Compromising reimbursement claim in third party suit

[Guest JD698]

Can a board of trustees of a health fund compromise a member's lien when the member's recovery will be little or nothing after the lien is repaid. (Even after the 1/3 is deducted for attorney's fees)?

Can anyone point me towards some authority for either position?

Thanks!!!!

[Guest b2kates]

what do you mean by compromise.

there is a recent Court of appeals case recognizing the right under ERISA for a welfare plan to subrogation of a participant's claim for health benefits.

[Guest JD698]

By compromise I mean settle. The third party case has been settled. The amount of the settlement is barely more than the amount of the health fund's lien. Is it a "prohibited transaction" for the Trustees to accept less money from the member in settlement of the lien.

[Guest BenefitsLawyer]

How about by analogy to the PT class exemption (76-1?) that permits a plan to compromise delinquent contribution claims, based on the facts and circumstances?

[mal]

We have always reviewed these claims on

a case by case basis. Given the hurdles imposed

by Knudson and the "make whole" line of cases,

the DOL would have a very tough time holding

a Board liable for compromising a claim. I

just make sure the file is documented with

the particular obstacles faced in attempting

to recover the monies. The trustees are then

asked to exercise their discretion.

Think about it another way. Suppose a fund

pursued all claims, regardless of size or

potential problems with recovery. In my

opinion, this would be a bigger problem as

the expenses associated with the

collection efforts on lousy cases

could not be deemed "reasonable."