Express Plan Terms Allow Self-Insured Plan to Recover Medical Benefits Paid to Employee Post-McCutchen

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In Quest Diagnostics v. Bomani, et al., 11-CV-00951 (D. Conn., June 19, 2013), the court granted Quest Diagnostic’s (“Quest”) motion for summary judgment, ruling that Quest, as the fiduciary to its self-insured medical plan, could recover medical benefits paid to its employee after the employee was injured in an accident and recovered a settlement from the responsible third-party. Citing the Supreme Court’s recent ruling in U.S. Airways, Inc. v. McCutchen, the district court ruled that the plan had a right under ERISA Section 502(a)(3) to recover the medical benefits paid to the employee based on the reimbursement provision of the plan, which clearly stated that the employee was “responsible for reimbursing the plan for 100% of the amounts paid by the medical plan…regardless of whether [the employee] ha[s] been made whole.” The court rejected the defendants’ argument that the “make-whole doctrine,” which would prevent the employee from paying monies from his personal injury recovery until he was “fully compensated for his injuries,” limited the plan’s right to recovery, reasoning that the explicit terms of the plan “unambiguously foreclose[d] the application of the make-whole doctrine.” The court also ruled that Connecticut’s anti-subrogation statue, which prohibits insurers from pursing recovery from third-party tort settlements, was preempted by ERISA and did not apply, because Quest’s plan was self-insured.

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