a world without subrogation/reimbursement leaves that cost straddling the shoulders of small and large employers throughout the country - increasing the cost of business, and ultimately the cost of their products.

Contrary to the assertion by the trial lawyers from ATLA, please look at the list of Congressional conferees for this Bill below, and let yours know that the House's ' 307 is vital not only to pension reform, but also to the vitality and longevity of the overall health care system in our country.

We will continue to keep you posted on the history and progress of this significant bill, either through NASP communications such as this one or through our firm electronic newsletter.

Yesterday, Congress adjourned for a two week recess. While they are home, please contact them about two important issues.

Thank you -Ken Suggs, ATLA President

Kathleen Fleming's case is one you may know too well. During a hospital stay, her medical team failed to properly respond to her choking. She suffered severe brain damage, and now requires around-the-clock attendance. Her future medical care will likely cost between 12 and 13 million dollars. While Kathleen was able to recover for medical negligence, she only received 2 million dollars to cover her future medical care costs.

The House of Representatives included a provision in its version of the Pension Reform bill that would allow ERISA insurers to take all or part of a victim's compensation. Insurers could sue these victims in order to be reimbursed for the costs of care. Because the Senate did not pass this provision in its version of the Pension Reform bill, a conference committee is working on final language. It is unclear when the conference committee will complete its work, so it is imperative that you contact the conferees and your Member of Congress right away.

Take Action - Send a Letter

If your Member of Congress is on the following list, they are a conferee on this bill. Call and tell them this unfair provision should not be included in the Conference Report. It has nothing to do with pension reform:

Send a Message to Congress.

Sen. Charles Grassley (R-IA): (202) 224-3744
Sen. Max Baucus (D-MT): (202) 224-2651
Sen. Judd Gregg (R-VT): (202) 224-3324
Sen. Kent Conrad (D-ND): (202) 224-2043
Sen. Trent Lott (R-MS): (202) 224-6253
Sen. Orrin Hatch (R-Utah): (202) 224-5251
Sen. Olympia Snowe (R-ME): (202) 224-5344
Sen. Rick Santorum (R-PA): (202) 224-6324
Sen. Michael Enzi (R-WY): (202) 224-3424
Sen. Mike DeWine (R-OH): (202) 224-2315
Sen. Johnny Isakson (R-GA): (202) 224-3643
Sen. John Rockefeller (D-WV): (202) 224-6472
Sen. Jeff Bingaman (D-NM): (202) 224-5521
Sen. Edward Kennedy (D-MA): (202) 224-4543
Sen. Tom Harkin (D-IA): (202) 224-3254
Sen. Barbara Mikulski (D-MD): (202) 224-4654
Rep. Buck McKeon (R-CA 25): (202) 225-1956
Rep. Sam Johnson (R-TX 3): (202) 225-4201
Rep. John Kline (R-MN 2): (202) 225-2271
Rep. Patrick Tiberi (R-OH 12): (202) 225-5355
Rep. George Miller (D-CA 7): (202) 225-2095
Rep. Donald Payne (D-NJ 10): (202) 225-3436
Rep. Robert Andrews (D-NJ 1): (202) 225-6501