A common misconception when dealing with ERISA-regulated healthcare plans is that the plans are never subject to the "made whole" doctrine.
When applicable, the "made whole" doctrine, or "full compensation rule," states that an insurer has no right to reimbursement for benefits paid out of the plaintiff's recovery from a third-party unless the plaintiff has been "fully compensated" for all damages, otherwise known as "made whole."
This is a statutory protection in many states, including Georgia, which can be found at O.C.G.A. 33-24-56.1. Pursuant to the statute, a benefit provider retains the right to reimbursement only in situations where the client's recovery is greater than all economic and non-economic losses.
However, because most health insurance in this country is employer-based, and therefore regulated by the Federal Employee Retirement Income Security Act (ERISA), the state protections often do not apply to your client's healthcare plans due to federal pre-emption.
However, the "made whole" doctrine does not only apply to plans subject to state law. The 11th Circuit Court of Appeals announced in Cagle v. Bruner, that the "made whole" rule is the default rule in all ERISA reimbursement cases in the 11th Circuit based on federal common law. Cagle v. Bruner, 112 F.3d 1510, 1522 (11th Cir. 1997). According to Cagle, the only question is whether the ERISA plan contracts out of the doctrine by inserting "clear and unambigious" language into the plan that specifically rejects the rule. If there is no language rejecting the doctrine, the client may not have to reimburse the plan if you can successfully argue the client was not made whole.
Therefore a careful reading of the plan to look for language that specifically rejects the made-whole rule is required in every case involving an ERISA plan. Where this language does not exist, Cagle v. Bruner states your client must be made-whole for the plan to have a right to reimbursement.
See also Adelstein v. Unicare, 31 Fed. Appx. 935 (11th Cir. 2002) and Summerlin v. Georgia-Pacific, 366 F.Supp.2d 1203 (M.D. Ga. 2005) for more explanation by the Court of when the "made whole" rule applies or does not apply to rights of reimbursement claimed by ERISA plans.
Ben Price is a partner at the law firm of Jarrett & Price in Savannah, Georgia. The information on this site is intended for Plaintiff's lawyers only. The content on this site does not establish an attorney-client relationship and in no way should be considered legal advice.
When applicable, the "made whole" doctrine, or "full compensation rule," states that an insurer has no right to reimbursement for benefits paid out of the plaintiff's recovery from a third-party unless the plaintiff has been "fully compensated" for all damages, otherwise known as "made whole."
This is a statutory protection in many states, including Georgia, which can be found at O.C.G.A. 33-24-56.1. Pursuant to the statute, a benefit provider retains the right to reimbursement only in situations where the client's recovery is greater than all economic and non-economic losses.
However, because most health insurance in this country is employer-based, and therefore regulated by the Federal Employee Retirement Income Security Act (ERISA), the state protections often do not apply to your client's healthcare plans due to federal pre-emption.
However, the "made whole" doctrine does not only apply to plans subject to state law. The 11th Circuit Court of Appeals announced in Cagle v. Bruner, that the "made whole" rule is the default rule in all ERISA reimbursement cases in the 11th Circuit based on federal common law. Cagle v. Bruner, 112 F.3d 1510, 1522 (11th Cir. 1997). According to Cagle, the only question is whether the ERISA plan contracts out of the doctrine by inserting "clear and unambigious" language into the plan that specifically rejects the rule. If there is no language rejecting the doctrine, the client may not have to reimburse the plan if you can successfully argue the client was not made whole.
Therefore a careful reading of the plan to look for language that specifically rejects the made-whole rule is required in every case involving an ERISA plan. Where this language does not exist, Cagle v. Bruner states your client must be made-whole for the plan to have a right to reimbursement.
See also Adelstein v. Unicare, 31 Fed. Appx. 935 (11th Cir. 2002) and Summerlin v. Georgia-Pacific, 366 F.Supp.2d 1203 (M.D. Ga. 2005) for more explanation by the Court of when the "made whole" rule applies or does not apply to rights of reimbursement claimed by ERISA plans.
Ben Price is a partner at the law firm of Jarrett & Price in Savannah, Georgia. The information on this site is intended for Plaintiff's lawyers only. The content on this site does not establish an attorney-client relationship and in no way should be considered legal advice.
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