The Supreme Court ruled that an ERISA plan could not recover settlement funds dissipated on non-traceable items, such as food or travel, from the from the tort victim/recipient’s general assets.
The tort victim, Montanile, sued the drunk driver that had injured him and received a $500,000.00 settlement. Montanile also received approximately $120,000.00 in medical benefits from his employer’s ERISA plan- National Elevator Industry Health Benefit Plan (The tort lawyer advised the Plan that he would release funds if there was no objection in 14 days.)
The parties could not reach a settlement, and the ERISA plan sued to enforce first party subrogation rights against Montanile. In a somewhat surprising opinion, SCOTUS reversed the lower courts and found the ERISA plan could not collect from Montanile’s general assets as he had spent the proceeds of the lawsuit.
Why does the opinion remind me of Richard Pryor’s 1985 campy comedy Brewster’s Millions?
ERISA providers will be forced to respond quickly seeking reimbursement to avoid dissipation of assets. The provider should move to attach the settlement prior to disbursement or secure an agreement or as a last ditch effort seek the plan recipient from taking any trips to Las Vegas.
The opinion may be found at: