Whether an ERISA healthcare plan can enforce its lien against the general assets of a beneficiary is a question the United States Supreme Court is scheduled to hear in October. The court may also provide clarity over the role a Summary Plan Description (SPD) plays in establishing the rights of healthcare plans to establish and enforce their liens.
The case, Board of Trustees of the National Elevator Industry Health Benefit Plan v. Robert Montanile, was decided by the 11th Circuit Court of Appeals in November 2014. The 11th Circuit Court held in favor of the Plaintiff health benefit plan, holding that the assets were subject to an “equitable lien by agreement” and they were “specifically identifiable funds.” The Defendant, Montanile, appealed to the highest court and the case was granted cert in March 2015. The case is scheduled for the October term of the Supreme Court.
There are two significant questions the Court is expected to rule upon stemming from this case. First, is whether an “equitable lien by agreement,” which lies in equity, allows a healthcare plan to recover out of the personal assets o the beneficiary if the funds have already been disbursed and spent. Montanile argues that is a legal remedy only available in law because it is essentially seeking money damages. The 11th Circuit held that because the funds were once identifiable, because they were once held in the trust account of Montanile’s attorney. Therefore the Court held the funds were still traceable to Montanile’s personal assets because Montanile eventually held, or spent, the same funds.
The other issue the Court may address is whether the “Summary Plan Description” (SPD) alone can grant a plan the right to assert a lien when those rights are not stated in any other plan documents. The 11th Circuit held that the Summary Plan Description could establish an enforceable lien even if all other plan documents were silent on the plan’s rights to reimbursement. Montanile argues this conflicts with a previous Supreme Court holding in Cigna Corp. v. Amara, 131 S.Ct. 1866 (2011). In Amara, the majority’s opinion stated in a footnote that the SPD did not create the rights of the plan, but merely summarized and explained those rights to the beneficiary. Several Courts, including the 11th Circuit, have held since Amara that the SPD is a plan document that can stand alone to create rights of the plan.
This case could have major implications for the rights of plans. Very often when reviewing plan documents, we see that the plan’s rights are stated only in the SPD. Just as often, we’re told that no other plan documents exist, and the SPD is the only relevant plan document. If the Supreme Court holds that SPD’s alone cannot establish these rights, this could provide a clear defense to reimbursement for plaintiff’s whose healthcare plans only consist of an SPD.
The case, Board of Trustees of the National Elevator Industry Health Benefit Plan v. Robert Montanile, was decided by the 11th Circuit Court of Appeals in November 2014. The 11th Circuit Court held in favor of the Plaintiff health benefit plan, holding that the assets were subject to an “equitable lien by agreement” and they were “specifically identifiable funds.” The Defendant, Montanile, appealed to the highest court and the case was granted cert in March 2015. The case is scheduled for the October term of the Supreme Court.
There are two significant questions the Court is expected to rule upon stemming from this case. First, is whether an “equitable lien by agreement,” which lies in equity, allows a healthcare plan to recover out of the personal assets o the beneficiary if the funds have already been disbursed and spent. Montanile argues that is a legal remedy only available in law because it is essentially seeking money damages. The 11th Circuit held that because the funds were once identifiable, because they were once held in the trust account of Montanile’s attorney. Therefore the Court held the funds were still traceable to Montanile’s personal assets because Montanile eventually held, or spent, the same funds.
The other issue the Court may address is whether the “Summary Plan Description” (SPD) alone can grant a plan the right to assert a lien when those rights are not stated in any other plan documents. The 11th Circuit held that the Summary Plan Description could establish an enforceable lien even if all other plan documents were silent on the plan’s rights to reimbursement. Montanile argues this conflicts with a previous Supreme Court holding in Cigna Corp. v. Amara, 131 S.Ct. 1866 (2011). In Amara, the majority’s opinion stated in a footnote that the SPD did not create the rights of the plan, but merely summarized and explained those rights to the beneficiary. Several Courts, including the 11th Circuit, have held since Amara that the SPD is a plan document that can stand alone to create rights of the plan.
This case could have major implications for the rights of plans. Very often when reviewing plan documents, we see that the plan’s rights are stated only in the SPD. Just as often, we’re told that no other plan documents exist, and the SPD is the only relevant plan document. If the Supreme Court holds that SPD’s alone cannot establish these rights, this could provide a clear defense to reimbursement for plaintiff’s whose healthcare plans only consist of an SPD.
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