Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006)
Primary Holding
A fiduciary under the Employee Retirement Income Security Act (ERISA) may sue a beneficiary for reimbursement of medical expenses paid by the ERISA plan when the beneficiary has recovered damages from a third party, as long as the plan contains a valid reimbursement provision.
In the case of Sereboff v. Mid Atlantic Medical Services, a couple received medical payments from their health insurance plan after a car accident. When they later received a settlement from a lawsuit against the party responsible for the accident, the insurance company claimed it had the right to get back the money it had paid for their medical expenses. This case is important because it establishes that health insurance plans can require beneficiaries to repay them for medical costs if they recover money from someone else, as long as the plan clearly states this rule. For consumers, this means that if you have health insurance and you get injured due to someone else's actions, your insurance may expect to be paid back for any medical costs if you win money from a lawsuit. This case is relevant if you find yourself in a similar situation where you are receiving insurance benefits and then also get a settlement or award from a third party.
AI-generated plain-language summary to help you understand this case
In the case of Sereboff v. Mid Atlantic Medical Services, Inc., Marlene Sereboff and her husband Joel were beneficiaries of a health insurance plan sponsored by Marlene's employer and administered by Mid Atlantic Medical Services, Inc. The plan included an "Acts of Third Parties" provision, which required beneficiaries to reimburse the insurer for medical expenses paid when they received benefits due to injuries caused by a third party. After the Sereboffs were injured in an automobile accident, the plan covered their medical expenses. Subsequently, they filed a tort action against several third parties seeking damages for their injuries. Mid Atlantic asserted a lien on the anticipated proceeds from the lawsuit, claiming reimbursement for the medical expenses it had paid on their behalf. The Sereboffs' tort suit eventually settled for $750,000, but they did not pay Mid Atlantic the claimed lien amount of $74,869.37, which represented the medical expenses incurred. In response, Mid Atlantic filed a lawsuit in District Court under ERISA, seeking to collect the owed amount. The District Court issued a temporary restraining order requiring the Sereboffs to preserve the lien amount from the settlement proceeds. After a ruling in favor of Mid Atlantic, the District Court ordered the Sereboffs to pay the owed amount plus interest, deducting a portion for attorney's fees and court costs incurred in the state court action. The Sereboffs appealed the decision, leading to the case being reviewed by the Fourth Circuit Court of Appeals, which affirmed the District Court's ruling. The case reached the Supreme Court of the United States on a writ of certiorari, where the Court examined the circumstances under which an ERISA fiduciary may seek reimbursement from a beneficiary for medical expenses paid when the beneficiary recovers from a third party. The underlying legal question was centered on the enforcement of the reimbursement provision in the context of ERISA and the rights of the health plan administrator to recover costs from beneficiaries who had received third-party settlements.
Whether a fiduciary under the Employee Retirement Income Security Act (ERISA) may sue a beneficiary for reimbursement of medical expenses paid by the ERISA plan when the beneficiary has recovered damages from a third party.
The judgment of the Fourth Circuit is affirmed in relevant part.
- Court
- Supreme Court
- Decision Date
- March 28, 2006
- Jurisdiction
- federal
- Case Type
- landmark
- Majority Author
- Roberts
- Damages Awarded
- N/A
- Data Quality
- high
Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006)
Consumer WonA state Medicaid agency cannot impose a lien on a tort settlement that exceeds the amount of medical costs paid by Medicaid, as such a lien contravenes federal law and is therefore unenforceable.
Commissioner v. Banks, 543 U.S. 426 (2005)
Consumer LostWhen a litigant's recovery constitutes income, the portion of that recovery paid to the attorney as a contingent fee is included in the litigant's gross income under the Internal Revenue Code.
Orff v. United States, 545 U.S. 596 (2005)
Consumer LostCongress did not waive the United States' sovereign immunity for suits brought by third-party beneficiaries under the Reclamation Reform Act of 1982, and therefore, individuals who are not parties to a government contract cannot sue the United States for breach of that contract.
Martin v. Franklin Capital Corp., 546 U.S. 132 (2005)
Consumer LostA federal court has discretion to award attorney's fees when remanding a case to state court under 28 U.S.C. § 1447(c), and such an award is appropriate only if the removing party lacked objectively reasonable grounds for believing that the removal was legally proper.