Lien spotting and other perils of contemporary workers’ compensation practice
Carter & Civitello
One Bradley Road, Suite 305
Woodbridge, Connecticut 06525
Intersection of a workers’ compensation claim with the private and public health and welfare support systems available to a claimant and his or her family can result in detrimental consequences from actions and decisions that would be perfectly reasonable in the context of the workers’ compensation claim viewed in isolation. The minefield that contemporary workers’ compensation practice has become is considerably more hazardous for claimants’ attorneys than for respondents’ attorneys. Nonetheless, practitioners on both sides should follow closely the changes in this legal landscape to avoid harming their clients and incurring potential pecuniary liability themselves. What follows is a list of the things that keep me awake at night, with comments and legal authority that may help to avoid disagreeable consequences for our clients and ourselves. Not all of the perils on this list are technically “liens,” but they are appropriately covered by this seminar because failure to understand how they affect workers’ compensation claims can lead to unpleasant surprises.
The workers’ compensation statute - the good old days
In the beginning, there was the workers’ compensation statute, which by its terms made workers’ compensation benefits inviolate. C.G.S. §31-320 remains essentially unchanged since the Act’s beginning, and provides:
Exemption and preference of compensation. All sums due for compensation under the provisions of this chapter shall be exempt from attachment and execution and shall be nonassignable before and after award...1
Today, this provision is honored more in the breach than in the observance, due to the passage of other state and federal laws that have effectively preempted Section 31-320. If the claimant, or a member of the claimant’s family, whether living in the claimant’s household or not, is, has, or is about to use, any financial or health and welfare support system, public or private, the claimant, and his or her lawyer, are about to step into the minefield.
Health insurance plans
The most common reimbursement obligation arising in workers' compensation cases is a claim for reimbursement by a group health insurer. Payments by the claimant's group health insurer may be made on purpose, in the case of a contested claim or contested treatment, or may be made inadvertently, usually through the mistake of the billing agent of a medical provider. There are important distinctions between group health plans that are qualified ERISA plans, and those that are not. In order to determine whether a lien for medical payments must be perfected before becoming enforceable, or whether it may be avoided for failure to perfect, counsel must first determine whether the medical benefits have been paid:
1) pursuant to a qualified self-insured ERISA plan;
2) pursuant to an ERISA plan that provides health insurance coverage through an insurance carrier;
3) pursuant to insurance coverage that is not part of an ERISA plan.
The discussion of health insurance liens is bifurcated below; the first section covers non-ERISA plans, and the second section covers ERISA plans.
Non-ERISA health insurance plans
In a contested case, or with respect to contested treatment for an accepted injury, the claimant may process medical expenses through his or her health insurance. Usually, the health insurer requires a Form 43 disclaimer of liability for either the condition or the specific treatment sought before it will pay for medical care. Under the workers’ compensation act, the group health insurer may seek reimbursement for its payments in the event the claimant is successful in establishing the compensability of his or her claim, or if the claimant settles the claim. Specifically, C.G.S. §31-299a(b) provides that, in a contested workers' compensation claim, the group health insurance carrier must pay benefits for the medical treatment to the extent otherwise provided by the group health policy. 2 The group insurer may then file a claim directly against the employer for reimbursement within two years from the payment of benefits, providing the policy contains a provision requiring reimbursement in compensable workers' compensation cases. Section 38a-470 of the general statutes establishes a lien on behalf of the group health insurer against the net proceeds of the workers' compensation claim, after costs of procurement, which include attorney's fees and costs of litigation. This statutory lien, however, must be perfected by written notice in duplicate served by certified or regular mail on the claimant, on the employer or the insurer, and on the commissioner. The notice of the lien, to be effective, must be served prior to the award of benefits or settlement approval. C.G.S. §38a-470(c).3 We believe that this statutory provision covers the reimbursement of benefits made by a group carrier initially, where the employer has paid for medical treatment voluntarily prior to the filing of a lien by the group health insurance carrier. In such cases, there is no “award of benefits” or settlement, but it is generally understood that, should the group carrier present its lien, the workers’ compensation insurer will pay it, subject to the workers’ compensation fee schedule. Although the statute provides that the amount of the lien must be contested by the workers' compensation parties by way of an action in Superior Court, in practice the workers' compensation commissioners routinely resolve such disputes.
Where, however, the group health carrier fails to file a lien pursuant to C.G.S. §38a-470, the windfall has been held not to go to the claimant, but to the workers' compensation insurer. See, Pokorny v. Getta's Garage, 219 Conn. 439, 594 A.2d 446 (1991), where the Court held that the workers' compensation carrier was relieved of its obligation to pay $175,000 in benefits because of the group insurance carrier's failure to asset its lien, rather than allow the claimant to benefit to that extent because of his group health insurance coverage. In Bombria v. Bonafine, 5740 CRB-2-12-3 (March 6, 2013), the CRB held that where the group health insurer has not sought reimbursement for payments made in a contested case, the commissioner may not order reimbursement or payment of the bills at the request of the claimant; the cumbersome lien process is required. The commissioner may order only payment of unpaid bills and out-of-pocket expenses. This decision unfortunately may induce employers to contest cases in the hopes of avoiding payment of the medical expenses of the injured employee.
ERISA health insurance plans
A complete discussion of the intricacies of ERISA (Employee Retirement Income Security Act of 1974), 29 U.S.C. §1001 et seq., the cases interpreting that act, and the regulations implementing it, is far beyond the scope of this seminar. Many aspects of ERISA are unknown to the authors of this presentation, and we do not pretend to summarize here all of the judicial interpretations of the law that may affect workers’ compensation claims in Connecticut. Attorney Groher will discuss generally the evolving law regarding ERISA plans, and specifically in the context of civil suits, in the next segment of this seminar. At a minimum, practitioners should be aware of three provisions of ERISA that affect workers’ compensation claims. They are:
ERISA §514(a), 29 U.S.C. §1144(a), called the “preemption clause,” that generally provides that ERISA supercedes state laws that “relate to” “employee welfare plans;” 4
ERISA §514(b)(2)(A), 29 U.S.C. §1144(b)(2)(A), called the “savings clause,” provides an exception to preemption for state laws that “regulate insurance;” 5 ERISA §514(b)(2)(B), 29 U.S.C. §1144(b)(2)(B), called the “deemer clause,” prohibits states from deeming self-funded employee benefit plans to be “insurers” subject to state insurance regulation. 6
Practitioners should be aware that ERISA does not apply to government employees. 29 U.S.C. §1002(32)(4)(b)(1).
If medical treatment is paid in a workers’ compensation claim by a health plan, and that plan is held to be an ERISA plan, then ERISA, not state law, may govern whether and what medical care will be paid by the plan, and what the subrogation and lien rights are available to the ERISA plan if it pays for treatment. The law is still developing in this area. For that reason, it is sometimes difficult to know whether and what kind of lien an ERISA plan has when it has paid for medical treatment for an alleged or an accepted workplace injury. Specifically, it is often not clear whether the plan is subject to the lien perfection and filing requirements set out in C.G.S. §31-299a(b) and §38a-470, that govern health insurers where an ERISA plan does not exist.
At least for the present, in the Second Circuit, the lien provisions in C.G.S. §31- 299a(b) and §38a-470 would likely be held to apply to ERISA health plans that are “insured benefit plans,” as opposed to “self-funded plans. Wurtz v. Rawlings Co., LLC, 761 F.3d 232 (2nd Cir. 2014), cert. denied, 135 S.Ct. 1400 (2015), and FMC v. Holliday, 111 S.Ct. 403, 112 L.Ed.2d, 356, (1990). Both of these cases are discussed further below. Before reaching the holdings of these cases, however, it is important to understand the controversy raging nationally over the distinction between treatment of “insured benefit plans,” which may be regulated by states under the savings clause, and ERISA plans that provide health benefits through insurers, but are not subject to state regulation. The answer at present depends on the jurisdiction; it is not clear how or whether the Supreme Court will resolve the controversy any time soon. That is, it is often difficult to recognize whether a health insurance program is an ERISA plan or simply an insured benefit plan. An employer or employee organization can establish an ERISA health insurance plan by offering coverage for employees through an insurer, or it may elect to self-insure funding for the plan, or to self-insure up only up to a certain retention level. A purported ERISA plan may very well not be one, and the involvement of an insurance company may not preclude the existence of a qualified ERISA plan.
The five statutory prerequisites for an employee benefit plan to qualify under ERISA are: (1) a plan, fund or program; (2) established or maintained; (3) by an employer or employee organization; (4) for the purpose of providing certain benefits; (5) to participants or beneficiaries. Ed Miniat, Inc. V. Globe Life Insurance Group, Inc., 805 F.2d 732, 738 (7th Cir. 1986), cert. denied, 107 S.Ct. 3188 (1987). Given these broad prerequisites, courts have taken various approaches to determine whether a plan is a qualified ERISA plan, some relying upon the statutory prerequisites only, and others examining more closely the employer’s involvement in the plan.
Whether an ERISA plan exists is a mixed question of fact and law. See, for example, Kulinski v. Medtronic Bio–Medicus, Inc., 21 F.3d 254, 256 (8th Cir.1994); Peckham v. Gem State Mut., 964 F.2d 1043, 1047 n. 5 (10th Cir. 1992). A plan is an ERISA plan if “it has a minimal, ongoing administrative scheme.” Garrett v. Veterans Memorial Medical Center, 821 F. Supp. 838 (1993), quoting the Supreme Court in District of Columbia v. Greater Washington Board of Trade, 113 S.Ct. 580, 584, n. 2 (1992). However, an employer’s decision to extend benefits to its employees is not the end of the inquiry.
The pivotal inquiry is whether the plan requires the establishment of a separate, ongoing administrative scheme to administer the plan's benefits. Simple or mechanical determinations do not necessarily require the establishment of such an administrative scheme; rather, an employer's need to create an administrative system may arise where the employer, to determine the employees' eligibility for and level of benefits, must analyze each employee's particular circumstances in light of the appropriate criteria.
Kulinski v. Medtronics Bio-Medicus, Inc., 21 F.3d 254, 256 (8th Cir., 1994).
An ERISA plan may be found to exist even where the plan has not been set out in a written document. See, Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir. 1982), where the Court noted that:
At a minimum, however, a “plan, fund, or program” under ERISA implies the existence of intended benefits, intended beneficiaries, a source of financing, and a procedure to apply for and collect benefits.7
Because the preemption provision of ERISA, as interpreted by courts to date, provides such broad protection from state statutes, case law and regulations that themselves protect consumers, and because plan administrators have a fiduciary duty to protect the assets and financial stability of their plans, there is every incentive for employers and insurers to claim that they are operating ERISA plans. To provide some clarity and direction, the United States Department of Labor issued a “safe harbor” regulation that excludes some types of group insurance arrangements from being characterized as ERISA employee welfare benefit plans. If a group insurance program offered by an employer meets the requirements of this regulation, then, according to the regulation, the plan is an insured benefit plan, not an ERISA plan, and state law governs.
The regulation, 29 C.F.R. § 2510.3-1(j), can be distilled to the following: group insurance programs offered by an insurer to employees or members of an employee organization are not employee welfare benefit plans for purposes of ERISA if (1) no contributions are made by the employer or employee organization; (2) participation by employees and family members is completely voluntary; (3) the employer or employee organization permits the insurer to advertise the program to employees or members without the employer’s endorsing the program; (4) the employer or employee organization collect premiums only to forward them to the insurer; (5) the employer or employee organization receives no profit or financial benefit, other than payment for administrative expenses associated with the collection of premiums; (6) the involvement of the employer or employee organization in the program is “neutral.” A program that satisfies the all of the regulation's criteria will be deemed not to have been “established or maintained” by the employer, and thus will not be an ERISA plan. The converse, however, is not necessarily true. A program that fails to satisfy all of the regulation's standards is not automatically deemed to have been “established or maintained” by the employer; further analysis is necessary. See Hansen v. Continental Ins. Co., 940 F.2d 971, 976 (5th Cir.1991); Johnson v. Watts Regulator Co., 63 F.3d 1129 (1995).
Predictably, this regulation has been interpreted and applied in a myriad of ways, complicating, rather than simplifying, the resolution of whether an insured program is an ERISA welfare plan. One might naturally think that if an insurance company such as Anthem or Cigna provides health insurance coverage and administers medical claims, the savings clause would apply to preserve state law remedies for beneficiaries. It would be foolhardy to make such an assumption. See, for example Brundage-Peterson v. Compcare Health Services, Inc., 877 F.2d 509 (7th Cir., 1989), where the employer negotiated with two insurance companies to provide health insurance to its employees. The employer offered a choice of plans to all employees who had been working for more than thirty days, collected premiums and remitted them to the insurers, and paid the workers’ premiums, but did not pay premiums for their dependents. The plan was found to be an ERISA plan, outside of the “safe harbor” created by the regulation. But see, Thompson v. American Home Assure Co., 95 F.3d 429 (1996), where the employer did not pay any of the premiums for a group accidental death and dismemberment policy, an issue of fact still existed as to whether the plan was an ERISA plan. Whether or not the employer pays some or all of the premiums for health insurance coverage is only one factor to be analyzed.
After determining whether a claimant’s health insurance coverage is provided by an ERISA plan, the practitioner must analyze whether, with respect to that particular plan, ERISA would be found to preempt C.G.S. §31-299a(b) and C.G.S. §38a-470, which together require the group health insurer to pay for disputed medical treatment, and which provide the insurer a mechanism for recovering payments in the event of an award or settlement, if the plan’s lien is properly perfected. Thus far, there have not been any reported cases directly deciding whether C.G.S. §31-299a(b) and C.G.S. §38a-470 are preempted by ERISA in some or all cases where an ERISA plan pays for medical treatment. However, there has been considerable litigation nation-wide on the question of preemption of anti-subrogation and other state statutes, mainly in the tort area. These cases for the most part distinguish between self-funded plans, and insurance benefit plans; the former enjoying the benefit of ERISA preemption of state statutes governing lien and subrogation rights, and provision of benefits. With respect to ERISA insured plans, that is, plans that provide health coverage through insurance plans, or that use insurers to administer self-funded plans, the law is unsettled. One thing is clear; state workers’ compensation laws to date have enjoyed no special protection from ERISA preemption. See, Alsessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68 L. Ed. 2d 402 (1981), where a New Jersey workers’ compensation act provision that prohibited pension benefit reductions based on receipt of workers’ compensation benefits was preempted by ERISA.
The Second Circuit recently squarely held that, at least with respect to recoveries in tort, insurance companies operating ERISA health plans were subject to a New York state anti-subrogation statute; ERISA did not preempt the operation of that state law. The basis for the Court’s decision was the “saver clause” of ERISA, which exempts from preemption state laws regulating the business of insurance. In Wurtz v. Rawlings Co., LLC, 761 F.3d 232 (2nd Cir. 2014), cert. denied, 135 S.Ct. 1400 (2015), the plaintiffs filed a class action complaint in state court against the Rawlings Company and the two insurers on behalf of which Rawlings collected subrogation claims. The plaintiffs sought a declaration and an injunction prohibiting assertion by the defendants of any health insurance liens against tort recoveries, and damages for unjust enrichment and deceptive business practices under New York state statute. The statute, N.Y. Gen. Oblig. Law §5- 335, provided in pertinent part that, in personal injury settlements, health benefit providers have no “right of subrogation or reimbursement against any such settling party.” The defendants removed the case to the federal district court, where the entire complaint was dismissed on the basis that it was preempted by ERISA. The district court held that because the law was not specifically directed at insurers, but applied to all benefit providers, including self-funded employer plans, it was preempted. Wurtz v. Rawlings Co., LLC, 933 F. Supp. 2d 480, 503 (E.D.N.Y. 2013). The Court of Appeals disagreed, concluding that the state statute was “‘saved’ from express preemption as a law that ‘regulates insurance,’” Wurtz v. Rawlings, supra, 761 F.3d at 240. The Court applied the test used by the United States Supreme Court for whether the New York statute “regulates insurance.”
A law “regulates insurance” under this savings clause if it (1) is “specifically directed toward entities engaged in insurance,” and (2) “substantially affect[s] the risk pooling arrangement between the insurer and the insured.”
Wurtz v. Rawlings, supra, 761 F.3d at 240, quoting Kentucky Ass’n. of Health Plans, Inc. v. Miller, 538 U.S. 329, 342,123 S.Ct. 1471, 155 L.Ed.2d 468 (2003). The Court found the New York statute similar to the Pennsylvania anti-subrogation statute before the Supreme Court in FMC Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990), which was held to fall within the ERISA insurance savings clause. However, because Holliday concerned a self-funded employer health plan, not an insurance benefit 10 policy, the ERISA deemer clause prevented the state from deeming the plan an insurance plan, and the insurance savings clause did not apply to the FMC plan. In Wurtz, the ERISA plans were insured benefit plans, not self-insured plans, therefore, the state statute was not preempted. The Court reversed and remanded the case to state court. Wurtz v. Rawlings, supra, 761 F.3d at 245.
In contrast, the benefit plan at issue in FMC Corp. v. Holliday, supra, was a selffunded plan that contained a subrogation clause requiring plan members to reimburse the plan in the event of any recovery in a liability action against a third party. The defendant Holliday was the daughter of a plan member who was injured in a motor vehicle accident; her medical treatment was paid by the plan. After her tort claim settled, FMC demanded reimbursement, which Holliday declined to pay, citing Pennsylvania’s anti-subrogation statute.8 FMC filed a federal declaratory judgment action, where the district court granted Holliday’s motion for summary judgment, holding that the Pennsylvania statute prohibited exercise of FMC’s subrogation rights in the tort action. The Third Circuit agreed, but the Supreme Court vacated the judgment and remanded, holding that while the state statute regulated insurance, so that the ERISA savings clause applied, it was preempted in this case because the plan was self-funded and thus protected by the deemer clause.
We read the deemer clause to exempt self-funded ERISA plans from state laws that “regulat[e] insurance” within the meaning of the saving clause. By forbidding States to deem employee benefit plans “to be an insurance company or other insurer ... or to be engaged in the business of insurance,” the deemer clause relieves plans from state laws “purporting to regulate insurance.” As a result, self-funded ERISA plans are exempt from state regulation insofar as that regulation “relate[s] to” the plans. State laws directed toward the plans are pre-empted because they relate to an employee benefit plan but are not “saved” because they do not regulate insurance. State laws that directly regulate insurance are “saved” but do not reach self-funded employee benefit plans because the plans may not be deemed to be insurance companies, other insurers, or engaged in the business of insurance for purposes of such state laws. On the other hand, employee benefit plans that are insured are subject to indirect state insurance regulation. An insurance company that insures a plan remains an insurer for purposes of state laws “purporting to regulate insurance” after application of the deemer clause. The insurance company is therefore not relieved from state insurance regulation. The ERISA plan is consequently bound by state insurance regulations insofar as they apply to the plan's insurer...
FMC v. Holliday, supra, 111 S.Ct. at 409. In short,
... Our interpretation of the deemer clause makes clear that if a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer's insurance contracts; if the plan is uninsured, the State may not regulate it.
FMC v. Holliday, supra, 111 S.Ct. at 411.
Justice Stevens, in his dissent, pointed out how illogical this approach was.
From the standpoint of the beneficiaries of ERISA plans-who after all are the primary beneficiaries of the entire statutory program-there is no apparent reason for treating self-insured plans differently from insured plans. Why should a self-insured plan have a right to enforce a subrogation clause against an injured employee while an insured plan may not? The notion that this disparate treatment of similarly situated beneficiaries is somehow supported by an interest in uniformity is singularly unpersuasive. If Congress had intended such an irrational result, surely it would have expressed it in straightforward English. At least one would expect that the reasons for drawing such an apparently irrational distinction would be discernible in the legislative history or in the literature discussing the legislation.
FMC v. Holliday, supra, 111 S.Ct. at 411-412, Stevens, J., dissenting.
The decision in FMC seemed to say that a group insurer, even under an ERISA plan, must abide by state laws regulating insurance. Many federal courts however, did not interpret the decision in that way, at least when civil plaintiffs sought damages for improper handling of claims by insurers that provided insured health or other insurance to ERISA plan members. These decisions often cited the Supreme Court’s holding in Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), for the proposition that, regardless of the savings clause, ERISA preempts state common law tort and contract actions asserting improper processing of claims for benefits. The stated rationale underlying most of these decisions is that ERISA prevents all claims, not just common law claims, brought under state law, that interfere with the “civil enforcement provisions” of ERISA, even though the claim is brought against an insurance company 12 that would otherwise not enjoy the protection of preemption. See, for example, Swerhun v. Guardian Life Ins. Co. of America, 979 F.2d 195 (11th Cir., 1992). Since Connecticut’s statutes requiring group health insurers to provide notice of their liens for payments of medical bills in workers’ compensation claims arguably do not interfere with ERISA’s civil enforcement provisions, these cases can be distinguished, and one can argue that an ERISA insurance plan cannot recover its lien without first perfecting it under C.G.S. §31- 299a and §38-470.
If the health insurance program is self-funded by the employer, the ERISA “deemer clause” applies, and C.G.S. §31-299a(b) and C.G.S. §38a-470 are clearly, under present, law pre-empted. If the claimant’s health insurance program is a union health and welfare fund, then it is likely self-funded, is not an insurance company, and is not subject to C.G.S. §31-299a(b) and C.G.S. §38a-470. Therefore, parties to a workers’ compensation claim cannot assume that an ERISA insurer’s failure to file a lien in a timely manner will preclude assertion of the lien. If the plan is a self-funded ERISA plan not subject to state law, then the lien rights depend upon what is written in the plan, assuming there is a written plan. ERISA plans have utilized several methods to collect reimbursements of their claimed liens, including filing federal court complaints against claimants, or filing federal court actions against claimants’ and/or respondents’ counsel where actual notice was given of a lien that was not paid, pursuant to ERISA §502(a)(3),9 or by simply taking back payments made to medical providers from those providers (resulting in collection actions by medical providers against claimants and/or respondents).
The disparate treatment of self-funded health insurance plans with respect to application of state law resulting from the FMC decision has created a new problem for claimants and respondents. Many employer-funded health insurance plans and union health and welfare funds, emboldened by the expansive view of preemption adopted by the courts in ERISA litigation to date, have incorporated language in their plans stating that the plan will not pay for any work-related medical condition. They then refuse to pay for medical treatment for any condition which is the subject of a workers’ compensation claim, contested or not. In the past, these plans would pay for medical treatment upon receipt of a Form 43. Currently, many refuse to pay for medical treatment unless a commissioner issues a finding and dismissal of the entire claim, or formally finds that the specific medical treatment sought is unrelated to the workplace. No longer can commissioners and parties assume that claimants with group health coverage can obtain urgently needed medical treatment while the workers’ compensation claim is being litigated. Sometimes the plan will agree to pay medical bills pending resolution of the workers’ compensation claim if pressed sufficiently. In many of these situations however, it may be necessary for the claimant to exhaust the plan’s remedies and to bring a federal court action under ERISA’s provisions regarding provision of benefits.
The only way to assess the validity of an ERISA plan lien claim is to obtain a copy of the full plan, if it exists. The Supreme Court has emphasized that parties should not rely on Summary Plan Descriptions when litigating the terms of an employee welfare plan.
We have made clear that the statements in a summary plan description communicate with beneficiaries about the plan, but do not themselves constitute the terms of the plan.
U.S. Airways v. McCutchen, 133 S.Ct. 1537, 1550, n. 1, 185 L. Ed. 2d, 654 (2013) (Citations and internal quotation marks omitted.)
In order for an ERISA lien to attach, the plan must be not only qualified as an ERISA plan but must also contain provisions that obligate the recipient of benefits to reimburse the plan. ERISA also authorizes plans to include provisions that provide that a lien for payment of medical benefits attaches, without notice, to any recovery of workers' compensation benefits. Many plans have such provisions.
Many plans also have provisions providing for 100% recovery from gross proceeds, even prior to the deduction of attorney's fees and costs. Such provisions have been upheld by some Circuit Courts. See, for example, Kress v. Food Employers Labor Relations Ass'n, 391 F.3d 563, 570 (4th Cir. 2004), where the attorney for the plaintiffbeneficiary refused to sign a subrogation agreement requiring him and the plaintiff to reimburse the plan for its entire lien out of any future recovery in a tort action, before disbursing funds to “all others,” the plan was entitled to stop paying for medical treatment of the plaintiff and his dependents.
The Supreme Court, however, has limited a plan’s ability to deny recovery of plaintiff’s attorney’s fee from the proceeds of a civil action absent specific language regarding primacy of the lien over costs of recovery. In U.S. Airways, Inc. v. McCutchen, supra, 133 S. Ct. 1537, the plan paid $66,866 in medical benefits, and asserted that it was entitled to 100% reimbursement from a $110,000 civil recovery. The proceeds of the suit consisted of $10,000 from the tortfeasor’s insurance policy, and $100,000 from McCutcheon’s own underinsured motorist insurer. McCutcheon’s recovery, after deduction of the attorney’s 40% fee, would have been $66,000. His attorney placed $41,500 in an escrow account, pending resolution of the dispute with the plan. That amount represented the plan’s full claim minus a proportionate share of the attorney’s fee agreed by McCutcheon. The plan administrator, U.S. Airways, filed an action under ERISA § 502(a)(3), seeking an equitable lien on the $41,500 in the escrow account and $25,366 more in McCutcheon’s possession. McCutcheon argued that the plan would be unjustly enriched if it were allowed to collect the full lien. He also argued that the “common-fund doctrine” required the plan to pay a fair share of the attorney’s fee. 10
The Court rejected McCutchen’s unjust enrichment argument, holding that the equitable doctrine of unjust enrichment was “‘beside the point’ when a party demands what it bargained for in an agreement.” U.S. Airways v. McCutchen, supra, 133 S. Ct. at 1546. Equity cannot override a contract term. McCutchen could be required to repay all of his proceeds to reimburse the plan if the plan so provided. However, the common-fund doctrine, at least in this case, was applicable to the issue of attorney’s fees. The Court opinion is reproduced at length here:
If the equitable rules [McCutchen] describes cannot trump a reimbursement provision, they still might aid in properly construing it. And for U.S. Airway’s plan, the common fund doctrine (though not the double recovery rule) serves that function. The plan is silent on the allocation of attorney’s fees, and in those circumstances, the common-fund doctrine provides the appropriate default. In other words, if U.S. Airways wished to depart from the well-established commonfund rule, it had to draft its contract to say so, and here it did not.
Ordinary principles of contract interpretation point toward this conclusion. Courts construe ERISA plans, as they do other contracts, by “looking to the terms of the plan” as well as to “other manifestations of the parties' intent.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The words of a plan may speak clearly, but they may also leave gaps. And so a court must often “look outside the plan's written language” to decide what an agreement means. CIGNA Corp. v. Amara, 563 U.S. ––––, ––––, 131 S.Ct. 1866, 1877, 179 L.Ed.2d 843; see Curtiss–Wright, 514 U.S., at 80–81, 115 S.Ct. 1223. In undertaking that task, a court properly takes account of background legal rules—the doctrines that typically or traditionally have governed a given situation when no agreement states otherwise. See Wal–Mart Stores, Inc. Assoc. Health & Welfare Plan v. Wells, 213 F.3d 398, 402 (C.A.7 2000) (Posner, J.) (“[C]ontracts ... are enacted against a background of common-sense understandings and legal principles that the parties may not have bothered to incorporate expressly but that operate as default rules to govern in the absence of a clear expression of the parties' [contrary] intent”); 11 R. Lord, Williston on Contracts § 31:7 (4th ed.2012); Restatement (Second) of Contracts § 221 (1979). Indeed, ignoring those rules is likely to frustrate the parties' intent and produce perverse consequences.
The reimbursement provision at issue here precludes looking to the double-recovery rule in this manner. Both the contract term and the equitable principle address the same problem: how to apportion, as between an insurer and a beneficiary, a third party's payment to recompense an injury. But the allocation formulas they prescribe differ markedly. According to the plan, U.S. Airways has first claim on the entire recovery—as the plan description states, on “any monies recovered from [the] third party”; McCutchen receives only whatever is left over (if anything). See supra, at 1543. By contrast, the double-recovery rule would give McCutchen first dibs on the portion of the recovery compensating for losses that the plan did not cover (e.g., future earnings or pain and suffering); US Airways' claim would attach only to the share of the recovery for medical expenses. See supra, at 1545 – 1546. The express contract term, in short, contradicts the background equitable rule; and where that is so, for all the reasons we have given, the agreement must govern.
By contrast, the plan provision here leaves space for the common-fund rule to operate. That equitable doctrine, as earlier noted, addresses not how to allocate a third-party recovery, but instead how to pay for the costs of obtaining it. See supra, at 1546. And the contract, for its part, says nothing specific about that issue. The District Court below thus erred when it found that the plan clearly repudiated the common-fund rule. See supra, at 1544. To be sure, the plan's allocation formula—first claim on the recovery goes to U.S. Airways—might operate on every dollar received from a third party, even those covering the beneficiary's litigation costs. But alternatively, that formula could apply to only the true recovery, after the costs of obtaining it are deducted. (Consider, for comparative purposes, how an income tax is levied on net, not gross, receipts.) See Dawson, Lawyers and Involuntary Clients: Attorney Fees From Funds, 87 Harv. L.Rev. 16 1597, 1606–1607 (1974) (“[T]he claim for legal services is a first charge on the fund and must be satisfied before any distribution occurs”). The plan's terms fail to select between these two alternatives: whether the recovery to which U.S. Airways has first claim is every cent the third party paid or, instead, the money the beneficiary took away.
Given that contractual gap, the common-fund doctrine provides the best indication of the parties' intent. No one can doubt that the common-fund rule would govern here in the absence of a contrary agreement. This Court has “recognized consistently” that someone “who recovers a common fund for the benefit of persons other than himself” is due “a reasonable attorney's fee from the fund as whole.” Boeing Co., 444 U.S., at 478, 100 S.Ct. 745. We have understood that rule as “reflect[ing] the traditional practice in courts of equity.” Ibid.; see Sprague, 307 U.S., at 164–166, 59 S.Ct. 777; supra, at 1548. And we have applied it in a wide range of circumstances as part of our inherent authority. See Boeing Co., 444 U.S., at 474, 478, 100 S.Ct. 745; Hall v. Cole, 412 U.S. 1, 6–7 and n. 7, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973); Mills, 396 U.S., at 389–390, 392, 90 S.Ct. 616; Sprague, 307 U.S., at 166, 59 S.Ct. 777; Central Railroad & Banking Co. of Ga. v. Pettus, 113 U.S. 116, 126–127, 5 S.Ct. 387, 28 L.Ed. 915 (1885); Greenough, 105 U.S., at 528, 531–533. State courts have done the same; the “overwhelming majority” routinely use the common-fund rule to allocate the costs of third-party recoveries between insurers and beneficiaries. 8A Appleman § 4903.85, at 335 (1981); see Annot., 2 A.L.R.3d 1441, §§ 2–3 (1965 and Supp.2012). A party would not typically expect or intend a plan saying nothing about attorney's fees to abrogate so strong and uniform a background rule. And that means a court should be loath to read such a plan in that way.11
The rationale for the common-fund rule reinforces that conclusion. Third-party recoveries do not often come free: To get one, an insured must incur lawyer's fees and expenses. Without cost sharing, the insurer free rides on its beneficiary's efforts—taking the fruits while contributing nothing to the labor. Odder still, in some cases—indeed, in this case—the beneficiary is made worse off by pursuing a third party. Recall that McCutchen spent $44,000 (representing a 40% contingency fee) to get $110,000, leaving him with a real recovery of $66,000. But U.S. Airways claimed $66,866 in medical expenses. That would put McCutchen $866 in the hole; in effect, he would pay for the privilege of serving as U.S. Airways' collection agent. We think McCutchen would not have foreseen that result when he signed on to the plan. And we doubt if even U.S. Airways should want it. When the next McCutchen comes along, he is not likely to relieve U.S. Airways of the costs of recovery. See Blackburn v. Sundstrand Corp., 115 F.3d 493, 496 (C.A.7 1997) (Easterbrook, J.) (“[I]f ... injured persons could not charge legal costs against recoveries, people like [McCutchen] would in the future have every reason” to make different judgments about bringing suit, “throwing on plans the burden and expense of collection”). The prospect of generating those strange results again militates against reading a general reimbursement provision—like the one here—for more than it is worth. Only if U.S. Airways' plan expressly addressed the costs of recovery would it alter the common-fund doctrine.
U.S. Airways v. McCutchen, supra, 133 S. Ct. at 1548-9.
The Supreme Court in U.S. Airways v. McCutchen provides valuable advice to counsel in workers’ compensation and tort claims. If the plaintiff has a health insurance plan that contains a provision requiring lien reimbursement before payment of attorney’s fee, counsel should advise the plan immediately that he or she will not undertake to represent the beneficiary unless the plan waives that provision. Depending upon the strength of the suit or claim, counsel may also be able to negotiate a lien reduction agreement prior to filing a claim or suit.
The crucial decision-maker in the assertion of ERISA liens and the interpretation of ERISA plan provisions is the ERISA plan administrator, whose interests in this context are only in preserving the plan assets. The decisions of the administrator are not reviewable in state courts, much less by workers' compensation commissioners; they are reviewable only in federal court, and, depending on the plan, may be reviewable only for abuse of discretion. De novo review is available only where the benefit plan does not give the plan administrator or plan fiduciary discretionary authority to determine benefits or to construe the terms of the plan, an unlikely occurrence. See, Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 103 L. Ed. 2d 80. ERISA health plan administrators may not overstep the limits of their authority under the plan provisions. See, e.g., Gorman v. Carpenters' & Millwrights' Health Benefit Trust Fund, 410 F.3d 1194 (10th Cir. 2005), where the Court held that the administrators had exceeded their authority in requiring the plan participant to sign a subrogation agreement that required him to file a third-party action to recover medical costs, since the plan had no provision allowing administrators to require plan participants to sign such an agreement.
A recent case from the Supreme Court confirmed that counsel would be ill-advised to sequester funds received in a tort or workers’ compensation recovery in an escrow account, or to advise a client to sequester funds claimed by an ERISA provider. In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 577 U.S. __ (2016), the plaintiff recovered $500,000 from the tortfeasor. The plan contained the following subrogation clause:
Amounts that have been recovered by a [participant] from another party are assets of the Plan... and are not distributable to any person or entity without the Plan’s written release of its subrogation interest.... any amounts recover[ed] from another party by award, judgment, settlement or otherwise... will promptly be applied first to reimburse the Plan in full for benefits advanced by the Plan... and without reduction for attorneys’ fees, costs, expenses or damages claimed by the covered person.
Montanile v. Board of Trustees, supra, 577 U.S. at _____. Montanile signed a reimbursement agreement pledging to reimburse the plan from any recovery. After deducting attorney’s fees and costs, Montanile’s attorney placed the remaining $240,000 in a client trust account, and, in response to the plan’s attempt to recoup its funds, responded that the plan was not entitled to any reimbursement. He then notified the plan that he would disburse the funds in fourteen days unless the Board of Trustees objected. The Board did not respond, and the attorney released the funds to Montanile. The board sued Montanile in federal court, seeking repayment and asking for an equitable lien against any funds or property in Montanile’s actual or constructive possession, and an order enjoining him from dissipating any funds in his possession. Montanile stipulated that he still possessed some of the settlement proceeds. The District Court granted summary judgment in favor of the Board, and held that it was entitled to reimbursement from Montanile’s general assets; the Eleventh Circuit affirmed. The Supreme Court granted certiorari to resolve a conflict among the Circuit Courts on this question. The Supreme Court held that the plan was not entitled to recover from Montanile’s general assets after he had dissipated the specific fund that contained his settlement proceeds. The right to reimbursement under Section 502(a)(3) of ERISA is limited to equitable remedies, and an equitable lien, even by agreement, can only be recovered against specifically identifiable or traceable funds. Dissipation of the funds eliminates the lien. The Board should have sued immediately, before the specifically identifiable fund of settlement proceeds was spent or otherwise diverted for non-traceable purposes. A claim against general assets is a legal claim, which is not authorized under ERISA. However, should claimant’s counsel place and keep settlement funds in escrow, that account would be an identifiable fund, not part of the claimant’s general assets, and would thus be reachable by the plan in equity. Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356, 369, 126 S. Ct. 1869, 164 L. Ed. 2d 612 (2006).
It is unclear where preemptive ERISA-plan lien authority stops. Many, if not most, ERISA benefits plans are reinsured above a certain dollar amount, with a real insurer as the stop-loss or excess carrier. It is unknown whether the provisions of C.G.S. §31-299a and §38a-470 would apply to the transactions of those excess carriers; i.e., apply to benefits that are ultimately paid by the excess carrier beyond the self-retention limit. However, there is authority to the contrary. Bill Gray Enterprises, Inc. Employee Health and Welfare Plan v. Gourley, 248 F.3d 206 (3d Cir. 2001). In that case, the plan engaged an entity called Diversified Group Administrator, Inc., to process some claims, and it also purchased stop-loss, also known as excess loss, insurance from the Insurance Company of North America. The defendant Gourley was a plan participant who was badly injured in a motor vehicle accident. The self-funded portion of the plan paid $40,000 in medical bills, and the insurer paid the balance of over $100,000. The tortfeasors had no insurance, and Gourley collected $300,000 from his personal uninsured motorist policy. He executed a release with the UM carrier that provided that none of the money was for accident-related medical bills, and refused to reimburse the plan. Gourley relied on a Pennsylvania anti-subrogation statute that barred insurance carriers from obtaining reimbursements from the proceeds of motor vehicle accidents.12 Based on the facts that (1) the stop-loss insurance at issue did not insure individual plan participants, (2) did not administer individual claims after the retention level was reached, (3) only provided reimbursement to the plan after the plan made benefit payments, and (4) the plan would remain liable to participants in the event of the insurer’s insolvency, the Court held that the purchase of stop-loss insurance did not make the self-funded plan an insurance carrier subject to the Pennsylvania anti-subrogation statute. Bill Gray v. Gourley, supra, 248 F.3d at 214-5.
Other Courts of Appeals have similarly held that purchase of stop-loss insurance does not make a self-funded ERISA plan an insurer subject to state regulation. See, Am. Med. Sec., Inc. v. Bartlett, 111 F.3d 358 (4th Cir.1997), cert. denied, 524 U.S. 936, 118 S.Ct. 2340, 141 L.Ed.2d 711 (1998), where the policies a state sought to regulate had a stop-loss “attachment point” of $25,000 or less; Thompson v. Talquin Bldg. Prod. Co., 928 F.2d 649 (4th Cir.1991) (where the ERISA plan provided that no medical expenses related to motor vehicle accidents would be paid, and the stop-loss attachment point was $25,000); Lincoln Mut. Cas. Co. v. Lectron Prod., Inc., Employee Health Benefit Plan, 970 F.2d 206 (6th Cir.1992); United Food & Commercial Workers & Employers Ariz. Health & Welfare Trust v. Pacyga, 801 F.2d 1157 (9th Cir.1986); Brown v. Granatelli, 897 F. 2d 1341, 1354-55 (5th Cir. 1990).
There has been recent judicial resistance to interpretations of the savings clause that protect illusory self-funded plans such as these. See, “Tactical self-funded ERISA employers unnecessarily threaten employees’ right to independent review of an HMO’s medical necessity determination with preemption,” L. Darnell Weeden, 77 St. John’s L. Rev. 867 (Fall 2003), summarizing developments in this area. See also, Am. Med. Sec., Inc. v. Bartlett, supra, 111 F.3d at 362, where the Fourth Circuit recognized that the state statute at issue was designed to prevent self-insured plans from taking advantage of the ERISA loophole that allowed them to take on only minimal risk, and to provide far less coverage to their beneficiaries than the state required for insured plans and insurers, and yet continue to enjoy the full protection of ERISA preemption. The Court however, stated that this was a problem for Congress to address. Id. at 364.
Whether ERISA plan representatives are obliged to assert their liens in or participate in workers' compensation hearings when noticed is doubtful, but they may wish to do so for the sake of ease of administration in an ongoing case. Representatives of the ERISA plan do in fact sometimes attend workers' compensation hearings, and their attendance is frequently very helpful in reaching a resolution of a difficult claim; discussing the issues of compensability frankly with the ERISA plan representative and the commissioner may induce the representative to compromise the ERISA lien as part of a resolution of the claim. The claimant and, presumably, the workers' compensation insurer should require that the plan documents be provided and insist on proof that the plan is in fact ERISA-qualified.
Possibility of health insurer’s refusal to pay for medical treatment post-settlement
Whether a future group health insurer will provide coverage for medical treatment of the compensable body part or condition after settlement of a workers’ compensation claim is impossible to predict. A future health insurance policy may exclude all coverage of workplace injuries; some policies exclude coverage even where a workers’ compensation claim has not been filed. There has been some litigation involving the refusals of group health insurers to pay for medical treatment of workplace injuries or conditions subsequent to a workers’ compensation settlement, most of it bad for claimants.13 Therefore, counsel for claimants must ensure that their claimants understand the uncertainty of future group health insurance coverage. Counsel for respondents should incorporate language into stipulations disclaiming any assurances by them or by their clients as to future health insurance coverage.
Where a claimant has no present health insurance coverage, the ability of a future health insurance carrier to exclude coverage on the basis that the claimant has a preexisting condition is generally limited in Connecticut by statute to one year of exclusion for the preexisting condition following the date of enrollment in the health insurance plan.14 There has been very little reported to date as to how or whether the Affordable Care Act and ERISA would apply to such situations.
Where future health coverage will be provided contractually by the employer, settlement dynamics are different. Where the employer is self-insured, the costs of future medical treatment for the compensable condition may be borne by employer even though the workers' compensation claim is settled; de facto the employer may still be on the risk medically. (Or not, depending on the provisions of the health insurance contract, as discussed above.) Where health coverage will continue to be provided by the employer for the compensable injury, the value of the claim for settlement will be correspondingly diminished. However, in some cases where the claimant will have health insurance provided post-settlement, it is possible to negotiate an agreed payment to the existing group carrier, in exchange for which the carrier will agree to provide coverage for the work-related injury. This was accomplished frequently in settlement of claims for employees of the State of Connecticut, where agreed payments to Anthem Blue Cross at the time of settlement prevented denial of future coverage for the conditions at issue. Alternatively, a moratorium amount or period may be determined by agreement, similar to a Medicare-approved allocation for future medical expenses. However, such negotiations with the existing health care insurer alone can provide no protections where the carrier for the health insurance changes in the future.
Short- and Long-Term Disability Benefits
Some employers offer short-term disability benefits, usually for six months, for non-work-related injuries. These benefits are usually paid out of operating revenues, rather than from a dedicated fund. They may be paid at full-salary, or at some percentage of salary. Short-term disability benefits are rarely paid for accepted workplace injuries, but if they are, they usually are reduced by the amount of any workers’ compensation benefit. When a workers’ compensation claim is contested, these benefits are usually paid pending resolution. Most employers require reimbursement if the worker ultimately receives workers’ compensation temporary total or temporary partial disability benefits for the period during which short-term disability benefits were paid. The obligation to reimburse is usually considered a contractual, not a lien, obligation. Customarily, the parties agree whether and how these benefits should be reimbursed, depending upon many factors, such as whether the short-term disability benefits were paid by the respondent or by another employer, or whether the claim is being settled.
Long-term disability benefits, may, depending upon the employer, be paid for both work- and non-work-related injuries. These benefits are by contractual provisions ordinarily reduced by the amount of workers' compensation benefits unless the claimant has purchased the disability policy privately. Employer-provided LTD plans can be ERISA plans, and the analysis above pertaining to ERISA group health plans applies equally to employer LTD plans.
Settlement of a contested workers' compensation claim may result in the payment of money which in part represents indemnity benefits which arguably should have been paid for a period of time during which STD or LTD benefits were being paid. Receipt of a specific portion of the settlement proceeds identifiable as benefits paid in a specific amount for a specific time period coinciding with a period of STD or LTD payments may give rise to a contractual obligation for the claimant to repay the STD or LTD. Lump sum settlements, however, are not ordinarily defined with respect to amounts paid for specific prior periods of disability; it is thus difficult to determine what amount of the lump sum settlement represents payment of indemnity benefits for the period covered by the LTD payments. The stipulation may indeed be drafted to allocate specific compromised amounts towards contested past-due indemnity benefits or towards potential future benefits to be paid after the date of the stipulation, in order to minimize the repayment obligation to the LTD insurer. The commissioner may find that these are reasonable compromises. However, whether such an allocation of benefits or finding by the commissioner has any legal effect on the disability carrier is doubtful. There appears to be no reported Connecticut precedent to date.
Ordinarily, therefore, such a repayment obligation for STD or LTD benefits at the time of settlement, if any, is subject to negotiation and compromise between the STD provider or LTD carrier and the claimant. Since in many cases an LTD insurer may continue to pay benefits after the settlement of a workers' compensation claim, attention must be given to the potential repayment obligation, based on the terms of the LTD contract, to deal appropriately with the issue of LTD reimbursement by negotiation. The claimant must also understand the potential impact of any lump sum settlement on future LTD payments, if counsel is unable to reach an agreement with the LTD carrier fixing the amount of any reduction.
It is important to remember that most employer-provided LTD plans contain provisions reducing the LTD benefit amount not only by any workers’ compensation payment received during the same period, but also by any Social Security disability benefit received during that period. Most employer-provided LTD plans require benefit recipients to file for Social Security disability benefits. Those who do not apply will have their LTD benefit reduced by the amount of Social Security disability benefit the beneficiary would have received if awarded Social Security disability. At least at present, most LTD plans do not require an appeal of an adverse decision by Social Security.
Medicare conditional payments
- A lien for Medicare conditional payments can be levied against any party, including, but not limited to, a “beneficiary, provider, supplier, physician, attorney, state agency, or private insurer that has received a third-party payment.” 42 C.F.R. §411.24(g).
- A conditional payments lien automatically applies to all parties, and attorneys who handled any funds payable to the claimant, without need to perfect;
- A conditional payments lien amount is frequently overstated, with treatment for noncompensable conditions included (the lien accounting can be contested);
- A conditional payments lien can be compromised at time of settlement (with considerable effort); - A conditional payments lien allows for recovery of attorney’s fee;
- A conditional payments lien probably applies only to estates of deceased claimants who have benefitted from conditional payments, not to their survivors’ benefits;
- Conditional payments are not to be confused with Medicare set-asides, a surprisingly common error.
Attorney Gregg Lisowski will speak later today about Medicare conditional payments in detail. This section focuses on how to recognize a potential Medicare conditional payment problem, and when counsel should take action. A Medicare lien for conditional payments is created at the time Medicare pays for:
medical treatment of a compensable condition;
a condition alleged to be compensable but disputed by the respondent;
disputed medical treatment for a compensable condition;
medical treatment for a condition later determined to be or alleged to be compensable.
A Medicare conditional payment lien is “perfected” upon payment of the medical provider’s bill, without need for any further action by the Center for Medicare and Medicaid Services (CMS).
If the claimant is eligible for Medicare, or has been eligible in the past, or becomes eligible during the pendency of the workers’ compensation claim, it would be wise to investigate conditional payments by Medicare as soon as possible. Claimant’s counsel, or, in the case of unrepresented claimants, respondent’s counsel, should ask:
- Is the claimant approaching, at, or our beyond his or her Social Security retirement age, so that Medicare has been or will likely become a health insurer during the pendency of the claim? It is easy to miss a conditional payments problem when a case drags on for years and the claimant become eligible for Medicare during the course of the claim.
- Has the claimant qualified for Social Security disability benefits at any time during which he or she received medical treatment for any of the body parts at issue in the workers’ compensation claim? Medicare entitlement usually begins two and a half years after the disability onset date determined by SSA, which is usually two years after the first month for which SSDIB benefits are paid. There are exceptions for certain cancers, blindness, and some terminal illnesses, when Medicare eligibility may occur earlier.
- In an accepted claim, has any authorized medical provider mistakenly billed Medicare for compensable treatment? (It happens frequently).
- Is the claimant using a Medicare Advantage Organization (MAO)? An MAO is offered by a private insurer to deliver certain Medicare-funded health benefits for a flat fee. A claimant may refer to such a plan as a “Medicare HMO,” or may tell you that the health insurer is a regular insurance company; leading you falsely to assume that Medicare conditional payments are not involved. Where the claimant obtains coverage through an MAO, a conditional payments accounting by CMS may or may not include expenditures by the MAO. It is not clear at this time whether MAOs have the same recovery rights for conditional payments as CMS. See, In re Avandia Marketing, Sales Practices and Products Liability Litigation, 685 F.3d 353 (3rd Cir. 2012), cert. denied 133 S. Ct. 1800, 185 L. Ed. 2d 810 (2013), where the Third Circuit held that the Medicare Advantage Plan had the same right to bring a cause of action to recover conditional payments as does CMS. However, in Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146 (9th Cir. 2013), the Ninth Circuit held that the statutes authorized an MAO to include contractual recovery rights in the policy and to enforce them under state law, but did not give it the same rights as CMS to recover payments made for medical treatment from the policy beneficiaries, tort plaintiffs who had secured a recovery in a civil action.
- Did a deceased claimant, or the claimant’s decedent, receive conditional payments from Medicare, or from a Medicare Advantage plan? The Eleventh Circuit held that CMS is limited to recovering conditional payments from the proceeds recovered by an estate, and may not recover from the survivors’ portion of a recovery in a civil action, in Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010). There are many cases on this issue at the district 28 court level. It is likely that workers’ compensation survivors’ benefits would be treated similarly to survivors’ recoveries in tort.
Medicaid and other forms of state public assistance
These liens are addressed in detail in another portion of this seminar. Basic information helpful in identifying potential liens related to public assistance follows, but this summary is by no means exhaustive.
- Liens must probably be perfected by written notice to attorney or insurer, but there is very little law on this point;
- Liens, if perfected, may be asserted against those who received adequate notice, including claimants, respondents and their counsel;
- Liens are asserted by the State of Connecticut Department of Administrative Services; - Liens for medical assistance may be asserted for 100% of amounts paid by the state for treatment of the compensable or claimed condition;
- Liens for medical assistance for treatment of other non-compensable or non-claimed conditions are capped at 50% of the net amount of any settlement, after attorney’s fees, costs of litigation, and payment of related unpaid medical bills;
- Liens for cash assistance are capped at 50% of the net amount of any settlement, after attorney’s fees, costs of litigation, and payment of related unpaid medical bills.
- Liens can be compromised;
- If after settlement, a request is sent to the Commissioner of Administrative Services for the lien amount and there is no response within 45 days, the settlement proceeds may be disbursed to the claimant.
- Whether an attorney (claimant’s or respondent’s) has an affirmative duty to investigate the existence of a potential lien claim has never been decided; most attorneys believe that no such duty exists.
- Whether the lien recovery limitations of 100% of claim-related medical expenses and 50% of non-claim-related expenses and cash payments would apply to workers’ compensation claims against the State of Connecticut has not been directly addressed, but since the limitation on lien recovery does not apply to the State in civil actions against it, the same may apply in workers’ compensation claims. (See discussion below.)
- Medicaid and other public assistance liens, excluding child support liens, are usually addressed at the time of settlement.
Public assistance, whether in the form of medical or income assistance, presents a two-pronged problem; (1) possible liens; and (2) loss of entitlement to valuable family benefits in the event of receipt of workers’ compensation payments. Dealing with state reimbursement liens is particularly crucial at the time of settlement, since the claimant's attorney, and probably the workers' compensation insurer, may be treated as stakeholders with a direct reimbursement obligation to the state, at least where a written notice of lien has been given to the attorney or insurer. See, State v. Blawie, 31 Conn. Sup. 552 (1974), cert. denied, 167 Conn. 693, 333 A.2d 70 (1975).
Many of the public assistance programs provided in Connecticut are funded by Medicaid (Title 19) allotments from the federal government to the state. Provision and administration of Medicaid benefits, and recovery of liens, is by the State Department of Administrative Services, not by CMS.
Public medical assistance is provided in large part under the Husky programs. Three of the four Husky programs are Medicaid programs: Husky A, C and D. Husky B is not funded by Medicaid. The state currently operates Husky B with funds provided by the federal government under the Affordable Care Act; this funding is set to expire in 2017. Since the Affordable Care Act (ACA) took effect, many Connecticut families rely upon Husky programs for health insurance coverage for some or all of their members. Some of the Husky programs are income and/or asset dependent. New Medicaid rules effective January 1, 2014 changed the former rule so that income that would not be taxable is not counted toward eligibility. Therefore, at least at present, non-lump sum workers’ compensation payments are not considered income for purposes of determining eligibility for Husky programs. However, lump sum payments from civil and other sources are counted as income in the month received; it is not clear whether workers’ compensation settlements will be treated similarly. The eligibility rules are revised often.
Many parents who are enrolled in employer or other private sector insurance plans have Husky coverage for their children because it is more economical. Counsel should ask whether if a claimant or any member of his or her family is enrolled in a Husky program, and then determine which program it is. In brief, the programs are:
Husky A is a Medicaid Title 19 program, available only to Connecticut residents who are U.S. citizens or certain “qualified” immigrants. Income-dependent coverage, without charge, is available to children under 19, their parents and care giver relatives, if family income is equal to or less than the specified percentage of the federal poverty level. Children who have aged out of the foster care system are also eligible until age 26, with certain restrictions. Pregnant women are covered as long as their income does not exceed the specified percentage of the federal poverty level. 15
Husky B is not a Medicaid program, although it is funded by a federal grant. It was formerly known as CHIP, the Non-Medicaid Children’s Health Insurance Program. Uninsured children under 19 of parents who earn too much to qualify for Medicaid programs (income limits for Husky B are fixed at a higher percentage of federal poverty level) may be eligible. This is free or subsidized coverage, depending upon family income level.
Husky C is a Medicaid Title 19 program, formerly known as Medicaid for the Aged/Blind/Disabled. Coverage is limited to those over 65, or to those between ages 18 and 64 who are disabled, who do not exceed the income and asset limits. Low-income seniors who have Medicare may also receive medical coverage under Husky C. Long term care, including long-term nursing home care, is usually covered under this program for those who meet the income and asset limits.
Husky D is a Medicaid Title 19 program, formerly called Medicaid for Low- Income Adults. It covers without charge those individuals between ages 19 and 64 whose family incomes exceed the Husky A limitations, and who do not receive SSI or Medicare. There is no need to prove disability, as with Husky C, and the asset requirements are not as strict. Pregnant women and adults with children dependant on them are not covered under this program.
Husky A, B & D are available for certain eligible undocumented immigrants, such as those with legal refugee or asylum status, battered spouses, trafficking victims, pregnant women (only for labor and delivery), children in the US fewer than five years, and newborns up to one year old. Immigrants with temporary status, such as students, temporary workers and tourists, and legal immigrant adults in the US for fewer than five years, are not eligible. With these exceptions, the three Medicaid programs are available to undocumented workers only for life-threatening conditions. Husky C is limited to United States citizens residing in Connecticut.
The State does not usually seek reimbursement for food stamps received under the SNAP program, absent fraud.
Temporary Family Assistance and SNAP (food stamps) benefits are available without proof of citizenship or legal presence in Connecticut.
Counsel who have had to address DAS liens in the past will be familiar with the usual reimbursement procedure set out in C.G.S. §17b-94. That section provides that: 100% of the amount paid by the state for treatment of the compensable or claimed compensable condition may be recovered out of amounts paid to the claimant; 50% of medical payments for conditions unrelated to the workers’ compensation claim (incurred at any time) may be recovered; and 50% of cash assistance (advanced at any time) may be recovered.
These limitations on DAS lien rights may not apply when the state is a respondent in a workers’ compensation claim. In Cordero v. UConn Health Center, 308 Conn. 215 (2013), the Supreme Court held that in a tort action against the State, the lien limitations did not apply, and that the State was entitled to a reduction in the judgment against it for the entire amount of medical and cash payments it had made to the plaintiff. The plaintiff worked as a driver for Hartford Elderly Services and was injured in the course of her employment while in a waiting room at the UConn Health Center. The health center filed a counterclaim against the plaintiff seeking a set-off against any judgment, equal to public assistance payments made to or on behalf of the plaintiff. The workers’ compensation carrier for Hartford Elderly paid benefits and intervened in the civil suit against the health center to recover benefits paid and payable. In the judgement against the health center, the employer was awarded the amount of its lien, leaving after costs and attorney’s fees, approximately $78,000. The State asserted its right to an equitable set-off for all of the amounts that it had paid to or on behalf of the claimant for many years prior to and following the accident, approximately $70,000. Ruling on a matter of first impression, the Court held that the lien limitation in C.G.S. §17b-94 did not apply to actions against the State. The Court observed in a footnote that the parties had stipulated at trial that the employer was to recover its lien, although C.G.S. §17b-93(a) gives priority, after costs and attorney’s fees, to the State’s recoupment lien recoupment rights. Cordero, supra, n.10.
Hospital Free Care and Free Bed programs
In contested claims, or where a claim has not yet been brought, the issue of free hospital assistance may arise where the claimant does not have access to health insurance and requires hospital services. Most hospitals in Connecticut offer “Free Care” or “Free Bed” programs for a limited number of patients as a last resort for those who do not qualify for any other form of public or private assistance. The programs vary considerably with respect to eligibility, availability, and types of conditions covered. In general, they are funded by a combination of hospital revenue and donations. Eligibility is determined by each hospital’s financial aid office according to that facility’s guidelines, and the financial aid office usually assists the patient in completing the application. Most hospitals have posted their applications on-line. The application forms, signed by the patient, routinely contain an agreement to re-pay the cost of any care received. For example, in the current YNNH application, the patient must agree “to repay the full amount of my financial assistance award if I receive payment of any kind, including awards from a lawsuit, for the services covered by this application.” This type of language gives the hospitals only contractual rights of recovery; no lien is created. The liability is the claimant’s only, unless the case is or becomes compensable, and unless the respondent agrees in a settlement agreement to assume responsibility for medical bills to date. It is often difficult to ascertain from a hospital bill whether someone has received assistance under a free care program. The bill will sometimes show an unidentified adjustment reducing the balance owed, or will refer to a “charitable reduction.” If claimant’s counsel executes a letter of protection, it may apply to the entire cost of hospital care, without the reduction. If claimant’s counsel has reason to believe that a client has benefitted from such a program, it would be best to alert respondents’ counsel to that actual or potential liability.
Veterans Administration Medical Benefits
A veteran may receive medical and hospitalization services at a federal Veterans Administration (VA) hospital or medical facility for a work-related condition, or for a condition claimed compensable, if he or she is unable to defray the expenses of necessary hospital care. 16 Liens for medical care provided by the VA are enforceable against the employer and the insurer, and presumably against those claimants who have the means to pay for such treatment. Reference should be made to the lien statute and to the regulations that have been promulgated pursuant to it. The following relevant statutory provisions are contained in Title 38 U.S.C.A. § 1729:
(a)(1) Subject to the provisions of this section, in any case in which a veteran is furnished care or services under this chapter for a non-service-connected disability described in paragraph (2) of this subsection, the United States has the right to recover or collect reasonable charges for such care or services (as determined by the Secretary) from a third party to the extent that the veteran (or the provider of the care or services) would be eligible to receive payment for such care or services from such third party if the care or services had not been furnished by a department or agency of the United States.
(2) Paragraph (1) of this subsection applies to a non-service-connected disability—
(A) that is incurred incident to the veteran's employment and that is covered under a workers' compensation law or plan that provides for payment for the cost of health care and services provided to the veteran by reason of the disability;
(b)(1) As to the right provided in subsection (a) of this section, the United States shall be subrogated to any right or claim that the veteran (or the veteran's personal representative, successor, dependents, or survivors) may have against a third party. (2)(A) In order to enforce any right or claim to which the United States is subrogated under paragraph (1) of this subsection, the United States may intervene or join in any action or proceeding brought by the veteran (or the veteran's personal representative, successor, dependents, or survivors) against a third party.
(B) The United States may institute and prosecute legal proceedings against the third party if—
(I) an action or proceeding described in subparagraph (A) of this paragraph is not begun within 180 days after the first day on which care or services for which recovery is sought are furnished to the veteran by the Secretary under this chapter;
(ii) the United States has sent written notice by certified mail to the veteran at the veteran's last-known address (or to the veteran's personal representative or successor) of the intention of the United States to institute such legal proceedings; and
(iii) a period of 60 days has passed following the mailing of such notice.
(C) A proceeding under subparagraph (B) of this paragraph may not be brought after the end of the six-year period beginning on the last day on which the care or services for which recovery is sought are furnished.
(c)(1) The Secretary may compromise, settle, or waive any claim which the United States has under this section …
(e) A veteran eligible for care or services under this chapter—
(1) may not be denied such care or services by reason of this section; and
(2) may not be required by reason of this section to make any copayment or deductible payment in order to receive such care.
(f) No law of any State or of any political subdivision of a State, and no provision of any contract or other agreement, shall operate to prevent recovery or collection by the United States under this section or with respect to care or services furnished under section 1784 of this title.
The VA may assert its statutory right of subrogation against the workers' compensation carrier, against a self-insured employer, or against the claimant if an award or settlement is sufficient to support reimbursement. The statute rovides that the VA is subrogated to the claimant's claim and may intervene or institute proceedings. However, one Circuit Court of Appeals has held that the right of subrogation, at least in workers’ compensation claims, is contingent upon the VA first obtaining a valid subrogation agreement from the claimant. The Fifth Circuit held that, in an action against a workers’ compensation insurer to recover hospitalization and other medical expenses related to treatment of a compensable work-related injury, the failure of the VA to obtain an assignment of claim from the patient-claimant prohibited the VA from seeking reimbursement from the insurer. Pennsylvania Nat. Mut. Cas. Ins. Co. V. Barnett, 445 F.2d 573 (5th Cir. 1971). The Court relied upon 38 C.F.R. §17.48(d), which provides in pertinent part:
(d) Persons hospitalized pursuant to paragraph . . . (d) . . . of s 17.47, who it is believed may be entitled to hospital care or medical or surgical treatment or to reimbursement for all or part of the cost thereof by reason of any one or more of the following:
(1) . . . (iii) “Workmen's Compensation” or “employer's liability” statutes, State or Federal; . . . or
(2) By reason of statutory or other relationships with third parties, including those liable for damages because of negligence or other legal wrong; will not be furnished hospital care, medical or surgical treatment, without charge therefor to the extent of the amount for which such parties, referred to in paragraph (d)(1) . . . of this section, are, or will become liable. Such patients will be requested to execute an appropriate assignment as prescribed in this paragraph. Patients who, it is believed, may be entitled to care under any one of the plans in paragraph (d)(1) of this section, will be requested to execute VA Form 10-2381, Power of Attorney and Agreement. . . . Notice of this assignment will be mailed promptly to the party or parties believed to be liable. When the amount of charges is ascertained, bill therefor will be mailed such party or parties.
The regulation, by its terms, only allows the VA to “request” that the patient/claimant execute an assignment form. The Court in the Pennsylvania decision did not indicate whether the VA had simply failed to obtain the authorization, or the claimant had refused to execute the authorization. See, U.S. v. Bender Welding & Machine Co., 558 F.2d 761, 764 (5th Cir., 1982), where the Court noted that a voluntary assignment was all that was necessary for the VA to be subrogated to the claimant’s rights to workers’ compensation benefits. Compare, Willits and Son Sod Farm v. Moon, 262 Ark. 742, 561 S.W. 2d 82 (1978), where the comatose employee was admitted to a VA hospital and died without regaining consciousness, the employer and its carrier were held liable for the VA’s lien.
Some courts have interpreted the statute to limit the VA’s liens to apply only to compensable medical treatment. That is, if the employer would not be liable to provide the treatment rendered by the VA, the lien is invalid. See, for example, U.S. v. Bear Bros., Inc., 355 So. 2d 1133 (Ala. Civ. App. 1978), where VA intervened in the workers’ compensation claim to recover its costs for medical treatment provided the employee for a compensable condition. The lien claim was denied because the employee had refused to continue treatment with his authorized workers’ compensation physician and instead sought care at the VA. Since treatment other than that with the authorized doctor was not compensable, the lien was invalid. See also, Morris v. Bernstein Co., 1995 WL 1066068, 95 O.I.C. 169-39-04 (Va. workers' compensation commission, VWC File no. 169-39-04, Dec. 20, 1995), where the VA's claim for reimbursement of $18,365.00 in a contested leg claim which was previously settled for $1,500.00 was denied by the Virginia commission on the ground that the case was not compensable; and Harlow v. Johansen, 2005 WL 641326, 19 Mass. Workers' Comp. Rep. 39 (Mass. Dept. of Industrial Accidents Board No. 56608-07 (2005), where the Massachusetts appellate board remanded a denied claim for reimbursement for further hearings on the issue of whether, under Massachusetts law, the VA reimbursement claim was known to the workers' compensation insurer at the time of settlement of the claim; if so, under Massachusetts law, the reimbursement claim could be pursued against the carrier after the settlement.
The amount of the claimed reimbursement, as well as medical records, may be obtained through the local VA facility, although claims for reimbursement are ultimately handled by VA staff counsel. The statute of limitations for the VA to seek recovery is six years. 38 U.S.C.A. § 1729(b)(2)(C). Compromise of the VA claim is permitted. 38 U.S.C.A. § 1729(c)(1). The lien provision preempts state law to the contrary. 38 U.S.C.A. § 1729(f). The claimant, however, may not be denied medical care by the VA because of the reimbursement statute. 38 U.S.C.A. § 1729(e)(1).
In addition to the federal VA, the Connecticut Department of Veterans Affairs provides shelter and medical treatment to veterans of the national armed services and the Connecticut National Guard. Treatment may be provided to any veteran at the Veterans' Home and Hospital in Rocky Hill, and medical treatment and care, including clothing, may be provided at any hospital for destitute veterans. C.G.S. §27-108; see generally, C.G.S. §31-103 et seq. The veteran so treated is required to pay for the costs of the treatment if able. If the veteran does not pay, the veteran is required to assign his right to receive payment of income, from whatever source, to the commissioner until the debt is paid. If the veteran dies without retiring the debt to the state, the Department of Veterans Affairs may make a claim against the veteran's estate. Sec. 27-108(e) and (f). See, State v. Egan, 169 Conn. 78, 362 A.2d 516 (1975). Whether such an assignment of workers' compensation indemnity benefits preempts the anti-assignment provision of C.G.S. §31-320 does not appear to have been determined; one expects that the assignment would be allowed. One would also expect that the situation would arise only in contested cases for which liability was later accepted, or in the settlement of contested cases.
Child Support and Alimony Orders
Pursuant to C.G.S. §52-362, child support and alimony liens are asserted by the State in a parallel manner with public assistance liens, and withholding orders may be asserted with legal effect on either the insurer or the claimant.17 Section 52-362(a)(5) provides that support orders for spouses, former spouses, and children may be asserted against the income of the responsible party, including:
… any periodic form of payment due to an individual, regardless of source, including, but not limited to, disposable earnings, workers' compensation and disability benefits, payments pursuant to a pension or retirement program and interest. …
Thus, by the terms of the statute, withholding orders may be asserted not merely against lump sum settlements, but against weekly indemnity benefits as well, in apparent contradiction of the anti-attachment provision of C.G.S. §31-320. Liens may also be asserted against a claimant's claim (or any “property”) pursuant to C.G.S. §17b-93, for support orders in favor of the state if the claimant is the parent of a child who has received public assistance for which a right of reimbursement exists. In State v. Reed, 5 Conn. Cir. Ct. 69, 241 A.2d 875 (1967), garnishment by the state of the claimant's workers' compensation benefits for child support obligations was allowed even though the court had no in personam jurisdiction over the claimant. See also, Tyc v. Tyc, 40 Conn. App. 562, 672 A.2d 526 (1996) where the Court held that, in a marital dissolution action, the husband's permanent partial disability benefits and future workers' compensation benefits could be included in the marital estate and were subject to assignment pursuant to C.G.S. §46b-81.18 And see, Bragg v. Bragg, 2012 WL 1003758 (Conn. Super. Ct. 2012), where the Court included the potential future settlement value of the wife's workers' compensation claim in the marital estate and ordered that any future settlement of the wife's claim would constitute a substantial change in circumstances with respect to the modification of the order for payment of alimony to her.
Orders to employers or other payors of income to withhold money for the payment of support obligations are authorized by C.G.S. §52-362(e) et seq.; employers or insurers who ignore such orders may be liable for the amount which should have been withheld but was instead paid to the claimant. Withholding orders are effective if served by certified mail. C.G.S. §52-362(h). C.G.S. §52-362(c)(1), however, requires notification of the person liable for support (the obligor) that, whatever the amount of the arrearage, the amount of withholding is limited by statute.19
There does not appear to have been any detailed examination in recent years of the relationship of these limitations or of C.G.S. 31-320, the anti-assignment statute, to C.G.S. §52-362. Presumably, the courts would hold that the anti-assignment provision of Section 31-320 does not prohibit the state from garnishing workers' compensation indemnity benefits to enforce support orders and that the limitation of the amount to be withheld under Section 52-362(c)(1) does not affect the right of the state to collect the entire amount of the arrearage in the case of lump sum settlement, as in State v. Reed, supra, where the Court simply held that Section 31-320 was not intended to protect the claimant from child support claims.
The amount of the support obligation is determined at the time the child support order is entered and the obligation continues to run until modified by the court entering the order. Disabled employees receiving workers' compensation may sometimes be advised to seek modification of the support order in recognition of their changed financial circumstances to alleviate the amount of increase in the lien going forward; but the past arrearages nevertheless frequently loom large in the workers' compensation claim.
Prior to June 8, 2004, it appears that a lien for the costs of incarceration could be asserted by the State of Connecticut against a claimant's net settlement of a workers' compensation claim against an employer other than the state. C.G.S. §§18-85a, 18-85c. There appear to be no cases reported where such a lien was asserted. Section 18-85b(a) provides that if the claimant's attorney requests the lien information from the Commissioner of Corrections or his designee and there is no response within 45 days, the attorney may release the settlement proceeds without personal liability of the attorney.
Since June 8, 2004, however, workers' compensation benefits, presumably including settlement proceeds, appear to be exempt from incarceration liens. Public Act 2004-234, sec. 17 amended C.G.S. §18-85a to incorporate as exemptions from the incarceration lien the exemptions from judgment liens which are provided by C.G.S. §52-352b, including an exemption for workers' compensation benefits. The act applies to “actions or proceedings pending or commenced on or after” the date of passage, June 8, 2004. Whether that means that the exemption for workers' compensation benefits applies to accidents on or after June 8, 2004, or applies only to cases in which notices of claim have been filed on or after June 8, 2004, or applies only to actions by the Attorney General to enforce the lien claim, has not been judicially addressed to our knowledge.
Similarly, there are no reported cases on whether the proceeds of a lump sum settlement of a workers' compensation claim are exempt from the incarceration lien after June 8, 2004.
Liens and other benefit reductions affecting public sector workers
The workers' compensation benefits of state and municipal employees are subject to additional statutory provisions that will not be discussed at length here. These public employees frequently are eligible for disability retirement benefits and longevity pension benefits. Liens, and the effects of workers’ compensation payments - periodic or lump sum, depend on the particular retirement program. Important things to remember are summarized here.
Important considerations for state employees
- If the claimant is receiving, or anticipates receiving state disability retirement benefits, the retirement benefit amount will be offset, partially or completely, by any workers’ compensation payments, except for permanent partial disability and scarring payments. The offset occurs regardless of whether the disability leading to the retirement is serviceconnected. The amount of the offset is not a dollar-for-dollar offset; it depends upon whether the claimant is also receiving Social Security disability payments (a possibility for all state employees who have in their working careers had earnings withheld for Social Security), and the amount of any earned income.
- If the claimant is receiving or anticipates receiving state voluntary longevity retirement benefits, or state hazardous duty retirement benefits after 20 or 25 years of service, workers’ compensation benefits received after the retirement date will not be offset.
- The amount of any state disability retirement offset is reduced by attorney’s fees incurred to obtain the workers’ compensation benefits.
- The state frequently fails to offset disability retirement benefits by workers’ compensation payments, and will then assert overpayment claims, which are often substantial. The state will seek recovery of overpayments by way of deductions from ongoing disability retirement payments, or, if there are no or insufficient disability retirement payments, from any workers’ compensation benefits. Waiver of an overpayment is possible, but rare. The Retirement Commission has authority under C.G.S. §5-170(b) to ask the Comptroller to petition the workers’ compensation commissioner for an order reducing workers’ compensation benefits until the retirement benefit overpayment is reimbursed, “notwithstanding the provisions of section 31-320.” An appeal of the overpayment amount may be made to the State Retirement Commission.
- Claimants who receive C.G.S. §5-142(a) or similar hazardous duty workers’ compensation benefits, are barred from receiving any other benefits under the state employees retirement statutes until he or she no longer receives the hazardous duty benefits. This is not an offset; it is a statutory bar which prevents simultaneous receipt of the two classes of benefits. Therefore, there is no exception for permanent partial disability or scarring benefits; workers’ compensation benefits cannot be paid for the same period as hazardous duty compensation. Overpayments frequently occur, and overpayments can be substantial and must be addressed through the State Retirement Commission. The State will seek recovery of overpayments by way of deductions from ongoing disability retirement payments, or, if there are no or insufficient disability retirement payments, from any workers’ compensation benefits. Waiver of an overpayment is possible, but rare. The Retirement Commission has authority under C.G.S. §5-170 to ask the Comptroller to petition the workers’ compensation commissioner for an order reducing Section 5-142a benefits until the retirement benefit overpayment is reimbursed, “notwithstanding the provisions of section 31-320.” An appeal of the overpayment amount may be made to the State Retirement Commission. Hazardous duty payments are generally reduced to one-half of the initial amount after five years, and at that point certain retirement benefits may become available. In some situations, it may be more advantageous financially for the claimant to collect C.G.S. §31- 307 temporary total disability benefits in lieu of hazardous duty benefits. The State Retirement Commission can provide information necessary to determine the best option.
- The relevant statutes governing state worker retirements are C.G.S. §5-169 and §5-170. These statutes operate to cap the combination of state disability retirement benefits, earned income, Social Security disability benefits and workers' compensation benefits, at 80% of the earnings of the employee, subject to cost-of-living adjustments. However, the statutes are complex in this area, and it is helpful to discuss the actual numbers in a particular case with the appropriate retirement administrator. Workers’ compensation benefits are primary, so that state disability retirement benefits are reduced by the amount of workers’ compensation benefits received, except, as noted above, for permanent partial disability payments made pursuant to C.G.S. §31-308(b), and scar awards.
- The retiree is responsible for notifying the appropriate retirement authority when he or she receives workers’ compensation benefits, and or Social Security disability benefits.
- Lump-sum settlements by state employees traditionally have had no post-settlement impact on disability retirement benefits, where the finding and award by stipulation has not allocated a portion of the settlement proceeds for future temporary indemnity benefits. However, the law is murky enough, that each case should be dealt with individually, and written agreement made with the state disability retirement program to confirm the impact, if any, of the settlement on future disability benefits. This is particularly true if a structured settlement involving periodic payments is contemplated.
Important considerations for municipal employees
The State Retirement Commission administers many municipal retirement programs under MERS (Municipal Employees Retirement System), including not only those for municipalities, but for other local government entities. The MERS program has offset and reimbursement rules that differ from those of the state.
- Only service-connected disability retirement benefits are reduced by workers’ compensation payments.
- The MERS offset is dollar-for-dollar.
- Permanent partial disability benefits do not reduce the MERS disability retirement benefit.
- There is no allowance made for attorney’s fees incurred in the workers’ compensation claim; the reduction in the MERS benefits is for the entire amount of the workers’ compensation benefit.
- The relevant statute is C.G.S. §7-436.
- There are frequent overpayments by MERS, and overpayments have been substantial. Overpayments are collected by way of reduction in the MERS disability payments.
- Many municipal and local government pension and disability retirement plans are not established under MERS. Different rules apply to these plans, and reference must be made to the ordinances, statutes, special laws, contracts, and personnel policies that govern these plans.
- With respect to non-MERS plans, disability retirement benefits, whether serviceconnected or not, may or may not be reduced by workers' compensation periodic payments; the provisions vary from one to another retirement plan.
- Municipal non-disability pensions may be reduced by the amount of workers' compensation benefits. City of Middletown v. Local Union No. 1073 of Intern. Ass'n of Firefighters, AFL-CIO, 1 Conn. App. 58, 467 A.2d 1258 (1983).
- The impact of a workers' compensation settlement on a non-MERS municipal disability or longevity-based retirement, because of contractual variations, should be determined prior to settlement of a municipal claim. Often, the effect of a lump sum workers’ compensation settlement on either disability or regular retirement is not specified in the retirement plan.
Public disability offsets from Social Security disability benefits
A further consideration for state and municipal employees is that Social Security benefits may be reduced not only by workers' compensation indemnity benefits paid periodically, but also by “public disability benefits” according to the same formula applicable to determining the workers' compensation offset from Social Security disability benefits.20 42 U.S.C.A. Sec. 424a; 20 C.F.R. sec. 404.408. “Public disability benefits” include disability retirement benefits paid by state and municipal governments, where the claimant has not contributed to Social Security through payroll deductions during the period of his public employment. Thus an important consideration with respect to settlement of state and municipal cases may be the amount of future Social Security disability benefits, which may be paid at a reduced level because of this “offset” for disability retirement income.
Where the state has paid unemployment benefits to the claimant, and the claimant is thereafter paid workers' compensation benefits for temporary disability under C.G.S. §31-307, or §31-308(a) for the same period covered by the unemployment benefits, the claimant is obligated to repay the unemployment benefits, or be subject to a moratorium on future unemployment benefits.21 Permanent partial disability benefits paid under C.G.S. §31-308(b), and presumably benefits under §31-308a, since they are clearly benefits for permanent rather than temporary disability, do not trigger this repayment obligation. Any obligation to repay unemployment benefits is not a lien, but a claimant who fails to repay risks a future moratorium.
In the settlement of contested issues, a lump sum settlement amount does not usually indicate the payment of past due benefits for any particular period or at any particular rate. Where a lump sum settlement specifies payment of weekly temporary benefits for a period during which unemployment benefits were paid, presumably a repayment obligation would be triggered for the unemployment benefits paid during this period. Where the stipulation does not specify particular compromised amounts for particular periods, it is not clear that the claimant has a legal duty to achieve a compromised partial reimbursement of the unemployment benefits received. There appears to be no precedent on this issue. If the parties agree or the commissioner finds that a certain amount of the settlement represents compromised past due temporary disability benefits for a specific time period, the Department of Labor might assert or accept this allocation; but it is doubtful that it would be legally bound. Indeed, because of past and future Social Security and long-term disability benefit considerations, stipulations frequently designate all proceeds of the award by stipulation as future payments made after the date of the approval of the stipulation, at a rate based on the amortization of the net lump sum over the claimant's life expectancy. Ordinarily claimants prefer to leave the issue unresolved, to refrain from making any reimbursement to the Department of Labor, and to avoid facing a potential moratorium against future unemployment benefits.
The federal government, under the TRICARE program, provides medical, prescription and dental care coverage to uniformed military service members and former members, members of the Public Health Service and National Oceanic and Atmospheric Administration, and to their dependents, under 10 U.S.C. 1071 et seq., referred to as “TRICARE.” With respect to payment by TRICARE for work-related injuries, 32 C.F.R. §199.8 provides:
(3) TRICARE and Workers' Compensation. TRICARE benefits are not payable for a work-related illness or injury that is covered under a workers' compensation program. Pursuant to paragraph (c)(2) of this section, however, the Director, TRICARE Management Activity, or a designee, may authorize payment of a claim involving a work-related illness or injury covered under a workers' compensation program in advance of adjudication and payment of the workers' compensation claim and then recover, under § 199.12, the TRICARE costs of health care incurred on behalf of the covered beneficiary.
If a third-party payor, including a workers’ compensation respondent, may be liable for expenses paid by the program, the Secretary of Defense is authorized, through a contractor, to recover “... reasonable charges for health care services..., less any deductible or copayment amount to which the responsible third-party would be entitled. 10 U.S.C. 1095(a)(1). 22 The United States may institute and prosecute legal proceedings itself to recover payments from responsible third-parties. 10 U.S.C. 1095(e)(1), and may also compromise, settle or waive any such claims
Ad hoc contractual obligations
Various other repayment obligations may arise, ordinarily in the context of settlement, such as repayment of loans made to the claimant. Whether such loan agreements obligating the claimant to repay the obligation out of the settlement proceeds of a workers' compensation claim would be barred by C.G.S. §31-320 is arguable but largely unexplored, since such loans are most frequently from relatives. However, the rise of advertised loans to claimants with accepted workers' compensation cases under extremely unfavorable terms by companies purporting to avoid usury laws by a variety of legal fictions suggests that this legal issue may be ripe for exploration.
Contractual obligations arise for payment of medical bills which have remained unpaid pending litigation or settlement of the claim under a “letter of protection” authorizing the claimant's attorney to pay such bills from settlement proceeds. The Commission has in the past discouraged such letters of protection; but to our knowledge, takes no official position at present.
1 Section 36 of the original 1913 Act contained the following provision:
Exemption and Preference of Compensations. All sums due for compensation under this act shall be exempt from levy, attachment and execution and shall be nonassignable before or after award...
2Section 31-299a provides: Payments under group medical policy not defense to claim for benefits. Health insurer's duty to pay. Lien. (a) Where an employer contests the compensability of an employee's claim for compensation, proof of payment made under a group health, medical or hospitalization plan or policy shall not be a defense to a claim for compensation under this chapter. (b) Where an employer contests the compensability of an employee's claim for compensation, and the employee has also filed a claim for benefits or services under the employer's group health, medical, disability or hospitalization plan or policy, the employer's health insurer may not delay or deny payment of benefits due to the employee under the terms of the plan or policy by claiming that treatment for the employee's injury or disease is the responsibility of the employer's workers' compensation insurer. The health insurer may file a claim in its own right against the employer for the value of benefits paid by the insurer within two years from payment of the benefits. The health insurer shall not have a lien on the proceeds of any award or approval of any compromise made by the commissioner pursuant to the employee's compensation claim, in accordance with the provisions of section 38a-470, unless the health insurer actually paid benefits to or on behalf of the employee.
3 Sec. 38a-470 of the general statutes provides: Lien on workers' compensation awards for insurers. Notice of lien. (a) For purposes of this section, “controverted claim” means any claim in which compensation is denied either in whole or in part by the workers' compensation carrier or the employer, if self-insured. (b) Any insurer, hospital or medical service corporation, health care center or employee welfare benefit plan which furnished benefits or services under a health insurance policy or a self-insured employee welfare benefit plan to any person suffering an injury or illness covered by the Workers' Compensation Act has a lien on the proceeds of any award or approval of any compromise made by a workers' compensation commissioner less attorneys' fees approved by the district commissioner and reasonable costs related to the proceeding, to the extent of benefits paid or services provided for the effects of the injury or illness arising out of and in the course of employment as a result of a controverted claim, provided such plan, policy or contract provides for reduction, exclusion, or coordination of benefits of the policy or plan on account of workers' compensation benefits.
(c) The lien shall arise at the time such benefits are paid or such services are rendered. The person or entity furnishing such benefits or services shall serve written notice upon the employee, the insurance company providing workers' compensation benefits or the employer, if self-insured, and the workers' compensation commissioner for the district in which the claim for workers' compensation has been filed, setting forth the nature and extent of the lien allowable under subsection (b). The lien shall be effective against any workers' compensation award made after the notice is received.
(d) The written notice shall be served upon the employee at his last-known address, the insurance company at its principal place of business in this state or the employer, if self-insured, at its principal place of business, and the workers' compensation commissioner, at the district office. Service shall be made to all parties by certified or registered mail. The notice shall be in duplicate and shall contain, in addition to the information set forth in subsection (c) of this section, the name of the injured or ill employee, the name of the company providing workers' compensation benefits, the amount expended and an estimate of the amount to be expended for benefits or services provided to such injured or ill employee.
(e) The insurance company providing workers' compensation coverage or the employer, if self-insured, shall reimburse the insurance company, hospital or medical service corporation, health care center or employee welfare benefit plan providing benefits or service directly, to the extent of any such lien. The receipt of such reimbursement by such insurer, hospital or medical service corporation, health care center or employee welfare benefit plan shall fully discharge such lien.
(f) The validity or amount of the lien may be contested by the workers' compensation carrier, the employer, if self-insured or the employee by bringing an action in the superior court for the judicial district of Hartford or in the judicial district in which the plaintiff resides. Such cases shall have the same privilege with respect to their assignment for trial as appeals from the workers' compensation review division but shall first be claimed for the short calendar unless the court shall order the matter placed on the trial list. An appeal may be taken from the decision of the Superior Court to the Appellate Court in the same manner as is provided in section 51-197b. In any appeal in which one of the parties is not represented by counsel and in which the party taking the appeal does not claim the case for the short calendar or trial within a reasonable time after the return day, the court may of its own motion dismiss the appeal, or the party ready to proceed may move for nonsuit or default as appropriate. During the pendency of the appeal any workers' compensation benefits due shall be paid into the court in accordance with the rules relating to interpleader actions.
4 “Employee welfare plans” are defined for purposes of ERISA in 29 C.F.R. §2510.3-1(j) as “plans providing “(I) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (ii) any benefit described in section 302(c) of the Labor Management Relations Act, 1947 (other than pensions on retirement or death, and insurance to provide such pensions).” The definition also includes holiday and severance benefits, and other similar benefits. A state law “relates to an employee welfare plan” if it has “a connection with or reference to such a plan.” FMC Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990).
5 The United States Supreme Court held in Rush Prudential HMO, Inc. V. Moran, 536 U.S. 355, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002), that a state law regulates insurance when it, from a “commonsense perspective,” does not just have an impact on the insurance industry, but is specifically directed at it. The “commonsense” decision is verified by reference to the three factors that point to state insurance laws that are spared preemption under the McCarran- Ferguson Act, 15 U.S.C. 1011 et seq. Rush, supra 536 U.S. at 366. The McCarran-Ferguson factors are “guideposts” only; a state law need not satisfy all three criteria to survive preemption. Id. at 370. A law regulating insurance for McCarran-Ferguson purposes targets practices or provisions that (1) have the effect of transferring or spreading a policyholder's risk; (2) that are an integral part of the policy relationship between the insurer and the insured; and (3) that are limited to entities within the insurance industry. Id.
6Congress enacted ERISA at a time when the number of self-funded employer welfare plans had grown dramatically, during the 1960's and 1970's. While ERISA provisions were being debated by Congress, a Missouri court held that an employer’s self-insured employee welfare plan could not pay out benefits until and unless it satisfied the Missouri licensing requirements governing insurance companies. This decision was apparently one of the reasons that Congress enacted the deemer clause, although there is little legislative history regarding this possibility. FMC Corp. v. Holliday, supra, 111 S.Ct. at 413, Stevens, J., dissenting.
7 The application of ERISA is not limited to medical coverage plans. ERISA applies to long- and short-term disability, retirement, savings, profit-sharing, and other programs established by employers or by employee organizations such as unions or trade associations. The litigation over whether a particular program falls under ERISA is therefore varied and complex.
8 75 Pa.Cons.Stat. § 1720 (1987) provided that “[i]n actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant’s tort recovery with respect to ... benefits... payable under section 1719.” Section 1719 referred to benefit payments by “[a]ny program, group contract or other arrangement.”
9 29 U.S.C. §1132(a)(3) provides in pertinent part that A civil action may be brought-... (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain any other appropriate equitable relief (I) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.”
10 Under the “common-fund doctrine” of equity, “a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” U.S. Airlines v. McCutcheon, supra, 133 S. Ct. at 1545 (citation omitted). “The [common- fund] doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched.” Id. at 1551, n. 4.
11 For that reason, almost every state court that has confronted the issue has done what we do here: apply the common-fund doctrine in the face of a contract giving an insurer a general right to recoup funds from an insured's third-party recovery, without specifically addressing attorney's fees. See, e.g., Ex parte State Farm Mut. Auto. Ins. Co., 105 So.3d 1199, 1212 and n. 6 (Ala.2012); York Ins. Group of Me. v. Van Hall, 1997 ME 230, ¶ 8, 704 A.2d 366, 369; Barreca v. Cobb, 95–1651, pp. 2–3, 5 and n. 5 (La. 2/28/96), 668 So.2d 1129, 1131–1132 and n. 5; Federal Kemper Ins. Co. v. Arnold, 183 W.Va. 31, 33–34, 393 S.E.2d 669, 671–672 (1990); State Farm Mut. Auto. Ins. Co. v. Clinton, 267 Ore. 653, 661–662, 518 P.2d 645, 649 (1974); Northern Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 154 Ohio App.3d 659, 669, 2003–Ohio–5196, 798 N.E.2d 667, 675; Lancer Corp. v. Murillo, 909 S.W.2d 122, 126–127 and n. 2 (Tex.App.1995); Breslin v. Liberty Mut. Ins. Co., 134 N.J.Super. 357, 362, 341 A.2d 342, 344 (App.Div.1975); Hospital Service Corp. of R.I. v. Pennsylvania Ins. Co., 101 R.I. 708, 710, 716, 227 A.2d 105, 108, 111 (1967); National Union Fire Ins. Co. v. Grimes, 278 Minn. 45, 46–47, 51, 153 N.W.2d 152, 153, 156 (1967); Foremost Life Ins. Co. v. Waters, 125 Mich.App. 799, 801, 805, 337 N.W.2d 29, 30, 32 (1983) (citing Foremost Life Ins. Co. v. Waters, 88 Mich.App. 599, 602, 278 N.W.2d 688, 689 (1979)); Lee v. State Farm Mut. Auto. Ins. Co., 57 Cal.App.3d 458, 462, 469, 129 Cal.Rptr. 271, 273–274, 278 (1976).
12 Section 1720 of the Pennsylvania Motor Vehicle Financial Responsibility Law provided:
In actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant's tort recovery with respect to workers' compensation benefits, benefits available under section 1711 (relating to required benefits), 1712 (relating to availability of benefits) or 1715 (relating to availability of adequate limits) or benefits paid or payable by a program, group contract or other arrangement whether primary or excess under ection 1719 (relating to coordination of benefits). 75 Pa.C.S.A. §1720.
13 See, e.g., Kosick v. Hospital Service Corp., 12 Ill. App. 2d 291, 139 N.E.2d 619 (1st Dist. 1956) (group health insurer did not have to pay claimant’s hospital expenses because claimant received $5,000 workers’ compensation settlement); Romanus v. Blue Cross and Blue Shield of South Carolina, 271 S.C. 164, 246 S.E.2d 97 (1978) (health insurer did not have to pay medical bills if medical condition work-related); c.f., Slomovic v. Tennessee Hospital Service Ass'n, 46 Tenn. App. 705, 333 S.W.2d 564 (1959)(where workers’ compensation carrier’s liability for medical bills capped, health insurance provided by employer did not have to pay balance of medical bills owed for work-related injury; semble, Ledoux v. Travelers Ins. Co., 223 So. 2d 684 (La. Ct. App. 4th Cir. 1969).
14 C.G.S. §38a-476. Pre-existing coverage provides:
a)(1) For the purposes of this section, “health insurance plan” means any hospital and medical expense incurred policy, hospital or medical service plan contract and health care center subscriber contract and does not include (A) short-term health insurance issued on a nonrenewable basis with a duration of six months or less, accident only, credit, dental, vision, Medicare supplement, long-term care or disability insurance, hospital indemnity coverage,
coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar law, automobile medical payments insurance, or insurance under which beneficiaries are payable without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance, or (B) policies of specified disease or limited benefit health insurance, provided that the carrier offering such policies files on or before March first of each year a certification with the Insurance Commissioner that contains the following: (I) A statement from the carrier certifying that such policies are being offered and marketed as supplemental health insurance and not as a substitute for hospital or medical expense insurance; (ii) a summary description of each such policy including the average annual premium rates, or range of premium rates in cases where premiums vary by age, gender or other factors, charged for such policies in the state; and (iii) in the case of a policy that is described in this subparagraph and that is offered for the first time in this state on or after October 1, 1993, the carrier files with the commissioner the information and statement required in this subparagraph at least thirty days prior to the date such policy is issued or delivered in this state.
(2) “Insurance arrangement” means any “multiple employer welfare arrangement”, as defined in Section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, except for any such arrangement which is fully insured within the meaning of Section 514(b)(6) of said act, as amended.
(3) “Preexisting conditions provision” means a policy provision which limits or excludes benefits relating to a condition based on the fact that the condition was present before the effective date of coverage, for which any medical advice, diagnosis, care or treatment was recommended or received before such effective date. Routine follow-up care to determine whether a breast cancer has reoccurred in a person who has been previously determined to be breast cancer free shall not be considered as medical advice, diagnosis, care or treatment for purposes of this section unless evidence of breast cancer is found during or as a result of such follow-up. Genetic information shall not be treated as a condition in the absence of a diagnosis of the condition related to such information. Pregnancy shall not be considered a preexisting condition.
(4) “Qualifying coverage” means (A) any group health insurance plan, insurance arrangement or self-insured plan, (B) Medicare or Medicaid, or (c) an individual health insurance plan that provides benefits which are actuarially equivalent to or exceeding the benefits provided under the small employer health care plan, as defined in subdivision (12) of section 38a-564, whether issued in this state or any other state.
(5) “Applicable waiting period” means the period of time imposed by the group policyholder or contract holder before an individual is eligible for participating in the group policy or contract. (b) (1) No group health insurance plan or insurance arrangement may impose a preexisting conditions provision which excludes coverage for a period beyond twelve months following the insured's effective date of coverage. Any preexisting conditions provision may only relate to conditions, whether physical or mental, for which medical advice, diagnosis or care or treatment was recommended or received during the six months immediately preceding the effective date of coverage.
(2) No individual health insurance plan or insurance arrangement may impose a preexisting conditions provision which excludes coverage beyond twelve months following the insured's 23 effective date of coverage. Any preexisting conditions provision may only relate to conditions, whether physical or mental, which manifest themselves, or for which medical advice, diagnosis or care or treatment was recommended or received during the twelve months immediately preceding the effective date of coverage.
(c) All health insurance plans and insurance arrangements shall provide coverage, under the terms and conditions of their policies or contracts, for the preexisting conditions of any newly insured individual who was previously covered for such preexisting condition under the terms of the individual's preceding qualifying coverage, provided the preceding coverage was continuous to a date less than one hundred twenty days prior to the effective date of the new coverage, exclusive of any applicable waiting period, except in the case of a newly insured group member whose previous coverage was terminated due to an involuntary loss of employment, the preceding coverage must have been continuous to a date not more than one hundred fifty days prior to the effective date of the new coverage, exclusive of any applicable waiting period, provided such newly insured group member or dependent applies for such succeeding coverage within thirty days of the member's or dependent's initial eligibility.
(d) With respect to a newly insured individual who was previously covered under qualifying coverage, but who was not covered under such qualifying coverage for a preexisting condition, as defined under the new health insurance plan or arrangement, such plan or arrangement shall credit the time such individual was previously covered by qualifying coverage to the exclusion period of the preexisting condition provision, provided the preceding coverage was continuous to a date less than one hundred twenty days prior to the effective date of the new coverage, exclusive of any applicable waiting period under such plan, except in the case of a newly insured group member whose preceding coverage was terminated due to an involuntary loss of employment, the preceding coverage must have been continuous to a date not more than one hundred fifty days prior to the effective date of the new coverage, exclusive of any applicable waiting period, provided such newly insured group member or dependent applies for such succeeding coverage within thirty days of the member's or dependent's initial eligibility.
(e) Each insurance company, fraternal benefit society, hospital service corporation, medical service corporation or health care center which issues in this state group health insurance subject to Section 2701 of the Public Health Service Act, as set forth in the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) (HIPAA), as amended from time to time, shall comply with the provisions of said section with respect to such group health insurance, except that the longer period of days specified in subsections (c) and (d) of this section shall apply to the extent excepted from preemption in Section 2723(B)(2)(iii) of said Public Health Service Act.
(f) The provisions of this section shall apply to every health insurance plan or insurance arrangement issued, renewed or continued in this state on or after October 1, 1993. For purposes of this section, the date a plan or arrangement is continued shall be the anniversary date of the issuance of the plan or arrangement. The provisions of subsection (e) of this section shall apply on and after the dates specified in Sections 2747 and 2792 of the Public Health Service Act as set forth in HIPAA.
(g) A short-term health insurance policy issued on a nonrenewable basis for six months or less shall not be subject to this section, provided, any policy, application or sales brochure issued for such short-term insurance which imposes a preexisting conditions provision shall disclose that such preexisting conditions are not covered. (h) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to enforce the provisions of HIPAA concerning preexisting conditions and portability.
15 The percentage can vary from year to year.
16 The Veterans’ Benefit Act of 1957, P.L. 85-56, s 510, 71 Stat. 111, as amended P.L. 85-857, 72 Stat. 1141 (1958); P.L. 87-583, 76 Stat. 381 (1962); P.L. 89-358, s 8, 80 Stat. 27 (1966); P.L. 93-82, s 102, 87 Stat. 180 (1973). See also 38 C.F.R. s 17.47 (1976). Congress in 1976 eliminated the male pronouns and substituted gender-neutral terms. 38 U.S.C.A. s 610 (Supp.1977).
17 Section 52-362(b) provides, inter alia, that where the responsible party is delinquent, the employer or other “payer of income,” presumably the workers' compensation insurer, may become directly obligated:
On service of the order of withholding on an existing or any future employer or other payer of income, and until the support order is fully satisfied or modified, the order of withholding is a continuing lien and levy on the obligor's income as it becomes due.
18 General Statutes § 46b-81(a) provides in pertinent part: At the time of entering a decree annulling or dissolving a marriage or for legal separation pursuant to a complaint under section 46b-45, the Superior Court may assign to either spouse all or any part of the estate of the other spouse.
19 CGS sec. 52-362(c)(1) provides in part that the delinquency notice must state that:
(E) eighty-five per cent of the first one hundred forty-five dollars of disposable income per week are exempt, and (F) the amount of the withholding order may not exceed the maximum percentage of disposable income which may be withheld pursuant to Section 1673 of Title 15 of the United States Code, together with a statement of such obligor's right to claim any other applicable state or federal exemptions with respect thereto.
20 The workers’ compensation offset from Social Security disability benefits should be familiar to all seminar attendees. In brief, the monthly amount that a Social Security disability recipient receives from the combination of workers’ compensation benefits and the Social Security primary insurance amount cannot exceed 80 percent of the claimant’s average current earnings. The amount of the Social Security disability benefit is reduced to reach this 80%. 42 U.S.C. §424a.
21 Repayment of benefits on receipt of workers’ compensation.
Any person who has drawn benefits under this chapter who subsequently receives compensation for temporary disability under a workers' compensation law with respect to the same period for which he has drawn unemployment compensation benefits shall be liable to repay to the administrator the sum so received under this chapter, provided the amount which he is liable to repay shall not exceed the amount received under the workers' compensation law. If such person does not repay the sum at that time, such sum may be offset by the administrator against any future claims for benefits which such person may have.
22 The TRICARE beneficiary will not be held responsible for the non-collectible co-payment or deductible. 10 U.S.C. §1095(a)(2).