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Subrogation Quandry

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A self insured ERISA health plan has been sued in state

court as part of a personal injury lawsuit. One count of

the complaint is essentially a claim for payment of benefits

that as of today have not been paid. (The member has

refused to sign the subro agreement as clearly required

by the terms of the plan.)

Prior to the QualChoice case which came out earlier this

month in the 6th Circuit, I would have simply removed the

case and gone through the constructive trust/equitable

lien hoops. However, QualChoice effectively killed these

options within the 6th Circuit. Therefore, if I remove the

case, the federal court is likely to give us a quick boot.

I am tenatively planning to discuss this matter with the

P.I. attorney and have his client sign the subro agreement.

This will allow us to pay the bills and participate in the

state court action under a true subrogation theory

(plan v. tortfeasor).

Questions...

1. What are your thoughts on this approach?

2. Does the state court have subject matter jurisdiction over

an action brought by the ERISA plan against the 3rd party

tortfeasor?

3. Any issues or options I am missing?

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Not enough information.

Who is your client: The Plan? The employer? The TPA firm?

Under the terms of the Plan, who must execute the subrogation agreement? The covered participant? Any beneficiary?

Does your state have an interpleader statute?

Answers (subject to revision upon clarification of facts)...

1. What are your thoughts on this approach? Probably not good unless it is in the interest of your client (whoever that is). I suggest that your client sign a release/hold harmless if you use this approach.

2. Does the state court have subject matter jurisdiction over an action brought by the ERISA plan against the 3rd party tortfeasor? Of course. Moreover, to the extent that ERISA might apply, the state court is capable of applying ERISA using conflict of law rules.

3. Any issues or options I am missing? You might be missing an opportunity to get out of the picture altogether by using the interpleader statute, assuming one exists.

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