My client was injured at work. Her employer totally controverted the claim. Because the claim was denied, she sought medical care under her employer sponsored HMO policy.
Eventually, she and her workers compensation lawyer settled the work comp case as a totally controverted claim. The HMO sought reimbursement of its alleged lien out of the work comp settlement. Her work comp lawyer asked the carrier to waive its lien, and the HMO carrier refused.
I filed a declaratory judgment action seeking a declaration that there is no lien based on two grounds: 1) work comp proceeds are statutorily exempt from all claims of creditors; and 2) HMO reimbursements are a creature of statute, and the applicable statute only allows HMO’s to be reimbursed out of recoveries from “tortfeasors.”
Even though this was an employer sponsored plan, this is not controlled by ERISA. Even if it were controlled by ERISA, the HMO reimbursement statute is “saved” from ERISA preemption.