Gavel on book The (not-so-secret) secret about filing a §502(a)(3)(B) action is that it frequently results in high legal fees and costs attributable to all parties, including the benefit plan.

Thousands of third-party recovery claims are handled by each day benefit plans and their representatives. In terms of private, self-funded ERISA plans, the mere threat of a §502(a)(3)(B) action against a plan participant is usually sufficient to foster settlement discussion. The (not-so-secret) secret about filing a §502(a)(3)(B) action is that it frequently results in high legal fees and costs attributable to all parties, including the benefit plan. A large portion of any recovery vendor’s caseload includes files worth less than $10,000.00.

More often than not, a benefit plan has the law on its side, but it’s too expensive to achieve a recovery via a §502(a)(3)(B) action if a plan participant refuses to reimburse the plan. How does a plan address this problem? Many plans opt to utilize a strategy allowing them to offset (i.e. deny) future medical bills until such time as the plan has recouped sufficient funds to satisfy the amount of benefits paid as a result of a third party’s negligence. The threat of denying medical bills is often strongly persuasive to plan participants, especially those expecting future medical treatment. However, just how enforceable is such a provision given the recent rulings by the United States Supreme Court?

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