The Supreme Court announced Monday it would hear the case of Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan. The case asks, if a plan's beneficiary wins money in court for an injury but then spends it, should the beneficiary still have to reimburse his or her insurance plan for medical expenses it paid?
It didn't take long for Robert Montanile to spend the $500,000 he won in a lawsuit against the drunk driver who slammed into his vehicle in 2008. He had ongoing medical expenses, lawyers' fees and a young daughter.
But his health insurance administrator says that regardless of him already spending that $500,000 on living expenses, he must reimburse it for what it spent on his care. His insurance company is still seeking that money. The National Elevator Industry Benefit Plans administers collectively bargained employee benefits.
The core issue in the case has divided lower circuit courts of appeal, with six circuit courts siding with insurers and two siding with the beneficiaries in similar cases.
Beneficiaries say forcing them to reimburse insurers is unfair when they've already spent their much-needed damages on living expenses. But the administrator says that's part of the deal beneficiaries struck with it when agreeing to coverage. It says allowing beneficiaries to shirk reimbursement payments could affect the affordability of plans for all beneficiaries.
Dana Berkowitz, an attorney with Stris & Maher representing Montanile, said her client is now in a “terrible position” because of his accident and his insurer's actions.
His insurer, “created a situation where the only way he can pay them back is by selling some of his own assets and that just seems terribly unfair,” Berkowitz said. “If this is allowed in other cases like this, there will be more terrible unfairness.”
Attempts to reach the benefit plan and an attorney for the plan were not immediately successful Monday. But the administrator argues in documents filed with the Supreme Court that claiming all the money owed to an insurance company has already been spent is just the latest strategy by beneficiaries to try to dodge the payments they're otherwise obligated to make after winning damages over their injuries.
“Health plans reasonably do not want to spend their limited resources paying medical bills that could, and should, have been paid by the actual wrongdoer,” according to a brief filed with the Supreme Court on behalf of the insurer.
The administrator argues that Montanile is not living up to his end of the bargain by refusing to reimburse the insurer for his medical expenses now that he's won damages in court. That compact was that the insurer would pay his medical costs upfront as long as he agreed to pay that money back if he achieved any tort recovery.
It's common for insurance plans to include provisions requiring beneficiaries to pay back costs of medical treatment should they win money in court for the injuries they sustained, Berkowitz said. The Supreme Court has already upheld that in a series of decisions, she said.
Plans make more than $1 billion a year under such reimbursement provisions, according to the brief. Allowing beneficiaries such as Montanile to evade payments by saying they've already spent the money they recovered could have a ripple effect throughout the industry.
“That reduction in plan recoveries will have to be passed along to others,” the administrator argues.
The administrator says it's a case that could “affect the affordability of plans that are responsible for paying benefits to over 132 million people.”
An attempt to reach insurance industry group America's Health Insurance Plans for comment was also unsuccessful Monday.
The case applies only to health plans governed by the federal Employee Retirement and Income Security Act (ERISA), but almost all private employer health plans do fall under ERISA, Berkowitz said.
After Montanile won $500,000 from a drunk driver, he had to pay his attorneys more than half of that money in fees and expenses. His insurance plan then sought $121,044 in reimbursements for medical expenses, but he spent that money on more legal fees and to care for himself and his daughter.
The administrator then sued Montanile and won. Montanile appealed to the U.S. Court of Appeals for the 11th Circuit, but that court also sided against Montanile. He then petitioned the Supreme Court for a hearing.
Both sides in the Montanile case urged the Supreme Court to take the case.
“As leading advocates on both sides of this issue have made clear, the question presented is of extraordinary importance to employers and workers across the country and requires a uniform national answer,” according to a petition filed with the Supreme Court by Montanile.
Berkowitz said she expects the court will likely hear the case during its next term, which starts in October.