An employee benefit plan may recover attorney’s fees incurred in obtaining reimbursement for medical benefits paid to a claimant.
In a recent case decided by the Board, the ILWU-PMA Welfare Plan (the “Plan”) provided a claimant with medical and disability benefits during the pendency of his disputed claim. The Plan intervened in the administrative proceedings seeking reimbursement of medical benefits provided to the claimant and to assert a lien on compensation benefits paid to the claimant, as provided for in Section 17 of the Act. Section 17 gives a trust fund established pursuant to a collective bargaining agreement a lien, payable by the claimant, for disability benefits paid to a claimant. After a formal hearing, the ALJ awarded the claimant benefits and recognized the Plan’s lien, and found that the Plan was entitled to reimbursement for medical benefits paid. The Plan then sought an attorney’s fee from the employer for the work performed by its attorney in asserting the lien and reimbursement right. The ALJ awarded the fees requested by the Plan. On appeal from this award, the Board explained that the Ninth Circuit, in which this case arose, has held that an employer may be liable for attorneys’ fees for health care providers seeking reimbursement of medical benefits provided to a claimant. The Ninth Circuit found such providers are “persons seeking benefits” as required by Section 28(a) of the Act. However, the Board faced an undecided question because the Plan was an insurance provider, as opposed to a medical provider. The Board relied upon established law holding that an insurer seeking reimbursement for medical benefits provided to a claimant has a right to intervene in administrative proceedings, because its claim is derived from the same nucleus of operative facts as the claimant’s claim for compensation. The Board said that the “combination of the Plan’s right to intervene and its derivative right to reimbursement for claimant’s covered medical benefits” gives the Plan the requisite interest to be a “person seeking benefits” under Section 28(a). Therefore, the Plan was entitled to reasonable attorneys’ fees for time spent recovering a claimant’s medical benefits to the extent the benefits are owed to the insurer as reimbursement of covered medical expenses. However, the Board held that the Plan cannot recover attorney’s fees for time spent enforcing its lien under Section 17. Under Section 17, the claimant has the obligation to repay the trust fund, here the Plan, out of compensation received, for disability benefits paid to the claimant by the trust fund. Therefore, the Board held, a Section 17 trust fund does not pursue benefits on behalf of a claimant, and therefore is not a “person seeking benefits” as required by Section 28(a). Therefore, “the employer cannot be held liable for the attorney’s fees incurred in validating its lien against the claimant’s disability benefits.” Despite this holding, the Board nevertheless agreed with the ALJ and awarded the Plan fees incurred advancing its reimbursement for medical expenses and in recovering its lien. The Board approved the ALJ’s determination that the “Plan’s efforts to establish that employer is liable for claimant’s medical benefits were inextricably intertwined with its efforts to show the compensability of the claim.” The ALJ further found that “[s]eparating the efforts to show [employer] was liable for the medical care from the efforts to create the fund on which [the Plan] had its lien would not only be difficult, the effort required would be disproportionate to the result.” Grierson v. Marine Terminals Corp., BRB No. 14-0314 (5/19/15)
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© 2018 Ira J. Rosenzweig
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