Montanile: An Option to Defeat ERISA Liens
Plaintiffs finally have their ERISA victory. With the increasing power the U.S Supreme Court has given to self-funded ERISA Plans, its decision in Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 136 S. Ct. 651 (2016) was a welcome surprise for plaintiffs. Prior to Montanile, beneficiaries had to rely on an in-depth review of the Master Plan, Summary Plan Description, Form 5500, and Schedules to confirm the usually strong reimbursement language was valid. Once confirmed, lengthy negotiations followed just to get a palatable result. While an in-depth review is still required prior to reimbursing any Plan, the Court provided another option in negotiations – the Montanile argument.
Montanile held that a plan should act fast to protect its right of subrogation and recovery because “equitable relief” under ERISA § 502(a)(3) is only available while the funds are in the participants possession. In the case, National Elevator (the “Plan”) paid $120,000 in medical expenses relating to a motor vehicle accident and participant Robert Montanile signed a reimbursement agreement affirming his obligations to reimburse the Plan from any recovery. Montanile obtained a $500,000 settlement and the Plan sought reimbursement of its paid claims. Montanile’s attorney refused to disburse funds to the Plan and notified the Plan that he was disbursing the funds to Montanile unless the Plan objected. The Plan did not respond and the funds were disbursed. Six months later, the Plan brought suit for recovery from Montanile’s general assets under ERISA § 502(a)(3). However, by the time the lawsuit commenced, Montanile had already spent his portion of the settlement funds on “untraceable items.”
ERISA § 502(a)(3) provides that a Plan may bring a civil suit to “to obtain other appropriate equitable relief (i) to redress Plan violations or (ii) to enforce any provisions of ERISA or the terms of the plan”. Montanile held the term “equitable” depends on both the basis of the claim and the nature of the remedy sought. The Court found that seeking recovery from “specifically identifiable” funds in the participant’s actual or constructive possession is an equitable remedy. However, seeking reimbursement from the participant’s general assets was not an equitable remedy. Ultimately, the Court held that since Montanile spent his settlement prior to the Plan seeking reimbursement, he was not obligated to reimburse.
In Montanile, the Supreme Court provided participants with an argument when discussing reimbursement to a Plan. Plans typically have no interest in litigating their rights. Montanile might be a way to secure a previously denied reduction and avoid costly litigation.
Many firms don’t plan for lien resolution as early as they could. If you are anticipating an upcoming settlement, have settled cases which you’d like to disburse, or simply have questions about lien resolution such as when or how to begin, please contact us at 844-MED-LIEN (844-633-5436) and discover how Massive can deliver exceptional results for you.