H.R. 4, the pension bill now in play in the Senate, excludes a provision that could have helped employer-sponsored health plans seek reimbursement from law settlements for care provided for members injured by other parties.

Members of the House-Senate conference committee that was trying to meld H.R. 2830 with S. 1783 dropped the provision at the last minute.

The conference committee has failed to produce a conference report, but the authors of H.R. 4 based that bill on a conference report draft which excluded the “Section 307″ subrogation provision.

Section 307 would have created a new federal cause of action under the Employee Retirement Income Security Act.

Section 307 would have permitted health plans seeking reimbursement for expenditures on tort victims to come in ahead both of the victims and their lawyers.

Sen. Edward Kennedy, D-Mass., the most senior Democrat on the Senate Health Education Labor and Pensions committee, and some other conferees strongly opposed Section 307.

Kennedy called Section 307 a “special interest fix” that would have allowed insurers to “raid” settlement funds meant for injured workers.

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.