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Accident victims with employer-sponsored health care plans can rest a little easier after the Second Circuit, the appellate court that covers New York, ruled that insurers may not seek reimbursement from injured parties out of settlements related to personal injury cases. The case in question, Wurtz v. Rawlings Co., centered on the interaction between a New York state law and the Employee Retirement Income Security Act of 1974, more commonly known as ERISA.
Specifically, the issue was whether ERISA overruled or "preempted" a New York law stating that insurance companies could not seek reimbursement from a personal injury lawsuit settlement for healthcare payments that the insurer made to the victim. 

Understanding Preemption

The issue in this case arises because there are both state and federal laws regulating these sorts of employer-sponsored health plans-meaning that the court needed to determine which law actually applied. Hence, the court needed to determine whether the U.S. Congress intended the federal law to overrule any related state laws. That was a particularly involved question in this case because Congress explicitly wrote ERISA to preempt any laws related to an employee benefit plan, but not to preempt laws that "regulate insurance."

The district court that had previously heard the case held that the New York state law applied to more than just insurance companies. This meant that ERISA preempted it, so insurers would be allowed to force injured persons to repay them out of personal injury settlements. However, the appellate court recently overturned this decision, finding that the New York state law applied only to insurance companies, and thus was not subject to preemption by ERISA.

What the Case Means

Insurers cannot make plaintiffs, whom they insure, repay them for any medical services that the insurer may have paid. In many circumstances, insurers have a right to such recovery because otherwise the injured party could profit on their own misfortune; they could receive compensation from both the insurer and the defendant for the same injury. This case makes it easier for injured plaintiffs to settle their cases out of court.

If the court had made the opposite decision, then after the plaintiff and defendant settled, the insurance company could make the plaintiff pay them back out of the settlement. Now, however, such settlements are safe and plaintiffs can choose to settle their cases out of court and ensure that they receive some payment for their injuries, rather than being forced into a risky trial that they may have been better off avoiding.

If you or one of your loved ones has been the victim of an accident, seek help from an experienced New York City personal injury attorney at Keogh Crispi, P.C. today. Our skilled team of professionals is available to help you understand your rights.

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