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A Review of Common Practice Issues for the Personal Injury Paralegal: Liens, Underinsured/Uninsured Basics, Your Own Focus Groups and Valuation of a Personal Injury Claim

By Attorney Michael A. D’Amico
D’Amico, Griffin & Pettinicchi, LLC
465 Straits Turnpike
Watertown, CT  06795
April 2007

  1. Worker’s Compensation Liens:

When a person is injured during the course of their employment and workers compensation benefits have been paid, the employer and/or its insurance carrier will usually assert a lien against any third party recovery. C.G.S 31-293 allows any employer and/or its insurance carrier to assert a lien for benefits paid, as well as the present value of probable future payments established by award, against any settlement or judgment obtained from a third person who is legally liable for the injury.  This lien is not an automatic lien but rather requires written notice of the lien to be sent to the responsible third party prior to the judgment or settlement. Typically this written notice of lien is simply a letter notifying the responsible third party of the lien claimed and the amount of benefits paid to date.

If an employer chooses, it may intervene in any lawsuit brought by the employee against the responsible third party; or it may bring a lawsuit on its own against the third party. When the employee or employer brings a lawsuit against the responsible third party, he/she/it is required to “immediately” notify the others of the lawsuit by personal presentation or by certified or registered mail. The others must then seek to intervene as parties within 30 days of notification, or their right of action against the third party will abate. This notification must include a warning that failure to move to intervene within 30 days of the notice will bar the recipient’s right to bring an action. See Worsham v. Greifenberger, 242 Conn. 432(1997).

The statutory right to intervene by the employer and the statutory lien rights of an employer or its insurance carrier apply to any injury which is caused by a third party and for which worker’s compensation benefits are paid. This includes injuries caused by medical malpractice (See King v. Sultar, 253 Conn. 429 (2000)) as well as injuries caused by defective products since the repeal of C.G.S. 52-572r as of July 1,1993. The proclaimed purpose is to avoid a double recovery by the injured employee. (Underinsured and uninsured motorist claims are not subject to these intervention or lien rights. These are contract claims. There typically are underinsured and uninsured insurance policy provisions which provide for reductions in coverage limits for worker’s compensation benefits paid or payable.)

The lien is for 100% dollar-for-dollar of benefits paid plus future benefits which are already the subject of an award. There is no provision in the statute for a contribution to the legal fees and costs which the employee pays to secure compensation for his/her injuries, although it is the opinion of this writer that there should be. Nevertheless these liens are almost always the subject of negotiation.

  1. Medicare Liens (As is relevant here, Medicare is a federal-based program for the payment of medical expenses for people over the age of 65, or people who are disabled and have met the requirements and been approved for Social Security Disability.)

If an injured person is over the age of 65, or is under the age of 65, disabled and receiving Medicare coverage, you must inquire as to how accident-related medical bills are being paid. If the medical bills are being paid by Medicare, then Medicare has an “automatic” lien for amounts it has paid less a percentage of procurement costs. It is “automatic” because Medicare is not required to notify the recipient or the recipient’s attorney that a lien is being claimed.

Federal law provides that Medicare may not pay medical bills to the extent that “prompt” payment can reasonably be expected from liability insurance. Typically payment may be expected but it will be anything but prompt. Thus, federal law allows Medicare to make conditional payment of accident-related medical bills, the condition being that reimbursement to Medicare will be made at the time a settlement or judgment is received. If reimbursement is not made within 60 days of receipt of settlement or judgment monies, Medicare may seek reimbursement from the injured party (client) and/or the attorney for the injured party. (Refer to 42 USCS 1395y(2); 42 CFR 411.24,411.26 and 411.37)

The amount of Medicare’s lien is the amount of benefits it has paid less the percentage ratio which procurement costs bear to the gross recovery. See 42 CFR 411.37. Procurement costs include costs and attorney fees which are reasonable and customary. For example, if the gross recovery were $9,000.00; attorney fees of $3,000.00; costs of $3,000.00; and Medicare payments of $1,000.00, then the percentage which procurement costs(attorney fees and costs) bears to the gross recovery is 2/3, or .66; therefore the Medicare lien would be $1,000.00 less .66 x $1,000.00, or $340.00. This calculation is made on a case-by-case basis and is necessarily different each time. It is therefore not possible to calculate the Medicare lien amount until the attorney’s fees and costs are known. Medicare can and will under appropriate circumstances negotiate the lien lower if for instance the liability claim is weak and the settlement amount necessarily reflects this. A written request is usually required for reduction of the lien in an amount greater than procurement costs and is done by simple explanatory letter stating the reasons therefore and the amount of further reduction requested.

Although Medicare is not required to notify the recipient or the recipient’s attorney of its lien, in practice it usually does so by letter and will typically provide a breakdown of the benefits paid. A careful examination of the breakdown should be done to be sure all the claimed benefits are accident-related. Any benefits which are not accident-related do not need to be repaid.(This differs from State Medicaid and welfare liens which will be discussed below.)

Medicare has a reputation for being notoriously late in responding to lien inquiries and impossible to contact. I asked one of our paralegals, Sue Mastropietro, to give me the latest info she has on Medicare lien requests. This is her response verbatim:

“To report the case for the first time call 800-999-1118. This is the Medicare Coordination of Benefits number. Once the accident is entered they will send you the paperwork to fill out. To request updated lien information you have to call 866-677-7220. It's faster to call as opposed to faxing the information. Once they send you the lien information you need to examine the charges to make sure they all pertain to your case. If some are not related  you need to check them off and then send the info back to them with a request for the final demand amount. At that point they need a list of expenses, fees and/or a copy of the Settlement Statement. They will then send you back the correct lien amount. The correct address for Medicare to notify of a new case in writing is now Medicare Coordination of Benefits, P.O. Box 5041, NY, NY  10274-50410. If the case has already been reported and you want lien information the address is National Government Services, MSCRP, P.O. Box 33828, Detroit, MI  48232-3828. The two fax numbers I have are 315-442-4430 or 734-957-0998.”

It should be noted that as of this writing Medicare has not required that a set aside trust be established for third party liability claims(as opposed to Workers Compensation claims). It has been this writer’s experience that Medicare will continue to pay future medical expenses related to a third party liability claims after settlement or judgment.

  1. Medicaid and General Assistance Liens (As is relevant here, Medicaid is a state-based program for the financially underprivileged and the disabled)

A good  general understanding of the State of Connecticut Medicaid and General Assistance lien issues can be had by reading a few legal authorities: C.G.S. 17b-93, 17b-94, 18-85a and 18-85b; State v. Blawie, 31 Conn. Supp. 552(1974); State v. Angelo, 39 Conn.App. 709(1995); and Rabatin v. Connecticut Department of Social Services, 5 Conn. Ops. 782(July 12,1999)(Judge Vertefeuille).
The State has a lien against any “causes of action” by people who have received benefits under the State Supplement Program, Medical Assistance Program, Aid to Families with Dependent Children Program, Temporary Family Assistance Program, State Administered General Assistance Program and for the costs of any incarceration. The term “causes of action” includes personal injury claims of all kinds as well as worker’s compensation claims. See Rabatin, supra.

The lien has been held to be effective upon notice to the aid recipient or the recipient’s lawyer. Blawie, supra. In practice this also appears to be the position of the State, i.e. that the lien is effective upon notice.(This writer cautions that nothing in C.G.S. 17b-93 or 17b-94 says the lien is only effective upon notice.)

The lien amount varies depending upon the type of benefit paid and the net proceeds of the claim. There is no reduction for a pro rata share of procurement costs, although again this writer suggests that there should be. Accident-related medical expenses paid by the State are reimbursable at 100% dollar-for-dollar after reduction for attorney fees, costs and outstanding medical expenses, subject to negotiation. Again the listing of claimed accident-related medicals should be examined carefully to be sure all are truly accident-related. For all other types of benefits, the State is entitled to the lesser of the amount of its lien or 50% of the net proceeds after reduction for attorney fees, costs and outstanding medical expenses, again subject to further reduction by negotiation.

If the lien is not paid upon settlement or judgment after notice of the lien has been received by the attorney, the State will likely and can sue the attorney for the lien monies due. If the attorney or the client disputes the validity or the amount of the lien and an agreement with the State cannot be reached, then settlement monies for the full amount of the lien should be retained by the attorney subject to resolution by an interpleader action. This writer’s experience has been that the State will agree to have the attorney retain the disputed money in his/her client funds account pending resolution of the interpleader action which the State will typically commence.

A word of caution which is beyond the scope of this presentation: Do not settle a claim when a client is disabled and receiving Medicaid benefits due to disability without consulting an attorney with expertise in “Special Needs Trusts”. Doing so could result in termination of Medicaid benefits.

  1. ERISA(Employee Retirement Income Security Act of 1974[Federal]) Liens and Rights of Subrogation

Of all the liens discussed in this presentation, ERISA claims are the most difficult to understand and resolve. Some brief background is helpful.

ERISA is a common abbreviation for the Employee Retirement Income Security Act of 1974. 29 U.S.C. 1001a,et seq.. ERISA was designed primarily to secure pension payments to participants. Sargeant v Local 478 Health Benefits & Insurance Fund, 746 F.Supp. 241,244-245(D.Conn.,1990) Nevertheless few have questioned that ERISA applies to employer provided medical plans; and “employee welfare benefit plan” as defined by 29 U.S.C 1002(1) seems expansive enough to include such plans.

So what you ask? This question depends first on whether the medical plan is “self-funded” and second, on the terms of the medical plan as set forth in the “plan documents”.

What does “self-funded” mean? Generally this means that the medical bills are paid dollar-for-dollar from employer revenues and not from an outside major medical insurance company to which the employer pays monthly premiums. If the medical benefits are fully insured by an outside major medical company, HMO, PPO, etc. to which premiums are paid by the employer then it is this writer’s opinion that no right of subrogation or reimbursement is valid. This is because insured medical plans are exempted from ERISA( 29 U.S.C. 1144(b)(2)(A)[popularly referred to as the “savings clause”]) and C.G.S. 52-225c prohibits contractual reimbursement for medical benefits paid. If the plan is fully insured, then you have no need to request the plan documents; simply, reimbursement is prohibited.

If the plan is not fully insured then you must request the plan documents. Plan documents do not mean the written description of medical benefits given to employees in their employee handbook. Rather every employer provided medical plan created under ERISA is described in written paperwork commonly referred to as the “plan documents”. Copies of these plan documents should be requested from the “plan administrator” in writing. The name and address of the plan administrator is required by ERISA to be set forth in the Summary Plan description which must be provided to all employees participating in the plan. See 29 U.S.C. 1022(b). ERISA also provides that copies of plan documents must be provided within 30 days of request. See 29 U.S.C. 1132(c). Do not accept “summary plan documents” unless you are assured to your satisfaction that the summary plan documents contain all the relevant provisions in full. You can be sure to know all terms of the plan only if you review the complete plan documents. (which are voluminous and mostly irrelevant)

When reviewing the plan documents you should search for the provisions which discuss what if any rights of reimbursement or rights of subrogation exist if the medical benefits are necessary due to the negligence of a third party. In this regard you should be careful to distinguish between rights of subrogation and rights of reimbursement. Subrogation is the ability of the plan administrator to step into the shoes of the injured person and sue the tortfeasor. Right of reimbursement is the ability of the plan administrator to get reimbursed from the injured person after the injured person receives money from the tortfeasor. If the only right given to the plan administrator is a pure right of subrogation against the tortfeasor, it is this writer’s opinion that no reimbursement is mandated; but rather the plan administrator can sue the tortfeasor directly for any medical bills paid. Certainly if no right of reimbursement or subrogation is provided for in the plan documents then there is no reimbursement at all as the ERISA statute does not mandate reimbursement or subrogation by its terms.

When reviewing the plan documents you should also be careful to distinguish between subrogation rights or reimbursement rights keyed to claims against a tortfeasor versus claims made under uninsured or underinsured motorist policies. If there is no mention of such rights in uninsured or underinsured motorist or similar contractual as opposed to tort claims, then it is this writer’s opinion that no rights of subrogation or reimbursement exist for such claims.

A.      Matters Limiting a Plan’s Contractual Right of Reimbursement

After receiving and reviewing the plan documents, if it is clear that the plan has a right of reimbursement under the facts of a particular claim, then is the plan automatically entitled to dollar-for-dollar reimbursement of medical benefits paid? No. Again a careful review of the plan language is imperative. There are five common arguments which can be made.

1.     Make Whole Exception

First, that the injured party has not been “made whole” because the injuries suffered were worth more than the amount received. This is sometimes referred to as the “make whole doctrine”. It is an equitable principle which precludes subrogation or reimbursement until the injured party has been compensated in full for his/her injuries, unless the clear language of the plan overrides this rule. In re Delucia, 261 B.R. 561 (Bankr. D. Conn. 2001); see also Moore v. CapitalCare, Inc., 461 F.3d 1 (D.C. Cir. 2006); Bill Gray Enterprises, Inc. Employee Health and Welfare Plans, 248 F.3d 206, 220 at n.13 (3d.Cir. 2001);  Sunbeam-Oster Co., Inc. Group Benefits Plan for Salaried and Non-Bargaining Hourly Employees v. Whitehurst, 102 F.3d 1368 (5th Cir. 1996); Rodriquez v. Tennessee Laborers Health and Welfare Fund, 89 Fed. Appx.949 (6th Cir.) (unpublished opinion), cert. denied, 543 U.S. 875 (2004); Hinley Printing Co., v. Brantner, 243 F.3d 956 (6th Cir. 2001); Copeland Oaks v. Haupt, 209 F.3d 811 (6th Cir. 2000); Marshall v. Employers Health Insurance Co., Nos. 96-6063, 96-6112, 1997 WL 809997 (6th Cir., Dec. 30, 1997), aff’g, 927F. Supp. 1068 (M>D> Tenn. 1996); Alves v. Silverado Foods, Inc.,  6 Fed. Appx. 694 (10th Cir. 2001) (unpublished opinion); Cagle v. Bruner, 112 F.3d 1510 (11th Cir.), reh’g en banc denied, 124 F.3d 223 (11th Cir. 1997); Confer v. Custom Engineering Co. Employee Health Plan, 760 F. Supp. 75 (W.D. Pa.), aff’d, 952 F.2d 34 (3d Cir. 1991); Providence Health System-Washington, 461 F. Supp.2d 1226 (W.D. Wash. 2006); 46 C.J.S. “Insurance” § 1209 at 155 (1946 & Supp. 1986); 44 Am. Jur.2d “Insurance” § 1797 (2005); 16 Lee R. Russ and Thomas F. Segalla, Couch on Insurance, §§ 223.139, 223.140, 223.142 (3d ed. 2005); G. Palmer, The Law of Restitution §§ 23.15, 23.16 (1978 & Supp. 1984); Theresa G. Fremont, Treatment of Subrogation Rights of ERISA-Qualified, Self-Funded Employee Benefit Plans, 138 A.L.R. Fed. 611, §5(a) (1997 & Supp. 2005);  and applying the reasoning of Sargeant v. Local 478 Health Benefits and Insurance Fund, 746 F. Supp. 241 (D. Conn. 1990); Brown v. American International Life Insurance Co., 778 F. Supp. 912 (S.D. Miss. 1991); and Central States Health and Welfare Fund v. Boyd, 762 F. Supp. 1263 (S.D. Miss. 1991).

In general, all of these cases stand for the proposition that the federal courts can develop a federal common law on issues not substantively addressed in ERISA, such as the rights of reimbursement and subrogation and the applicability of the make whole doctrine.  For cases which hold the opposite see Harris v. Harvard Pilgrim Health Care, Inc., 208 F.3d 274 (1st Cir. 2000); Thompson v. Talquin Building Products, Inc., 928 F.2d 649 (4th Cir. 1991); Stillmunkes v. Hy-Vee Employee Benefits Plan & Trust, 127 F.3d 767 (8th Cir. 1997); Cutting v. Jerome Foods, Inc., 993 F.2d 1293 (7th Cir.), cert. denied, 510 U.S. 916 (1993); Barnes v. Independent Automobile Dealers Association Health & Benefits Plan, 64 F.3d 1389 (9th Cir. 1995); Blue Cross & Blue Shield of Alabama v. Sanders, 974 F. Supp. 1416 (N.D. Ala. 1997) aff’d, 138 F.3d 1347 (11th Cir. 1998); Paris v. Iron Workers Trust Fund, 211 F.3d 1265, 2000 WL 384036 (4th Cir., April 17, 2000) (unpublished opinion), aff’g, In re Paris, 44 F. Supp.2d 747 (D. Md. 1999); cert. denied, 531 U.S. 875 (2000);  National Employees Benefits Trust of Associated General Contractors of America v. Sullivan, 940 F. Supp. 956 (W.D. La. 1996); Marshall v. Employers Health Insurance Co., 927 F. Supp. 1068 (M.D. Tenn. 1996); See also Fremont, supra, 138 A.L.R. Fed 611, § 5(b).

Some of the cases which allow reimbursement do so because the plain language specifically refutes the application of the make whole doctrine or because the plan has language that requires it to be reimbursed first from any tort recovery received.  See, e.g., Moore v. CapitalCare, 461 F.3d at 1; Bill Gray Enterprises, 248 F.3d at 220, N.13; Sunbeam-Oster, 102 F.3d at 1375-76; Marshall, 1997 WL 809997 at *5-6; Waller v. Hormel Foods, Inc. 120 F.3d 138 (8th Cir. 1997); Alves, 6 Fed. Appx. at 701-02; Serembus v. Mathwig, 817 F. Supp. 1414 (E.D. Wis. 1992)

2. Proportionate Reduction for Attorney’s Fees

Second, an argument can be made that there should be a proportionate reduction for a pro rata share of the legal fees and costs incurred because the plan has benefited from the value of these legal services and costs unless the plan expressly provides otherwise.  See Waller, 120 F.3d at 141; Ryan v. Federal Express Corp., 78 F.3d 123 (3d Cir. 1996); Mid-Atlantic Medical Services, L.L.C. v. Sereboff, 407 F.3d 212 (4th Cir. 2005); aff’d, __U.S.__, 126 S.Ct. 1869 (2006); Ward v. Wal-Mart Stores, Inc. Associates Health and Welfare Plan, 7 F.Supp.2d 927 (W.D. Mich. 1998); Dugan v. Nickla, 763 F. Supp. 981 (N.D. Ill. 1991); see also Fremont, supra, 138 A.L.R. Fed 611, § 10(a).

However, where the plan’s terms provide that no deduction for attorney’s fees should be allowed, reimbursement in full is required.  See Ryan v. Federal Express Corp., 78 F.3d 123 (3d Cir. 1996); Bollman Hat Co., v. Root, 112 F.3d 113 (3d Cir.), cert denied, 522 U.S. 952 (1997);  Kress v. Food Employers Labor Relations Association, 391 F.3d 563 (4th Cir. 2004); Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir. 2003); Smith v. Wal-Mart Associates Group Health Plan, No. 99-6464, 2000 WL 1909387 (6th Cir., Dec. 27, 2000) (unpublished opinion) (reimbursement to be made pro rata from the participant and from the participant’s attorney); United McGill Corp. v. Stinnett, 154 F.3d 168 (4th Cir. 1998); Administrative Committee of the Wal-Mart Stores, Inc. Associates Health and Welfare Plan v. Varco, 338 F.3d 60 (7th Cir. 2003);  Land v. Chicago Truck Driver, Helpers and Warehouse Workers Union (Independent) Health and Welfare Fund, 25 F.3d 509 (7th Cir. 1994); Green v. Hotel Employees & Restaurant Employees International Welfare-Pension Funds, No. 95-16314, 1997 WL 8466 (9th Cir., Jan. 7, 1997) (unpublished opinion); Wal-Mart Stores, Inc. v. Associates’ Health & Welfare Fund, 27 F. Supp.2d 1166 (W.D. Ark. 1998); see also Fremont, supra, 138 A.L.R. Fed. 611, § 10(b).

3.     Pain and Suffering

Third, an argument can be made that the monies received from the tortfeasor are earmarked for pain and suffering or other losses and not for medical expenses which the plan paid, and, therefore, the plan is not entitled to reimbursement from these monies. See Cooper Tire & Rubber Co. v. St. Paul Fire and Marine Insurance Co., 48 F.3d 365 (8th Cir.), cert denied, 516 U.S. 913 (1995); Western and Southern Life Insurance Co. v. Wall, 903 F. Supp. 1155 (E.D. Mich. 1995); Vreeland v. Cardi, 134 F. Supp.2d 270 (E.D.N.Y.2000); U.S. Healthcare, Inc. (New York) v. O’Brien, 868 F. Supp. 607 (S.D.N.Y.1994); Dugan, 763 F. Supp. at 984-85 but see Rhodes, Inc. v. Morrow, 937 F. Supp. 1202 (M.D.N.C. 1996); Singleton v. Board of Trustees of IBEW Local 613, 830 F. Supp. 630 (N.D. Ga. 1993). Again if the plan language provides for reimbursement from all damages, including pain and suffering, this argument is difficult.

4.    Stop Loss Insurance

Fourth, there are many situations where the plan has stop loss insurance which picks up medical expenses of an employee over a certain amount.  For example an employer may be self-insured for the first $10,000.00 of medical bills after which the bills are paid by an insurance company to which the employer pays periodic premiums.  In these circumstances a good argument can be made that no reimbursement is allowed as to any bills paid by insurance.

5.   Post-Settlement Medical Expenses

Finally, in some cases the courts have held that a self-funded plan was entitled to enforce its reimbursement or subrogation rights but only for those medical benefits paid to the plan participant prior to the participant’s settlement with the third-part tortfeasor.  Davis v. Nepco Employees Mutual Benefit Association, 51 F.3d 752 (1995); Central States, Southeast and Southwest Areas Health and Welfare Fund v. State Farm Mutual Automobile Insurance Co., 17 F.3d 1081 (7th Cir. 1994).  Under these cases, all post-settlement medical expenses are not subject to reimbursement.

Never allow a client, and certainly you should never sign, any reimbursement agreement until you have reviewed the plan documents. Frequently plan administrators or their representatives will request that the employee sign an agreement requiring reimbursement as a condition precedent to paying any bills. If the plan documents do not mandate a signature on this reimbursement agreement, it is the opinion of the undersigned that this is illegal. Once a reimbursement agreement is signed without a thorough knowledge of the plan language it will make the above arguments less effective, and potentially defeat them altogether.

In this writer’s experience most plan administrators are willing to negotiate their claims for reimbursement or subrogation in light of these arguments and the uncertainty and expense of litigating the arguments to conclusion. Some are more willing than others but I always attempt to reduce reimbursement by at least one-third as a contribution toward legal fees.

Most frustrating and angering are those companies which send letters misrepresenting that they are entitled to reimbursement when they clearly are not. These usually take the form of letters which assert ERISA qualification and federal preemption of C.G.S. 52-225c, when in fact the plans are insured plans to which ERISA does not apply.

B.      Effect of Sereboff and Knudson

Finally questions have been raised as to whether the case of Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002), may prevent truly self-funded ERISA qualified plans from seeking reimbursement. This writer’s opinion is that this case does little to change the legal landscape as set forth previously herein. The Knudson case was fact specific. In the case a Janette Knudson was seriously injured in a car accident and her employer’s medical plan paid over $400,000.00 in medical expenses. When the claim was settled with the tortfeasor, the plaintiff’s lawyer arranged for the creation of a Special Needs Trust to provide for ongoing medical care and allocated, after attorney fees and costs, only approximately $13,000.00 of the $650,000.00 settlement as reimbursement for past medical expenses to be repaid to the plan. The plan then sought to enforce its rights of reimbursement as stated in the plan under section 1132(a)(3) of ERISA which the United States Supreme Court interpreted to provide only equitable relief. The Court further reasoned that since the plan was seeking money from the plaintiff, i.e. reimbursement of monies paid for medical bills, and since section 1132(a)(3) under which the plan proceeded only provided for equitable relief that the plan chose the wrong legal route to get its money. The Court suggests that if the plan had sought recovery under a different legal theory such as breach of contract, or the imposition of  a constructive trust on the Special Needs Trustee, that the plan may have been allowed recovery.

In short, the Court did not suggest that reimbursement to a truly self-funded qualified ERISA plan can be avoided as a general rule, or even that some type of a trust can be established to avoid reimbursement.

The Supreme Court recently revisited the reimbursement issue in Sereboff v. Mid-Atlantic Medical Services, Inc., __ U.S. __, 126 S.Ct. 1869 (2006), aff’g, Mid-Atlantic Medical Services, L.L.C. v. Sereboff, 407 F.3d 212 (4th Cir. 2005).  In Sereboff, the Sereboffs’ were beneficiaries of a health insurance plan administered by Mid-Atlantic Medical Services, and they obtained a settlement from a third party for injuries they had sustained in an accident.  Mid-Atlantic brought suit under section 502(a)(3) seeking reimbursement pursuant to the “Acts of Third Party” provision of the Sereboffs’ ERISA plan, under which the Sereboffs’ agreed to reimburse Mid-Atlantic for medical expenses the latter paid if they recovered from a third party for their injuries.

The Supreme Court first considered whether the type of relief Mid-Atlantic sought was equitable or legal.  The Court determined that Mid-Atlantic sought an “equitable lien,” properly characterized as equitable because the funds were specifically identifiable and remained in the possession and control of the Sereboffs’ Id. at 1874.  The Court next analyzed whether the basis for Mid-Atlantic’s claim was equitable, applying “the familiar rul[e] of equity that a contract to convey a specific object even before it is acquired will make the contractor a trustee as soon as he gets a title to the thing.” Id. at 1875.  The Court found that the Acts of Third Parties provision in the Sereboffs’ plan specifically identified a particular fund, distinct from the Sereboffs’ general assets and a particular share of that fund to which Mid-Atlantic was entitled.  Mid-Atlantic therefore could rely on a familiar rule of equity’ to collect for the medical bills it had paid on the Sereboffs’ behalf.

Essentially, the Supreme Court in Sereboff ruled no differently than it did in Knudson, where it had held that section 502(a)(3) provides only for equitable relief.  In Sereboff, though, the health plan sought reimbursement from an identified fund, unlike in Knudson, and stated a claim for equitable relief, allowable under section 502(a)(3). An excellent discussion of the current federal case law on ERISA actions against beneficiaries to recover monies paid can be found in “Subrogation Under ERISA and the Search for “Appropriate Equitable Relief” by Randal M. Whitlatch, Tort Trial & Insurance Practice Law Journal, Summer 2006, Volume 41, Number 4, p. 1049.

V. Underinsured/Uninsured Traps

The key for the paralegal is to be sure that any underinsured/uninsured claim is recognized and PRESERVED. The statute of limitation as set forth in C.G.S. 38a-336 is 3 years from the date of accident. There are two exceptions: (1) As to certain uninsured claims the statute of limitation is 1 year from receipt of written notice that the automobile liability carrier has denied coverage or is insolvent if so provided in the policy; and (2) as to underinsured claims when a notice is sent to the underinsured insurance carrier within 3 years of the accident which extends the statute of limitation to 6 months from the date of settlement of the tortfeasor claim. Some traps: (1) Be sure to notify all possible underinsured insurance carriers; (2) Be sure to send the notice to all possible underinsured carriers by certified mail; (3) as to underinsured claims, either file suit within 3 years regardless, or be sure that the 6 months time span is very carefully diaried; and (4) there is no extension of the statute of limitation for uninsured claims.

  1. Doing Your Own Focus Group

The most important concept of focus groups is to understand what they are not. They are not a prophecy of how the case will be decided at the actual trial. There are too many variables that cannot be duplicated such as the personality and bent of the judge, defense counsel assigned to try the case and the crap shoot of the jury pool. A focus group is, however, a vitally important trial preparation tool, a good glimpse into how a jury may view certain important and disputed issues and an excellent method to hone your presentation for the best chance of success. We have routinely used focus groups in higher value cases and have found them to be immensely beneficial not only for our preparation but for client preparation(and control) as well. I began many years ago using trial consultants and have conducted my own for the last several years. Should you wish to use a consultant a good place to start looking is the American Society of Trial Consultants. I have listed below my thoughts from focus group experiences. I have also added some thoughts I learned from reading an excellent book written by David Ball, Ph.D. entitled “How to do Your Own Focus Groups”.

    1. We use “deliberation groups”. This is a summary presentation of evidence after which the jurors deliberate the issues. We watch the jurors as they deliberate on TV monitors from another room and record the deliberations on DVD for future review.
    2. You need approximately 4-5 hours for most cases and preferably 6 hours for more issues, or complex issues. We have typically conducted the focus groups during the week in the evening starting at 5:30 or 6:00 and ending at 10:30. If the presentation and deliberations are believed to be longer then a Saturday or Sunday is better. We like a focus group size of 8-10 and prefer splitting them into 2 groups of 4-5 for deliberations in 2 different rooms that we have wired for audio and video. You will need to call in 40-60 people(we have typically placed an ad in the venue-appropriate local newspaper for a jury project and are swamped with calls) to get 8-10 even after screening by phone. This will be done 2-3 days before the presentation.(You should be careful not to re-use jurors that have done this before.) We then have the jury pool of 40-60 come in 2 sessions of 20-30 spaced 1 hour and 30 minutes apart. This allows time for them to fill out the juror information forms(we have typically used the juror information form that is used in court but are switching to a more detailed form) and the confidentiality agreement before conducting a box voire dire. We provide food and drinks. The jurors selected are asked to come back for the day of the presentation and we pay them $100.00 each.
    3. They need to be told that they will be videotaped.
    4. David Ball suggests that you should not let them know who you represent. I have not found this to lessen the benefit of the focus group. I always ask a very experienced colleague(usually a defense lawyer I am friendly with) to present the defense side. You must allow the defense to present the strongest opposing arguments they can or the focus group will not be beneficial.
    5. You should allow breaks for 10-15 minutes after not more than 1 hour and 30 minutes or you will lose some of them; but be sure to tell them not to discuss the issues until they are asked to deliberate.
    6. I have always allowed the jurors to write notes or questions on notebooks that we provide for use during the presentation. Any questions should be answered before they start deliberating(assuming you can answer them without a detrimental effect on the exercise).
    7. I generally use an abbreviated trial format: a short 15-20 minute opening and allow defense the same; then present live testimony of the client and any critical witnesses allowing for vigorous defense cross-examination; then excerpted videotape testimony of defendant and/or defense experts; brief closing remarks with no rebuttal closing; and then have a paralegal read the jury charge as it would be in court on all relevant issues.(Jury charges from prior trial transcripts or from the judicial website are acceptable usually) Keep it brief!
    8. For deliberations we provide a copy of all exhibits for each juror. This saves the time of waiting for one juror to pass the exhibits to the next. Do not load them up with medical records. There is not enough time. Pick and choose carefully the most critical ones being sure to include the good and the bad, especially the bad. If there are demonstrative or other visual effects exhibits you want to use at the actual trial and you wish to test the effectiveness of them, this is a good opportunity. We also provide a Verdict Form similar to one that they would receive in court. You may want to consider Jury Interrogatories on critical issues you want to be sure they discuss.
    9. After the presentation allow them a short break and then let them deliberate. We have them deliberate in our courtroom and a conference room that we have wired for audio and visual. The audio/visual is piped to TV monitors in another conference room. We have the capability of switching from one deliberation or the other, or both at the same time.(An outside production company can accomplish this for you if you have adequate space).We watch them deliberate and take notes. The deliberations are recorded on DVD for future review as many times as necessary to be sure we hear everything(really hear!) they have to say on the issues we are concerned about. We usually allow them to deliberate for 45 minutes to an hour and one-half depending on the issues.
    10. After deliberations we talk with them. First in the separate deliberating groups, and then all of them together. We ask lots of open-ended questions about their thoughts on the issues and their conclusions and just listen(listen!) to what they have to say. A paralegal takes notes. These are referred to as debriefing sessions. David Ball suggests debriefing them on what they think the law is. This can provide valuable insight into what areas of the jury charge you need to be sure you speak with the trial judge about.

If you have never done a focus group don’t be afraid to speak with other lawyers and paralegals that have; and if you are uncomfortable attempting one yourself hire an experienced jury consultant until you get the hang of it. As David Ball aptly said “doing a focus group wrong is like getting a serious misdiagnosis from a doctor; you confidently believe it and it kills you.”

  1. Valuing a Personal Injury Claim

Valuing a personal injury claim is more art than science but the heart of science is the key: PROOF of facts! Having done this work for 21 years now I have some thoughts I can share:

  1. Facts, facts, facts!! All cases are fact driven. Getting to know the facts, really know them, takes a lot of investigation and record gathering. The days when you could settle cases for a fair sum without a meticulously investigated, researched and documented file are history.
  2. Concentrate equally on damages and liability. Too often we concentrate on one or the other, whichever we are more concerned about; the other doesn’t get worked up adequately hurting the value of the claim. If you can, have separate staff working on these two issues then you can be certain they are worked up equally.
  3. Get all the medical bills! This sounds easier than it is. Be sure you coincide each record with each bill. Don’t forget to get prescription records and bills. Be sure to request a payment history from any outside source that paid medical bills to be sure you have them all; and be sure you check with each provider for any outstanding balances.
  4. Be sure to get the client’s entire past medical history and all remotely relevant past medical records. DO NOT rely on a client’s memory of past medical treatment. Their memory can be notoriously inaccurate!
  5. Be sure all future medical treatment, medical risks and permanent injuries are documented
  6. Be mindful of any potential lien paybacks
  7. Discuss wage loss thoroughly with your client. What are they claiming? If they are claiming loss of income or loss of their job due to injuries be sure to check what their employer has to say. If self-employed a careful examination of the client’s books and records needs to be done to be sure the wage loss is provable. And be sure you check the tax returns: have they filed? And do the returns support the income loss? If there is a total disability be sure it is supported as necessary by medical opinion as well as a vocational rehabilitation expert and economist.
  8. Look for any other potential source of economic loss, such as over-the-counter medicines; orthopedic appliances; hiring of lawn care or home cleaning personnel, a part-time job, etc… Ask the client!
  9. Non-economic losses are almost always greater in legal value than the economic losses. I have found that to build the right argument for any particular client you have to take the time to get into their life and really know who they are, what they did before the injury, what they liked to do, and what they are REALLY doing after the injury.(Beware of surveillance!) Non-economic losses are built from life changes so take the time to know what the changes are and be sure to fully involve the client in this quest. And then corroborate the changes by speaking with the family and friends who are closest to your client. I have found it helpful to visit the client at home prior so you see what makes them tick and get a feel for how they live.
  10. Control your client. Let them know that the legal system is not a lotto. They are entitled to fair compensation for all PROVABLE injuries and losses. If it isn’t REALLY TRUE don’t expect any compensation for it. And don’t take their word for anything. Listen to them and then investigate and document. If what they have said doesn’t jive with what you uncover, discuss it!
  11. Do not summarily dismiss IME or other opposing expert opinions. They could be right! Share the reports with your client and your client’s doctors/experts and get their response. Research the medicine,etc if you don’t FULLY understand it.
  12. Egregious behavior such as drunk driving, altering medical records, etc adds substantial value. Consider it!
  13. Discuss the facts with other colleagues and get their thoughts on value. Run the facts by other staff in the office and get their thoughts. Hold a focus group. Research other verdicts and settlements in similar cases.(Caution: No two cases are EVER the same! So consider prior settlement or verdict information as only one factor in valuation puzzle)

DO NOT EVER VALUE A CLAIM WITHOUT ALL THE FACTS!

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