When you’re injured by someone else’s wrongful or negligent actions, you will likely be stuck with medical bills, most of which will be covered by your health insurance. When you receive a settlement or judgment, however, a certain amount may be due back to your insurer under the Employee Retirement Income Security Act of 1974 (ERISA). Your personal injury attorney must help you resolve these healthcare-related liens before you can receive your money, and it isn’t always easy.

ERISA explained

ERISA was conceived and structured to provide employees of large companies with access to adequate and affordable health care. Today, many self-funded insurers use it to collect money paid on behalf of sick or injured employees. If you are hurt in a car accident, and an ERISA health plan covers your medical care, then you may have to refund the amount paid for your expenses when you recover damages from the at-fault party.

Self-funded vs. insured ERISA plans

With a self-funded ERISA plan, your employer pays to receive coverage from large insurance companies like Cigna, Blue Cross Blue Shield, or United Healthcare. With these plans, which are not typically governed by state laws, your company’s payroll department collects employee premiums and adds them to a pool that covers any employee medical expenses.

Insured ERISA plans, which are subject to New York state law, are handled differently. Your employer collects the premiums and provides them to the insurance company, which pays healthcare providers directly.

State vs. federal law regarding ERISA liens

Like most states, New York observes common fund and unjust enrichment doctrines. If you hire a New York personal injury attorney who wins a substantial award or settlement that your health plan will share in, then state law says that your insurer should cover part of the attorney’s fee. Otherwise, it is unjust enrichment. For this reason, insured ERISA plans can be obligated to cover a certain amount of legal costs.

Federal courts, however, have taken the position that self-funded ERISA plans are not similarly affected by state law. Only a minority of company health plans are structured this way. The ones that are self-funded tend to be used by larger non-government entities, and can potentially result in you receiving a lot less of your personal injury money than you hoped.

Speak to your personal injury attorney about ERISA liens if you are concerned about how much you may have to repay your insurance company after an accident. Your attorney will explain the situation and work hard to minimize the effect of ERISA liens on the case outcome so that you can keep as much of your award or settlement as possible.

Jayson Lutzky is a Bronx, New York personal injury attorney. He handles motor vehicle accident cases and can be reached at 718-514-6619. He has over 35 years of legal experience and offers free in-person consultations. Visit https://mynewyorkcitylawyer.com/ to learn more.