Dave Place, J.D.Vice President, Synergy Settlement ServicesDirector Synergy Lien Resolution Services

Insider Tactics - Reduce or Eliminate ERISA Liens

Presented by:

Is it ERISA?• ERISA governs employer-employee plans except

where the employer is a government organization or a church organization.

• If the employer is the federal government, FEHBA applies.

• If the employer is the state government, State law applies.

• If the employer is a church, State law applies.• ERISA does not govern individual plans.

• Medicare, Medicaid, or state law applies to individual plans.

The Real Question – Funding Status?

• Self-Funded ERISA pre-empts state law• Funded by contributions from employer

and employee

• Fully insured ERISA subject to state law• Funded by purchased insurance

coverage

How to Determine Funding Status• Plan Language

• The mechanism established in the Summary Plan Description (SPD ) is the determining factor for establishing if the particular plan is self-funded or not.

• The Form 5500• This Internal Revenue Service form must state how each element of a

employer welfare-benefit plan is funded.

• Ask • The plan administrator or recovery agent will be able to tell you THEIR

opinion.

• Short Cuts• If the plan is a named employer group, or titled an ASO, then likely a self-

funded plan.• If plan is a named insurance carrier or titled a HMO, POS or PPO, then likely

a fully insured plan.

IRS Form 5500

IRS Form 5500 9a & 9b

Get What You Are Owed!• 29 U.S.C §1024(b)(4) provides list of what the ERISA Plan

Administrator must provide upon request.• Copy of the latest updated Summary Plan Description (SPD)• The latest annual report• Any terminal report• The bargaining agreement• The trust agreement, contract, or other instruments under which

the plan is established or operated.• Administrative Services Agreement was subject to the ERISA

disclosure requirements as it is a document “that restrict[s] or govern[s] a plan's operation.” Shaver v. Operating Eng'rs Local 428 Pension Trust Fund, 332 F.3d 1198, 1202 (9th Cir. 2003), Hughes Salaried Retirees Action Comm. v. Administrator of the Hughes Non-Bargaining Retirement Plan, 72 F.3d 686, 690 (9th Cir. 1995); Grant v. Eaton, S.D. Miss, Civil Action No. 3:10CV164TSL-FKB; Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1077 (5th Cir. 1990) Heffner v. Blue Cross and Blue Shield of Alabama, Inc., 443 F.3d 1330, 1343 (11th Cir. 2006).

Ask the Correct Party29 U.S.C §1024(b)(4) is a requirement placed upon the “plan administrator”.

Named on administrative page in SPD. If not named then default is plan sponsor who will be employer or possibly a union.

The Third Party Claims Administrator (TPA) is NOT the “plan administrator”.

The recovery vendor or agent is NOT the “plan administrator”.

Rawlings, Healthcare Recoveries, Ingenix, ACS, etc. will NEVER be the “plan administrator”.

Don’t Take Yes for an Answer!• Often the plan administrator is unsophisticated and relies on

their TPA or recovery vendors to handle these matters. • The TPA or recovery vendor may provide some of the required

documents, but they almost never provide all that is required by 29 U.S.C §1024(b)(4).

• Documents supplied by bill collectors are entirely self-serving, and

there is no penalty for providing misleading or inaccurate information to attorneys.• Accept documents provided, most often the SPD and claims

summary.• The demand for documents itself is burdensome to the plan

administrator, their TPA and recovery vendors. Do not let them off the hook.

• They have thirty (30) days to comply or face penalties.

Track Penalties• 29 U.S.C. § 1132(c)(1)(b)

• Establish $100.00 per day penalty for failure to comply

• 29 CFR § 2575.502c-1• Allows for this penalty to be increased to $110.00 per day

• Leister v. Dovetail, Inc., No. 05-2115, (C. Dis. Oct. 22, 2009) – Penalty $377,600 • Huss v. IBM Medical & Dental Plan, No. 07 C 7028, (N.D Dis.Ill. Nov. 4, 2009)–Penalty

$11,440.00 • Law v. Ernst & Young, 956 F.2d 364, 375 (1st Cir. 1992)(affirming penalty of $100 per day)• Gorini, 94 Fed. Appx. 913 (3rd Cir. 2004)(affirming an award totaling $160,780)• Kollman v. Hewitt Assoc., 2005 WL 2746659 (E.D. Pa. 2005)($100 per day)• Freitag v. Pan Am. World Airways, Inc., 702 F.Supp. 128, 132 (E.D. Vir. 1988)($100 per day)• Tait v. Barbknecht & Tait Profit Sharing Plan, 997 F.Supp. 763 (N.D. Tex. 1998)($100 per day)• Gatlin v. Nat. Healthcare Corp., 16 Fed. Appx. 283 (6th Cir. 2001)($100 per day)• Kreuger Intl v. Blank, 225 F.3d 806, 811 (7th Cir. 2000)(affirming $100 per day)• Brown v. Aventis Pharma., 342 F.3d 822, 825-826 (8th Cir. 2003)(affirming maximum penalty)• Koegan v. Towers, Perrin, Forster & Crosby, 2003 WL 21058167 (D. Minn. 2003)($100 per day)• Conger v. Univ. Marketing, Inc., 2000 WL 1818521 (D. Or. 2000)(($100 per day).

Cigna v. Amara, 131 S. Ct. 1866 (U.S. 2011)SPD v. MPD

• Check for differences between the Summary Plan Description “SPD” and the Master Plan Document “MPD”

• We have made clear that the statements in a summary plan descrip tion “communicat[e] with beneficiaries about the plan, but . . . do not themselves constitute the terms of the plan.”

U.S. Airways v. McCutchen, 133 S. Ct 1537 (2013)(footnote 1) citing CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011) at 15. • Under the rationale of this case it clear that before terms of the

plan can be determined both documents must be compared• Use this case to bolster your 29 U.S.C. 1024(b)(4) requests and as

a reason why the plan administer has not complied unless they produce both.– Progeny

• Wilson v. Wal Green, 2013 WL 1799599 (M.D. Fla.), • Mull v. MPI, LA CV 12-06693-VBF (Sept. 30, 2014)

Is it a Plan?29 U.S.C. § 1102(b)• Every employee benefit plan shall—• (1) provide a procedure for establishing and carrying out a funding

policy and method consistent with the objectives of the plan and the requirements of this subchapter,

• (2) describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan (including any procedure described in section 1105 (c)(1) of this title),

• (3) provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan, and

• (4) specify the basis on which payments are made to and from the plan.

Attack the Language Does the language reach to first party coverage? (i.e. UIM, UM)

Often language is silent or vague. Does the language overcome “made whole”?

• The Plan language need only confer an unqualified right to recover.

1st, 3rd, 4th, 5th , and 8th

• Specific Plan language is required. 6th, 7th, 9th , and 11th

No default rule. 2nd , 10th , and D.C.

Does the language overcome “common fund”? If language is silent then a reduction of attorney fees may

be appropriate. “If [The Plan] wishe[s] to depart from the well-established

common-fund rule, it ha[s] to draft its contract to say so U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 12

(2013) at 12

U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013)

“In January 2007, McCutchen suffered serious injuries when another driver lost control of her car and collided with McCutchen’s…McCutchen retained attorneys, in exchange for a 40% contingency fee, to seek recovery of all his accident-related damages, estimated to exceed $1 million. The attorneys sued the driver responsible for the crash, but settled for only $10,000 because she had limited insurance coverage and the accident had killed or seriously injured three other people. Counsel also secured a payment from McCutchen’s own automobile insurer of $100,000, the maximum amount available under his policy. McCutchen thus received $110,000—and after deducting $44,000 for the lawyer’s fee, $66,000.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 2 (2013) “[] US Airways paid $66,866 in medical expenses for injuries suffered by [] McCutchen … The plan entitled US Airways to reimbursement if McCutchen later recovered money from the third party [including his own insurance] … US Air-ways demanded reimbursement of the full $66,866 it had paid. When McCutchen did not comply, US Airways filed suit under ERISA [requesting the $41,500 being held in an escrow account and $25,366 more in McCutchen’s possession].” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at syllabus (2013)

“McCutchen rais[ed] two defenses… First, he maintained that US Airways could not receive the relief it sought because he had recovered only a small portion of his total damages; absent over-recovery on his part, US Airways’ right to reimbursement did not kick in. Second, he contended that US Airways at least had to contribute its fair share to the costs he incurred to get his recovery; any reimbursement therefore had to be marked down by 40%, to cover the promised contingency fee.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 4 (2013)

Bad news from U.S. Airways v. McCutchen

“McCutchen [] cannot rely on theories of unjust enrichment to defeat U.S. Airways [] plan’s clear terms. Those principles, as we said in Sereboff, are ‘beside the point’ when parties demand what they bargained for in a valid agreement.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 9 (2013).

“The agreement itself becomes the measure of the parties’ equities; so if a contract abrogates the common-fund doctrine, the insurer is not unjustly enriched by claiming the benefit of its bargain.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 11 (2013). “[If] [t]he express contract term … contradicts the background equitable rule … the agreement must govern. U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 14 (2013)

“Common Fund” Abrogated? U.S. Airways v. McCutchen

“[If] the plan is silent on the allocation of attorney’s fees, []in those circumstances, the common-fund doctrine provides the appropriate default. In other words, if US Airways wished to depart from the well-established common-fund rule, it had to draft its contract to say so …” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 12 (2013)  “The words of a plan may speak clearly, but they may also leave gaps. And so a court must often “look outside the plan’s written language” to decide what an agreement means. CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011) at 13; see Curtiss-Wright, 514 U. S., at 80–81.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 13 (2013) “To be sure, the plan’s allocation formula—first claim on the recovery goes to US Airways—might operate on every dollar received from a third party … [b]ut alternatively that formula could apply to only the true recovery, after the costs of obtaining it are deducted.” U.S. Airways v. McCutchen, 133 S. Ct. 1537, at 14 (2013)

Round 4 – 29 U.S.C. 1024(b)(4) To The Rescue

U.S. Airways v. McCutchen

On March 17, 2014 the trial court allowed Mr. McCutchen to “amended Answer, including amended affirmative defenses and an amended counterclaim.”   “Under normal circumstances, this Court would be loath to allow amendment of the pleadings and a reopening of discovery nearly six (6) years after commencement of the case. Here, however, the Court is troubled by US Airways’ untimely production of the Plan documents and its disingenuous contention that Defendants failed to request the Plan document”

“The Court finds US Airways’ reasons for its failure to produce the Plan to be woefully inadequate.”

[A]n ERISA “fiduciary may not, in the performance of [its] duties, ‘materially mislead those to whom the duties of loyalty and prudence are owed.’” . . . This responsibility encompasses “not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful.”Unisys Corp. Retiree Med. Benefits Erisa Litig. v. Unisys Corp., 579 F.3d 220, 228 (3d Cir. 2009), cert. denied sub nom. Unisys Corp. v. Adair, 559 U.S. 940 (2010)

Writ of Certiorari GrantedMontanile v. Bd. Of Trustees of the Nat. Elev.

Health Benefit Plan The issue presented before the Court: 

“Does a lawsuit by an ERISA fiduciary against a participant to recover an alleged overpayment by the plan seek "equitable relief" within the meaning of ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3), if the fiduciary has not identified a particular fund that is in the participant's possession and control at the time the fiduciary asserts its claim?”

Circuit Split :

First, Second, Third, Sixth, Seventh, and Eleventh – Allowed

Eighth and Ninth – Not Allowed

Basis for Confusion:

SCOTUS statement in Sereboff “inability to satisfy ‘strict tracing rules’ for ‘equitable restitution’ is of no consequence.” 547 U.S. at 365

Fighting the Good Fight Pays Off!

2014 Results Average Reduction in Self-Funded ERISA Cases:

39% Average Savings in Self-Funded ERISA Cases:

$48,305.88

Total Savings in Self-Funded ERISA Cases: $2,180,213.43

Medicare Conditional PaymentsPost Final Demand Options

• Appeal• Financial Hardship Waiver• Compromise• “Best Interest of the Program”

Waiver

AppealsAPPEAL LEVEL TIME LIMIT FOR FILING

REQUESTMONETARY THRESHOLD TO BE MET

I. Redetermination 120 days from date of receipt of the notice initial determination

None

2. Reconsideration 180 days from date of receipt of the redetermination

None

3. Administrative Law Judge (ALJ) Hearing

60 days from the date of receipt of the reconsideration

At least $130 remains in controversy.

4. Departmental Appeals Board (DAB) Review/Appeals Council

60 days from the date of receipt of the ALJ hearing decision

None

5. Federal Court Review 60 days from date of receipt of the Appeals Council decision or declination of review by DAB

At least $1 ,260 remains in controversy.

Wavier & Compromise

Optional Step:Financial Hardship Waiver

§1870(c) of the Social Security Act; Synergy recommends you pay the Final Demand amount

and then attempt to obtain a partial or full waiver. Waiver of recovery should not be requested until the case

is settled and Medicare has issued a demand for repayment letter.

Requests for waiver must be submitted in writing Medicare may grant a full or partial waiver if recovery

would negatively affect the beneficiary's standard of living compared to how it was before the accident/injury/illness.

http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Downloads/SSA-632-Request-for-Waiver.pdf

Form is from the Social Security Administration and appears odd but is correct form

Medicare Forms

Waiver Request

Form:SSA-632-BK

Post-Settlement Compromise• The Federal Claims Collection Act (FCCA)• Basis for Compromise • Inability to Pay• Litigative probabilities • Cost of collecting the claim

• 31 U.S.C.3711• The cost of collection does not justify the enforced collection of

the full amount of the claim; • There is an inability to pay within a reasonable time

on the part of the individual against whom the claim is made; or

• The chances of successful litigation are questionable, making it advisable to seek a compromise settlement.”

• Medicare Secondary Payer Manual (MSP), Chapter 7 § 50.7.2

Optional Step:“Best Interest of the Program” Waiver

§ 1862(b) of the Social Security Act; A separate and distinct evaluation than a request

under §1870(c) of the Social Security Act (Financial Hardship Wavier) and a request for a Compromise under the Federal Claims Collection Act (FCCA)

The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this title

Dave L. Place, J.D.Vice President, Director ofSynergy Lien Resolution Services911 Outer Road Orlando, FL 32814dave@synergysettlements.com407-279-4811