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AHIP Fights ATLA Over Pension Bill Subrogation Provision

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America’s Health Insurance Plans is battling the American Trial Lawyers Association and the National Conference of State Legislatures over access to patients’ lawsuit settlements.

Lawmakers serving on a House-Senate conference committee are deciding whether to include a settlement measure, a “subrogation” provision, as they work to meld H.R. 2830 and S. 1783, the House and Senate pension bills.

Section 307 of H.R. 2830 would create a new federal cause of action under the Employee Retirement Income Security Act, allowing group health insurers to sue injured plan members who receive settlements from the parties that cause the injuries. Insurers would stand first in line when seeking reimbursement for expenditures from settlement funds. The provision could reduce the amount of cash that the plan members and their lawyers would receive.

The House provision would replace the current mixture of state statutes, federal statutes and court decisions that now govern group health plan subrogation actions.

Rep. John Boehner, R-Ohio, the House majority leader, is one of the pension bill conference committee members who support the provision.

Sen. Edward Kennedy, D-Mass., another conference committee member, said last week that removing the subrogation provision from the final pension bill is a priority.

Keeping the House H.R. 2830 subrogation provision would let insurers take money that was intended to cover injured patients’ future medical expenses and to compensate the patients for lost wages, Kennedy said in June.

Implementing the provision would have “devastating consequences for people who suffer serious and often permanent injuries, such as paralysis or loss of cognitive function,” Kennedy said.

The U.S. Supreme Court ruled in May in Sereboff v. Mid Atlantic Medical Services Inc., that health plans can ask for reimbursement for previously provided benefits if the recipient of those benefits receives payment for the services from someone else.

But the Sereboff ruling affects only the rules governing subrogation in North Carolina, South Carolina and Virginia, while H.R. 2830 subrogation provision would establish a uniform national standard, according to AHIP spokesman Mohit Ghose.

Private U.S. health insurers paid about $658 billion in claims in 2004, according to the Centers for Medicare & Medicaid Services.

AHIP, Washington, estimates subrogation helps benefit plans recover as much as $1 billion per year.

Subrogation “continues to be a critical cost-saving device for unions, employers and other plan sponsors,” Ghose says.

Dennis Byars, chair of the health committee at the NCSL, Denver, has written to pension bill conference committee members questioning the need for congressional efforts to give ERISA even more ability to preempt state laws.

“It is extremely important that any contemplation of such an expansion be the subject of extensive congressional hearings where states would be afforded an opportunity to express in detail our concerns,” Byars writes.

ATLA, Washington, argues on its People Over Profits Grassroots Action Center Web site that implementing the subrogation provision would leave many catastrophically injured Americans unable to afford the cost of their medical expenses.


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