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Landmark Ruling re: ERISA subrogationDec 21st, 2011
November 16, 2011- A driver was seriously hurt in an accident and agreed to settle for policy limits of $110,000. His health insurer filed suit and demanded reimbursement for all medical bills it paid related to the accident, an amount that exceeded the driver's net recovery.
The trial court agreed with the insurer and ordered full reimbursement, leaving nothing for the injured driver. On appeal, the Third Circuit revered the trial court's decision, and held that when an ERISA Plan's reimbursement language is grossly unfair to the plan participant, the Plan may be modified or reformed to ensure a fair result.
This is the first appellate decision that rejected an insurance company's argument that the Plan language must always be enforced according to its terms. The case is US Airways, Inc. v. McCutchen, Opinion filed 11/16/11, United States Court of Appeals, Third Circuit.
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