Special considerations apply to self-funded ERISA health plans because otherwise applicable state laws and regulations have been pre-empted. For most plans, there is still a need to craft detailed subrogation provisions consistent with state law and state insurance regulations.
Health plans are all faced with the tough, everyday predicament of being required to be available to pay benefits when the participant or member needs them, but not wanting to pay prematurely when another person or entity may be responsible for those same expenses. Subrogation and reimbursement provisions dealing with the exclusion of benefits caused by the negligent or other wrongful acts of a third party are all extremely important in conserving health plan assets. Effective subrogation and claim recoupment policies and procedures protect plan assets and prevent other responsible third parties from shifting health care expenses to health plans when they are properly the responsibility of another party or insurer. At the time medical expenses are incurred it is often very difficult to determine what party or entity is ultimately responsible for those claims. Issues such as the negligence of the third party, and the solvency or coverage available from the third party all contribute to the uncertainty of who is ultimately responsible for the payment of many health care claims.
The uncertainty of liability is always matched with a participant's immediate need for medical care. The economic reality is that if the care is not paid for promptly or is in any way uncertain as to ultimate payment, the care giver may make treatment decisions based upon the ability of the injured person to pay. This is regardless of the responsibility or solvency of the allegedly responsible third party. Plans traditionally are required to pay benefits owed as soon as possible. However for those benefits for which another party may be responsible, the plans will attempt to protect themselves from paying for benefits which are the responsibility of another through three primary methods:
1. Exclusion of benefits for expenses caused by the negligent or wrongful acts of a third party.
2. The creation of a right of subrogation against the responsible tortfeasor.
3. The right of reimbursement from the plan if the participant recovers plan assets from any responsible third party or insurer.
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