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Supreme Court To Review ERISA Reimbursement Rights


The United States Court of Appeal for the Ninth Circuit has issued a ruling in a personal injury case that could have implications for insured injured plaintiffs in Hawaii. 9th Circuit law is binding authority for 9th Circuit states like Hawaii.

In CGI v. Rose, No. 11-35127 (9th Cir. June 20, 2012), the 9th Circuit ruled that an insurance company did not have the right to full reimbursement from the plaintiff in a personal injury case when the plaintiff did not recover all of her damages from the wrongdoer. The plaintiff only recovered a fraction of her damages from the defendant, and as a result, the insurance company should not expect to recover more than the plaintiff did.

The court denied the insurance company’s claim for additional money from the injured Rose, writing, “parties may not by contract deprive [a court] of its power to act as a court in equity.” In other words, the insurance company’s contract with Rose did not supersede the court’s power to equitably distribute the appropriate recovery.

Circuit court Judge Schroeder, issued a concurring opinion, stating it would be “manifestly unfair” to let the insurance company recover 100% of its expenses. This would “leav[e] the beneficiary vastly undercompensated for her actual damages” and “unjustly enrich” the ERISA (Employee Retirement Income Security Act) plan, which had already been paid premiums for the expenses it was now trying to recoup. This case is expected to be reviewed by the Supreme Court next.

A similar opinion was issued in the Third Circuit in US Airways v. McCutchen, showing that the court’s interpretation of law in this area is moving towards supporting plaintiff’s rights and ensuring fairness.

Public Justice, lead counsel for the plaintiff in the case, certainly thinks so. “The Ninth Circuit’s decision agrees entirely with — and builds on — our previous victory, making it clear that these plans should not be allowed to have their cake and eat it too,” said lead counsel Matt Wessler of Public Justice, who was also lead counsel in U.S. Airways v. McCutchen.

Damages in personal injury cases are always contentious. Thus, it is important to contact a qualified and experienced attorney who knows the relevant laws like the recent ruling above to ensure you receive the maximum compensation.