Philadelphia Injury Attorney Blog

Third party legal cases that involve first party medical payment plans and subrogation interests can be tough to resolve. Quite often, a medical payer will assert a subrogation interest and lien on a third party liability claim, in an effort recover the full payment of medical bills. As Pennsylvania catastrophic injury and car accident lawyers, we believe that all plans, even self-funded ERISA plans, should be forced to reduce such medical liens in proportion to the amount spent on attorneys’ fees for third party recovery.

In the case of US Airways, Inc. v. McCutchen, 663 F.3d 671 (3rd Cir. 2011), the Third Circuit Court reversed, on appeal, the decision of a Western Pennsylvania trial court ruling that a lien had to be repaid in full, with no reduction. The case involved a self-funded ERISA plan, to which the Court applied the traditional equity principle of unjust enrichment. It held that any judgment requiring the victim or plaintiff to provide a full reimbursement to the employer—in this case, US Airways—would constitute inequitable relief, because the amount exceeded the net amount of the victim’s third party liability recovery. The Court ruled that requiring the victim to fully reimburse his or her employer’s health plan would result in a windfall for the employer—who had contributed nothing to the cost of obtaining a third party recovery. Noting that “equity abhors a windfall,” the Court concluded that equity applies to subrogation rights under an ERISA plan. In the case of McCutchen, Counsel successfully argued that, if legal fees or costs were not taken into account, the employer , US Airways, would effectively be reaching into its beneficiary’s pocket—thereby placing the beneficiary in a worse position than if he or she had not pursued a third party recovery in the first place.

A third party lien holder that attempts the full recovery of a subrogation interest, and wrongfully seizes or attaches the funds of another for its own purposes, is committing what is known as a theft- by-conversion. Conversion is when a defendant assumes and exercises ownership or control over property or funds belonging to someone else —without authorization—thereby depriving the other person of property or funds. Whenever a third party lien holder or medical plan claims the right to full recovery, and either refuses to reduce its recovery, or insists on a minimal reduction, the victim needs aggressive legal protection to ensure that he or she will not be cheated by an insurance carrier, adjuster, or independent adjuster who violates the law.

This principle applies to many personal injury cases—particularly, settlements involving a spouse’s right of compensation and/or recovery for loss of consortium—which are “off limits” for the recovery of subrogation interests. In one case, that of ACS Recovery Services Inc. v. Griffin, 676 F.3d 512 (5th Cir. 2012), the Court stated that—unless the plan agreement states specifically that it can seek reimbursement from an award for loss of consortium made to a beneficiary’s spouse—it cannot recover such funds. In other words, the plan, or third party lien holder, would have no rights to recovery on any portion of the spouse’s settlement.

Jeffrey Reiff is a catastrophic injury and car accident lawyer in Pennsylvania who has been recognized as one of the Top 100 Lawyers in Philadelphia and one of the Top Northeast Lawyers. He has regularly been named a Pennsylvania Super Lawyer, and has consistently been rated Superb by Avvo.com.

In my practice as a Philadelphia trucking accident and car accident lawyer, I have noticed a disturbing trend. More and more frequently, auto insurance companies and their overzealous lawyers are attempting to intimidate car accident victims into having defense medical exams—misleadingly called “independent medical exams” (IMEs)—in highly inconvenient, faraway locations. There is usually a good reason for the defense to choose a doctor located in a place that requires “burdensome and extensive travel.” It is, quite simply, to harass the injured party.

Generally speaking, the doctor chosen for an IME is “on the payroll”—that is, paid generously by the insurance carrier to write a medical report that is biased in favor of the insurance company. As many physicians watch their incomes decline, with changes in insurance reimbursements, this practice provides a welcome source of revenue. And, indeed, the monetary rewards are great for a report that contests the victim’s complaints.

It is well established, under the law of the Commonwealth of Pennsylvania, that a plaintiff should not be compelled to travel a great distance, unless the insurance company and its attorneys show good cause for the requested examination. Thus, the defense lawyer for the insurance company must prove the need for the exam.

A skilled plaintiff’s counsel should always argue that traveling an unreasonable distance without good cause is unduly burdensome to his or her client--which is especially true if the client is injured and in pain. He or she should also argue that, if an examination by such a doctor-- sometimes called a “painted lady” expert—is needed, the doctor can travel to another office closer to the plaintiff. The Court will generally determine whether good cause exists for travel to an extreme location.

The Pennsylvania Rules of Civil Procedure provide that “when the mental or physical condition of a party is in controversy, the party may be able to submit to a physical or mental examination.” The law further stipulates that this order may be made “only on motion for good cause shown, and upon notice that the person shall be examined, and shall specify the time, place, manner, and scope of the examination, and the person or persons by whom it is to be made.” The law also states that no discovery shall be permitted in the Commonwealth of Pennsylvania that “would cause unreasonable annoyance, embarrassment, oppression, burden, or expense” to any party.

Our office aggressively contests unreasonable independent medical examinations, and we will often assert to the Court—utilizing MapQuest or other services readily available on the Internet—that such an exam requires driving hundreds of miles, for a plaintiff or victim who is already injured. The Courts have generally ruled that requiring a plaintiff to travel in excess of a hundred miles to attend an IME–- without extraordinary proof that a qualified physician in the specialty is not available in plaintiff’s home county or closer location—is unreasonable. In the Philadelphia metropolitan area, with its unparalleled medical resources, this is most often the case.

You and your lawyer should not be afraid to tackle the opposition--namely the insurance company and its defense attorneys—and make it prove to the Court that a good cause exists for an examination by a doctor located far away.

Jeffrey Reiff has litigated thousands of car accidents since 1979. He is a member of the National Trial Lawyers’ Top 100 Trial Lawyers, and has been voted one of the Top 100 Lawyers in Philadelphia. He is regularly nominated as a Pennsylvania Super Lawyer, and has received the AVVO 10/10 People’s Choice Award.