May 2014 Subrogation Newsletter
Health insurers and health insurance professionals can close their eyes and hope that the so-called Patient Protection and Affordable Care Act (ACA) becomes a memory in their rear-view mirror, but the truth is that for now, it is the law, and it may be here to stay. Less well-known among the various political and economic issues affected by Obamacare, however, is its effect on subrogation and health insurance reimbursement under the Employee Retirement and Income Security Act (ERISA). One undeniable effect of Obamacare is that a much larger percentage of working Americans will no longer be covered by employer-sponsored group Plans governed by the ERISA, the federal law that sets the standards for and governs employee health benefit Plans. This means that an increasing number of Plans will no longer be protected by the subrogation and reimbursement security afforded through the ERISA preemption.
Workers’ compensation subrogation in Ohio has gone through major changes since it was ruled unconstitutional in 2001. Subrogation is currently a statutory right of carriers and self-insured employers, but it has been a bumpy road. An Ohio Court of Appeals recently held that § 2744.05 immunizes any political subdivision employee unless the employee’s actions are outside the scope of employment, malicious, in bad faith, or wanton and reckless. The Court also stated that workers’ comp subrogation rights under § 4123.931 apply to amounts the injured employee would be entitled to recover from a political subdivision and grants exception to immunity only when recovery is sought from a political subdivision, not when recovery is sought from a political subdivision employee. That the legislature would authorize a third-party action against a political subdivision, but not one of its employees acting in the course and scope of employment, defies centuries of common law.
In one of last year’s most questionable court decisions, a sharply-divided Illinois Court of Appeals has held that the Common Fund Doctrine applies to Med Pay set-offs. The Scheppler v. Pyle, 2013 IL App. (3d) 110380-U (Ill. App. 2013) decision is yet another example of judges bending over backwards to assist trial lawyers and it makes no sense.
Personal Injury Protection (PIP) coverage is mandatory in Pennsylvania. When a Pennsylvania PIP carrier makes medical and/or lost wage benefit payments for an accident that was work-related, the issue arises as to whether the PIP carrier can seek reimbursement from the workers’ compensation carrier. The Pennsylvania Commonwealth Court recently decided a case which made it quite clear that with regard to the rights of the PIP carrier to seek reimbursement from a workers’ compensation claim, § 319 is going to be taken literally. The decision underscores the fact that, in Pennsylvania, workers’ compensation is primary over PIP when an accident occurs during the course and scope of employment and the necessity of acting promptly on a PIP carrier’s right to seek reimbursement from a workers’ compensation claim when an accident is deemed to be work-related.