What is an ERISA Lien?

A metal birdcage holds a dollar inside against a black background, representing how ERISA liens can impact monetary awards.

In a personal injury case, there are many steps involved before you finally obtain a settlement. You’re not only dealing with the negligent parties, but your insurance companies. These negotiations contribute to the length of the process. For example, your health insurance may want to be paid back for the medical expenses that it incurred in treating your injuries.  Things get more complicated when you find out that your employer paid for the medical expenses related to your injury under a Federal law called ERISA. In this situation, your health insurance may have what is called an “ERISA lien,” and it’s far more common than you might suspect.

What is ERISA?

ERISA stands for the Employee Retirement Income Security Act of 1974. This act protects the rights of employees and their beneficiaries who participate in benefit plans provided by employers. Before ERISA, worker benefits were subject to varying and sometimes conflicting state laws. It sets and protects standards of conduct over millions of health and retirement plans that 141 million workers rely on for benefits.

There is an important distinction between traditional health insurance and the health benefits that are covered by ERISA. Rather than the patient paying a monthly premium, like with an insurance plan, an employer will provide the patient a health benefits plan formed under ERISA, which pays all the patient’s medical expenses up front, except for the occasional co-pay. The employer sometimes negotiates directly with the care provider to get reduced costs for such services. 

If you’re not sure whether you have health insurance or a health benefits plan, you can visit Free ERISA to find out, or ask your human resources representative.

What is an ERISA Lien? 

If an employee is injured due to the negligence of another and his medical bills are paid with a health benefits plan governed by ERISA, the employer may have a right to recover the money, dollar-for-dollar, that was spent on the health care. 

This is different from the rules that apply to an insurance company. Health insurance companies must reduce the amount they can be repaid from a  settlement to account for their share of the attorney fees and expenses that went into recovering money for them. However, employers with ERISA benefits have the right to recover the full amount they paid for the treatment regardless of whether there are attorney fees or expenses incurred by the patient in making a recovery on the employer’s behalf.   Under ERISA, there is the potential that the employer could take the full amount an injured person is awarded.

How Does an ERISA Lien Affect an Indiana Personal Injury Case?

In the event of an ERISA lien during an Indiana personal injury case, the employer may have the right to recover the money once the settlement has gone through. It is important to note that employers and insurers do not have any claims against the injured party’s personal assets, but only the monetary damages recovered from the lawsuit. This means that an injured party does not need to worry about the lien being placed against their personal finances. However, a good Indiana personal injury attorney should consider any dollar amount owed through an ERISA lien into the final negotiation of a personal injury settlement. 

If you were injured due to negligence in Indiana and have medical bills, you should find out if your policy is governed by ERISA before starting the civil claims process. You need a lawyer who is experienced in these nuances and can give you advice in your best interest. We can also, in many cases, talk to the insurance company in order to negotiate the amount of the lien. The Indianapolis personal injury attorneys at Cline Farrell Christie Lee & Bell want to help you get what you need to move forward in life with peace of mind. From listening to your story to fighting for you in court, we’re your advocates. Contact us today for a free consultation.