April 2001 - ERISA provisions

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#006699" TEXT="#080000" background="04a085a3.jpg"> <div> <FONT SIZE="5" COLOR="#FFFFFF" FACE="Arial" ><B>Kreiner & Peters Co., L.P.A.</B></FONT><B>    </B><B> |     </B><A HREF="index.htm" TARGET="_top" TITLE="Kreiner Peters Co., L.P.A."><U><B>home</B></U></A></div> <div> <A HREF="id46.htm" TARGET="_top" TITLE="December 2004 Subrogation under Legisla"><U>December 2004 - Subrogation under Legislative Scrutiny</U></A>   |   <A HREF="id41.htm" TARGET="_top" TITLE="November 2004 Lawson"><U>November 2004 - Lawson</U></A>   |   <A HREF="id40.htm" TARGET="_top" TITLE="November 2004 Restitution"><U>November 2004 - Restitution</U></A>   |   <A HREF="id45.htm" TARGET="_top" TITLE="August 2004 Rental"><U>August 2004 -  Rental</U></A>   |   <A HREF="id37.htm" TARGET="_top" TITLE="February 2002 ERISA"><U>February 2002 - ERISA</U></A>   |   <A HREF="id36.htm" TARGET="_top" TITLE="November 2001 ERISA"><U>November 2001 - ERISA</U></A>   |   <A HREF="id35.htm" TARGET="_top" TITLE="November 2001 Evidence"><U>November 2001 - Evidence</U></A>   |   <A HREF="id34.htm" TARGET="_top" TITLE="June 2001 Intentional Acts"><U>June 2001 - Intentional Acts</U></A>   |   <A HREF="id33.htm" TARGET="_top" TITLE="May 2001 Fiduciary"><U>May 2001 - Fiduciary</U></A>   |   <B>April 2001 - ERISA  provisions</B>   |   <A HREF="id31.htm" TARGET="_top" TITLE="January 2001 ERISA"><U>January 2001- ERISA</U></A>   |   <A HREF="id30.htm" TARGET="_top" TITLE="2000 ERISA Fiduciary"><U>2000 - ERISA Fiduciary</U></A>   |   <A HREF="id29.htm" TARGET="_top" TITLE="2000 Medical Payments"><U>2000 - Medical Payments</U></A>   |   <A HREF="id28.htm" TARGET="_top" TITLE="2000 ERISA"><U>2000 - ERISA</U></A></div> <div> <B>N</B></div> </td> </tr><tr> <td valign="top" width=210 BGCOLOR="#FFFFFF" TEXT="#080000" background="04bd2e83.jpg"> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <I>April 2001 - ERISA  provisions</I></div> <div> <B>APRIL 2001</B></div> <bR> <div> <B>ERISA PLAN MUST REDRAFT SUBROGATION AND REIMBURSEMENT</B></div> <div> <B>PROVISIONS TO SATISFY THE SIXTH CIRCUIT'S IMPLIED AMBIGUITY</B>.</div> <bR> <div> The Sixth Circuit Court of Appeals again prevented enforcement of ERISA plan subrogation and reimbursement rights by implying ambiguity into the contract terms. In <U>Hiney Printing Co. v. Jeannine Brantner</U>, 2001 FED App 0072P, 01a0072p (6th Cir., March 16, 2001), the Sixth Circuit refused to enforce a right of reimbursement against an injured employee. In its ruling, the Sixth Circuit found the reimbursement clause to be ambiguous because it was "silent as to whether the right of reimbursement applies to partial recovery." <U>Brantner</U>, 2001 FED App 0072P at pg 4. The reimbursement provision stated "[i]f the Plan member recovers damages from any party....[he] must reimburse us to the extent of payments made." The Sixth Circuit found the plan's silence regarding partial recovery to be ambiguous.</div> <bR> <div> The Sixth Circuit also held the subrogation clause in the plan to be ambiguous as well. The Court stated that "the Plan must also unambiguously establish a right to any full or partial recovery." <U>Brantner</U> at pg. 3. The subrogation provision in <U>Brantner</U> stated that "[a]ny amounts so recovered, however designated, shall be apportioned as follows: this Plan shall be reimbursed to the extent of its payments under this plan...... If any balance then remains from such recovery, it shall be applied to reimburse the plan member." <U>Brantner</U> at pg. 2. The Sixth Circuit created ambiguity in this provision by ruling the plan language did not explicitly state what happens when there is only a partial recovery. A request for en banc hearing of the <U>Brantner</U> case is pending with the Sixth Circuit as of the date of this newsletter. </div> <bR> <div> Based upon the <U>Brantner</U> opinion, plans with members in the jurisdiction of the Sixth Circuit must redraft their subrogation and reimbursement provisions immediately to employ "magic language" required by the Sixth Circuit. Under the current rulings, both subrogation and reimbursement provisions must state two things: 1. the plan's rights are first in priority and 2. the rights apply whether the member only partially recovers or fully recovers for their loss. Plans, insurers, and third-party administrators must act quickly to redraft their subrogation and reimbursement language to allow the plan to recover. Without the “magic language”, the Sixth Circuit will not allow the plan to recover unless the injured party is "made whole." As can be imagined, plans will now hear arguments in every case that the injured party was not “made whole”. Plans should seek legal assistance in redrafting their provisions or making arguments to defeat “made whole.”</div> <bR> <div> ©2001 Kreiner & Peters Co., L.P.A.</div> <bR> <div> <B>This is an advertisement</B><FONT SIZE="3" COLOR="#000000" FACE="Arial" > </FONT></div> <bR> </td> </tr></table></body>