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Has Your Insurance Company Denied
Your Disability Claim?

Whether an insurance company, employer, union or other ERISA governed
plan has denied your insurance claim, we can help.


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Gavel and Stethoscope on white background.On January 20, 2016, the Supreme Court released Montanile v. Board of Trustees of the National Elevator Industry Health Care Benefit Plan. The Court held that when an ERISA-plan participant wholly dissipates a third-party settlement on non-traceable items, the plan fiduciary may not bring suit under §502(a) (3) and recover a judgment in law against the participant.  In other words, once the plan participant spends the funds on non-traceable items, food, medicine, etc., the health plan is out-of-luck: the health plan or health insurer may not sue the participant to recover the costs of medical expenses paid for is benefit.

BACKGROUND: The National Elevator Industry Health Benefit Plan (“Health Plan) had paid medical costs for Robert Montanile after he was injured by a drunk driver. His medical care had cost the Health Plan about $122,000. Montanile later sued the drunk driver and recovered a $500,000. After paying legal fees and costs advanced, the attorneys held about $240,000 in their attorney’s client’s trust account.

The Health Plan had a reimbursement provision providing, “Amounts that have been recovered by a [participant] from another party are assets of the Plan . . .and are not distributable to any person or entity without the Plan’s written release of its subrogation interest.”

The Health Plan directed its reimbursement claim to Montanile’s attorneys. After negotiations broke down, Montanile’s attorneys informed the Health Plan that they  would distribute the remaining settlement funds to Montanile unless the Health Plan objected within 14 days. The Health Plan did not respond.

The attorneys distributed the funds to Montanile. Montanile spent them. Later the Health Plan filed suit against Montanile under ERISA seeking repayment of about $122,000. The Health Plan won in the District Court and Eleventh Circuit. The Supreme Court reversed.

ISSUE: When an ERISA-plan participant wholly dissipates a third-party settlement on non-traceable items, the plan fiduciary may not bring suit under §502(a)(3) to attach the participant’s separate assets? In other words, may an ERISA plan sue an individual and recover a judgment after the funds have been spent and are not traceable, i.e., spent on food, shelter, clothing etc.

SUPREME COURT HELD (8-1 ruling): NO. If an Employee Retirement Income Security Act plan participant spends a third-party settlement on non-traceable items, the plan fiduciary may not secure a monetary judgment against the participant.

Justice Ginsburg dissented. She would have found for the Health Plan, based on her belief that Section 502(a)(3) of ERISA permits damages. Legal relief or damages or money, is a remedy that the Supreme Court has sought to disallow at all costs.


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