Health Subrogation Provision Falls Out Of Pension Bill

Section 307 opponents are hoping Congress will focus on ensuring that injured workers are made whole before a plan can recover any reimbursement for its expenses.

“One must question whether an insurance company should ever be able to obtain reimbursement for medical expenses it has agreed to pay simply because the injured worker or injured beneficiary was able, after litigation, to recover funds from the party that caused the injuries,” says Eva Cantarella, senior litigation counsel for pensions and employee benefits at Hertz, Schram & Saretsky P.C., Bloomfield Hills, Mich.

Reimbursement transfers risk to the injured worker, “giving the insurance company a free lunch.” Cantarella says.

But Section 307 advocates said the provision could keep health plan costs down.

Subrogation helps benefits plans recover as much as $1 billion annually, according to America’s Health Insurance Plans, Washington.

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

The U.S. Supreme Court ruled in May that health plans can seek reimbursement for care expenditures if the recipient of that benefit receives payment for care from someone else, but that decision affects the rules for reimbursement only in North Carolina, South Carolina and Virginia, according to AHIP spokesman Mohit Ghose.