Last month the U.S. Supreme Court issued a unanimous decision that initially appeared to be catastrophic for injury victims whose employee health benefit plans had paid medical expenses.  In Sereboff v. Mid Atlantic Medical Services, Inc., 126 S.Ct. 1869 (U.S.,2006), Chief Justice Roberts wrote for  the court that an ERISA benefit plan could sue in federal court for reimbursement of medical benefit it had paid after the injury victim recovers from the party responsible for the injury.  Those of us who deal with these cases every day recognize how devastating the net effect of that can be, taking away much if not all of the victim’s recovery after payment of the fees and expenses involved in holding the opposite party accountable.

However, upon further examination, there are still viable defenses against most if not all such reimbursement claims. For example, if the benefit plan is insured, the insurance company’s portion of the claim for reimbursement is still subject to state laws regulating insurance, which in Georgia includes a statutory "full compensation" rule. As the benefit plan’s claim arises in equity, a full range of equitable defenses may be asserted.  While it may be necessary to negotiate compromises on more ERISA reimbursement claims than in recent years, it will still serve the injury victim’s interests for their lawyers to stake out a well-informed hard line defense against such claims.  Following is a sample of a letter to the subrogation agent of an insured ERISA plan that may be adapted in individual circumstances.

This firm represents > in the above-referenced matter with regard to serious bodily injuries sustained in a motor vehicle collision on >. You have asserted on behalf of > a claim for subrogation or reimbursement of medical benefits paid to the medical providers treating > as a result of this injury.

As you know, the Employee Retirement Income Security Act of 1974 (ERISA) preempts all state laws “insofar as they . . . relate to any employee benefit plan,”29 U.S.C. § 1144(a), but saves from preemption state “law[s] … which regulat[e] insurance …·,”§ 1144(b)(2)(A).  The United States Supreme Court held, in the case of FMC Corp. v. Holliday, 498 U.S. 52 (1990), that employee benefit plans that are insured are subject to indirect state regulation, as an insurance company that insures a plan remains an insurer for purposes of state laws “purporting to regulate insurance” after application of the preemption clause, savings clause and deemer clause of the ERISA statute.

Therefore, an ERISA plan is bound by state insurance laws insofar as they apply to the plan’s insurer.  To save state law from preemption, ERISA’s savings clause does not require that state law regulate "insurance companies" or even "the business of insurance"; it need only be a "law … which regulates insurance." Employee Retirement Income Security Act of 1974, § 514(b)(2)(A), 29 U.S.C.A. § 1144(b)(2)(A).

You are undoubtedly familiar with the recent case of Sereboff v. Mid Atlantic Medical Services, Inc., 126 S.Ct. 1869 (U.S.,2006).  In Sereboff, the Solicitor General of the United States filed an amicus curie brief on the side of the ERISA plan, citing FMC v. Holliday and stating: “State laws limiting reimbursement may of course apply to insured ERISA plans if those state laws are directed to insurance.”

While the “deemer” clause of the ERISA statute may override the “savings” clause in the case of a self-funded plan, it appears that yours is an insured rather than a self-funded plan, so the Georgia insurance law is not preempted.  If you disagree, please send me a complete copy of the plan in the form in which it existed on the date of the incident referenced above, within ten days, including all documentation of the allocation of losses between insurance and self-insured reserve. 

Because this is an insured rather than self-funded ERISA plan, the “savings” clause of the ERISA statute, as discussed above, prevents preemption of Georgia state laws governing insurance. By both statute and case law, Georgia law regulating the business of insurance includes a “full compensation” rule that severely limits medical insurance reimbursement claims and bars medical subrogation in personal injury cases. See O.C.G.A. § 33-24-56.1 and Duncan v. Integon General Insurance Corp., 267 Ga. 646, 482 S.E.2d 325 (1997). The Georgia “full compensation” rule  does not provide for an insurer to exclude operation of the “full compensation” rule by including in a contract of adhesion “first dollar” language to exclude operation of the doctrine. If it were a self-funded ERISA plan, the Eleventh Circuit case law would permit that, but this is an insured plan subject to Georgia state law that does not allow contractual exclusion of the doctrine. Under the Georgia law, virtually any compromise settlement constitutes less than “full compensation.”

> had a significant preexisting condition related to another collision in >, so there is a substantial question of fact whether the medical expenses you claim for reimbursement are due to the preexisting condition or the new injury. In addition, there are questions of liability that will likely require a compromise for less than full value of the injury.

The ERISA statute authorizes enforcement by “appropriate equitable relief,” and the Sereboff decision makes it clear that any claim for ERISA reimbursement is equitable, and is subject to equitable defenses.  The United States Supreme Court has recognized a number of equitable defenses in other contexts.  These include laches, National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 121-22, 122 S.Ct. 2061, 2077 (2002); the “clean hands” doctrine, Precision Instrument Mfg. Co. V. Automotive Maintenance Machinery Co., 324 U.S. 806, 814 (1945); and the defense that equity will not aid in enforcement of a forfeiture, Oregon & California R.R. Co. v. U.S., 238 U.S. 393 (1915).  Other equitable defenses include the common fund doctrine, which  would seek setoff for a prorata share of attorneys fees and expenses incurred in obtaining the recovery, and the “made whole” or “full compensation”  doctrine.  As equity follows the law, and Georgia law incorporates the “full compensation” doctrine, that is a extremely significant consideration of equitable defenses in any case in Georgia.

It is potentially significant that any payment to the spouse of the injured person under a claim for loss of consortium is not subject to your claim of lien, and under Georgia law the recovery in a settlement may be allocated to the spouse in a lawful lien avoidance structure.

After review of all available documents and the applicable laws, it appears that > does not have an enforceable claim for reimbursement or subrogation, and that my client would prevail in court if such a claim were asserted. This remains the situation even in light of the recent Supreme Court decision in Sereboff , supra.

Therefore, I am now giving you notice pursuant to O.C.G.A § 33-24-56.1 that in ten (10) days or more we will seek to consummate final resolution of this case by a compromise settlement for less than the full value of the injury, and will then disburse the proceeds, net of fees and expenses, to my clien
t, with no payment of any subrogation or reimbursement claim for medical expenses. If you do not respond within that time with both a complete copy of the plan as it existed on the date of the incident causing injury and with everything required by O.C.G.A. §§ 33-24-56.1, that will constitute your acknowledgment that: the > claim relates to a fully  insured ERISA plan under which state insurance law is not preempted; that you do not have an enforceable claim for reimbursement or subrogation in law or in equity; that it would be inequitable for your claim to result in a forfeiture of my client’s personal injury recovery; that to do so would be contrary to conscience and good faith; that your plan is subject to both the “full compensation” rule under Georgia law and an equitable “made whole” and “common fund” defense; and that you acquiesce in the final consummation of settlement and disbursal of funds without payment of any subrogation or reimbursement claim.

After disbursal of the funds, my representation of my client will continue with regard to any subsequent assertion of a claim by you, so all communication should be directed to me rather than to my client.

Please take due notice of the foregoing and govern yourself accordingly.



Of course, evaluation of ERISA reimbursement claims must be made on a case by case basis after carefully  reviewing plan documents, the allocation of losses between insurance and self-funded reserves, and publicly available information such as the IRS filings of ERISA plans available at

The Shigley Law Firm  represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a "SuperLawyer" in Atlanta Magazine and one of the "Legal Elite" in Georgia Trend Magazine. He is a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks.