December 6, 2021

By: Teresa Kenyon, Esq.

In HMS Holdings LLC v Ted A Greve & Associates P.A. et al, 2021 WL 5163308, an ERISA self-funded health plan was denied a temporary restraining order (TRO) on settlement funds., The court found that the health plan did not present sufficient evidence to satisfy all necessary requirements to issue a TRO, including that the TRO was required to prevent irreparable harm. This was mostly due to the fact that the health plan delayed in bringing the action and that nine-month delay in bringing suit supported the conclusion that irreparable harm will not be suffered in lieu of a temporary restraining order.

The injured party was in an automobile accident and the ERISA health plan paid over $100,000 in medical benefits. The settlement was limited to $100,000. The injured party notified the health plan of their pursuit of a claim against the tortfeasor and asked the plan to prove its self-funded status as otherwise the plan would not have a right to a recovery under North Carolina law.

The ERISA plan filed the ERISA action asking for the TRO and preliminary injunction to restrain the injured party from “wasting, disbursing, spending, converting or comingling” the settlement funds. The ERISA plan expressed concern that if the injured party dissipated settlement funds on non-traceable items, then the health plan would be deprived on its right of recovery. The ERISA plan cited the US Supreme Court’s Montanile case as its support. Montanile v. Bd. of Trustees of Nat’l Elevator Indus. Health Benefit Plan, 136 S.Ct. 651 (2016).

The court noted that when evaluating a request for a TRO, the plaintiff must demonstrate that: (1) it is likely to succeed on the merits; (2) it will likely suffer irreparable harm absent an injunction; (3) the balance of hardships weighs in its favor; and (4) the injunction is in the public interest. The ERISA plan argued that it would suffer irreparable harm because under Montanile, it can only obtain equitable relief against identifiable proceeds. The ERISA plan argued that if the court did not issue an order preventing the firm / injured party from transferring or comingling funds then their pursuit of a recovery would be out of the reach of an ERISA action.

The court stated that irreparable harm was not apparent because the ERISA plan’s injury could be remedied in the ordinary course of litigation. This was especially the case because the health plan had pled multiple alternative causes of action in its Complaint that did not rely on ERISA and those theories of liability did not appear to be limited to equitable relief.

The court also stated that the ERISA plan’s delay in bringing a lawsuit and/or the TRO may indicate the absence of irreparable harm. Although the ERISA plan claimed that it was doing what the Supreme Court required them to do, they were not immediately suing to enforce its lien as the Court required. The court noted that more than 9 months had passed from when the injured party notified the ERISA plan of the settlement. A long delay in pursuing their claim indicated that speedy action, in the form of a TRO, was not required to protect the health plan’s rights.

Interestingly, the court said that it is hesitant to issue a decision that could be interpreted to require such parties to delay distribution of personal injury lawsuit proceeds for months on end to preserve the viability of potential subrogation/reimbursement claims under ERISA, thereby appearing to have sympathy for the injured party and a delayed disbursement of settlement proceeds. Shortly thereafter, the court expressed sympathy for the health plan because if there is a wrongful double recovery to the injured person then it would be a miscarriage of justice. The court acknowledged that the health plan is in a difficult position with ERISA requiring the request of equitable relief by filing suit immediately or risking loss of the ERISA claim. In the end, the ERISA plan did not obtain the TRO and will be forced to decide whether it pursues its claim in another manner.


August 12, 2021

Teresa Kenyon, Esq.

When handling a third-party liability case and you know your client had health insurance that paid the medical expenses, should you check to see if there is a lien interest on the settlement funds? Or maybe you have settled a case and you just received a notice letter from a possible lienholder, what do you do about it?  What about Medicare or other federally governed interests? Do you treat them differently?  These are critical questions to answer prior to disbursing funds to your client.

To read more, download the article below:

May 13, 2021

Michael Walrath, Esq.


Plaintiffs’ lawyers largely understand settlement proceeds which are subject to a claim of lien must be protected in trust, even against the client’s interests or wishes. An attorney may not serve as the “sole arbiter” of a lien dispute, take it upon herself or himself to decide the dispute in the client’s favor, and distribute the disputed funds. Generally, liens must be amicably resolved or adjudicated at impasse. Perhaps the most misunderstood concept in the resolution of direct hospital/provider liens, is what I call the “lien debt dichotomy.” The lien debt dichotomy is simply a name I have given to the myriad of issues and decisions that flow from or turn upon, the distinction between a lien and a mere debt.

Reimbursement Liens vs. Direct Provider Liens

I have long believed the disconnect and the root of much of the confusion regarding direct provider liens versus mere medical debts flows from their place in an entirely different silo in the lien resolution world. Upwards of 80% of clients are covered by some form of health insurance. Whether public (Medicare, Medicaid or certain state, county or municipal “Health Care Districts”) or private insurance (the Blues, Uniteds, Cignas, and Aetnas, to name the big plans), or even self-funded or insured ERISA plans–health insurers in most states, and under federal law in the case of ERISA, have “reimbursement lien rights” against tort recoveries. Accordingly, Plaintiffs’ attorneys must identify, negotiate, and resolve reimbursement liens in more than eight out of ten clients’ recoveries. As we all know from common experience, we do not owe a debt to our health insurers when they pay out our health benefits. We, and our injured clients, have benefits under a plan, that plan pays for our healthcare, and that is it; but when there is a tort recovery, everything changes. Tort recoveries themselves, under various legal doctrines, contracts, and statutory regimes, create a right of reimbursement: a lien against the settlement proceeds allowing these plans to recover (to be reimbursed) the benefits they have paid. The very high percentage of clients facing these reimbursement liens has, in the Author’s opinion, trained many lawyers to believe accident-related medical care automatically creates a lien (it does not); and to ignore the importance of debts when it comes to direct provider liens (which is a mistake).

When a patient does not have health benefits, or a patient’s healthcare providers do not bill a patient’s health plan, there are no payments to reimburse. Stated simply, if a provider was paid by a plan, the plan often has a reimbursement lien, but if the provider has not been paid at all for accident-related care, the provider may (or may not) have a direct provider lien. This article focuses on the latter: providers who have treated a tort victim and have not yet been paid.

How Providers get Lien Rights

As stated at the outset, liens against settlement proceeds must be resolved or adjudicated, and the Plaintiffs’ attorneys face significant exposure, both ethically and legally, if liens are ignored. There are essentially only two (2) ways a provider gets a direct lien against a tort recovery. Firstly, direct provider liens can be created by contract. The most familiar version of these contractual liens is the Letter of Protection (LOP) or some similarly styled agreement between a lawyer and a provider (or a client and a provider) in which the client agrees to pay the provider from a future settlement if the provider agrees to treat and forbear collection until the tort case settles. These agreements are often the only way an uninsured accident victim can obtain non-emergency accident-related care. While Emergency Medical Treatment and Labor Act (EMTALA) ensures hospital emergency rooms will treat and stabilize an uninsured injury victim, the same is not true of future, scheduled care. The contract itself is the genesis of the providers’ lien rights, as well as the “law of the case.”  Therefore, the terms, requirements, and legal exposure depend entirely upon the language of the agreement. The second way a provider is given direct lien rights against recovery proceeds is by statute (or in some cases, by County Ordinance). These “statutory” liens often include perfection requirements and carry impairment provisions, set priority, and even limit or define lien amounts. If unsure, the best way to determine whether a provider has a lien against a settlement is to ask. At the outset of every post-settlement negotiation, the Author’s practice is to inquire whether each known provider is pursuing a lien, and if so, request documentation supporting their alleged lien rights.

Why the “Lien Debt Dichotomy” Matters

In short, liens attach to settlements, while debts attach to people. A lien secures a debt to the settlement proceeds, requiring the lien amount to be protected in trust. Absent a lien, a provider is a mere creditor with an unsecured debt. The fact that a provider rendered accident-related care is irrelevant to whether their interest is a lien or a mere debt. Perhaps the best analogy is a mortgage and a home loan. A mortgage is a security instrument, an agreement that attaches a debt to real property. If a bank merely loaned money to purchase a house but did not require a security interest to protect the loan, the homeowner could simply sell the home, spend the proceeds, and never pay the bank back. The same is true of a non-lienor medical provider. If a surgeon, for example, performs a spinal fusion on a tort victim and fails to require a contractual lien against the settlement, the patient could recover his damages from the tortfeasor and refuse to pay the doctor whose bills the medical special damages were based upon. Accordingly, determining whether a medical provider has a lien against the settlement, versus a mere debt against the patient, is not only required to analyze the attorney’s ethical and legal requirements and exposure, but it also drives negotiation strategies and distribution procedures. If there is not a lien, it is up to the client whether they wish to pay a provider anything at all from the settlement. Clients are free to refuse such payment and force providers to pursue traditional collection actions to collect on their debts.

Equitable Distribution

Most Plaintiffs’ attorneys are familiar with the concept of equitable distribution. While procedure and formulae vary, an equitable distribution is essentially a court-ordered “fair” division of a limited settlement. The most common split is to award a third to each of the interested parties: one third to the attorney, one third to the client, and the last third split pro-rata among the medical lienholders. But remember, only lienholders have claims to the settlement proceeds. Providers who do not have any such lien rights are mere creditors and should not properly participate in an equitable distribution. After all, lienholders went to the trouble of obtaining a security interest while mere creditors did not; why should the mere creditors who did not be permitted to dilute the positions of the lienholders as related to their share of the settlement? Again, consider the mortgage analogy. Only lienholders would be able to lay claim to the proceeds of a sale, while mere creditors would have to secure and execute traditional judgments against the general assets of the debtor, which may or may not include remaining proceeds from the sale of the property.

Negotiation of Direct Medical Liens

Once a lien has been identified, a Plaintiff’s lawyer’s marching orders are clear: amicably resolve the lien or have it adjudicated. This legal interest in the settlement proceeds must be respected, and protected, until such time as the lien rights are released. The first step is always to identify all the known terms of the lien (whether found in a contractual agreement, statute or ordinance). Once the lien terms are clear, and their meaning agreed upon with the lienholder, attorneys must determine whether a deeper reduction is available through an equitable reduction or a reduction to a reasonable value. This decision typically turns on the amounts of the settlement and of other liens. If a settlement is limited, and an equitable distribution is likely to obtain better results for the client, agreements with all lienholders should be sought, in accordance with a distribution schedule setting out their pro-rata shares of a “fair” position of the proceeds (such as one third, as discussed above). Be careful to make offers contingent on the agreement of all lienholders and be prepared to file for formal equitable distribution with the Court, if all such agreements cannot be secured amicably.

Negotiation of Medical Debts

When it is confirmed that a provider does not have lien rights (a confirmation the Author highly recommends be obtained in writing), all bets are off and negotiation leverage swings heavily to your favor. Best practices include explaining the client’s options, including paying the debt from the proceeds, or electing not to and instead of awaiting traditional collections activity from the provider. It is unquestionably in the client’s best interests to resolve debts when possible, while they have proceeds and counsel (two things they likely will no longer have, by the time the provider sues them). Accordingly, clients should be made acutely aware of the potential exposure and adverse effects of such a future collection action and reminded they will be unrepresented at that time; however, the providers do not know the client’s true intentions. The leverage created by threatening to give the money to the client and pay the provider nothing from the settlement is substantial and effective.


Understanding the “lien debt dichotomy” is paramount to ensuring effective resolution of direct provider liens. Identifying which medical providers have liens, and which have mere debts, is a critical first step. Once confirmed, liens can be negotiated based upon either equitable principles or analysis and negotiation towards reasonable value. Mere debts should also be negotiated along both “equitable” and “reasonable value” lines, but your negotiation position is much stronger and providers, given the choice between something or nothing, often make the right decision.



April 22, 2021

Michael D. Walrath, Esq.

Direct provider “liens” against settlement proceeds have teeth, whether hospital or physician liens, statutory or contractual. The various positions of state bar associations on these issues, and the limited law delineating them, have historically been ever shifting and evolving but two things are clear. Liens must be released prior to settlement and deep discounts are available. Learn more by downloading the white paper below.

February 11, 2021

Teresa Kenyon, Esq.

The dreaded ERISA lien. The vendors representing ERISA self-funded health plans’ interests certainly want you to believe that it must be reimbursed in full. They will cite the US Airways v McCutchen case, tell you that they are not subject to equitable doctrines, and, therefore, do not have to reduce for attorney fees, limit, or waive their full recovery even if your client was not made whole from a compromised settlement. How do you get an ERISA plan to be fair and equitable?

What is ERISA?

ERISA is an acronym for the Employee Retirement Income Security Act. That is right, its original intention in its 1974 creation was focused on pension plans not health benefits. According to the US Department of Labor, ERISA protects the interest of employee benefit plan participants and their beneficiaries. It requires plan sponsors to provide plan information to participants. It establishes standards of conduct for plan managers and other fiduciaries. And it establishes enforcement provisions to ensure that plan funds are protected and that qualifying participants receive their benefits.[1]
Great! This all sounds good. The employee is protected. The Plan must follow rules. The Plan must provide detailed reporting to the federal government. It must provide disclosures to the participants and establish guidelines on how denied claims can be appealed. And it must ensure that the funds are protected and delivered in the best interest of the plan to pay future claims.

An ERISA plan as it relates to health benefits is an “Employee Welfare Benefit Plan.” The ERISA statute defines it as

“any Plan, fund or program which was… established or maintained by an employer or by an employee organization… for the purpose of providing for its participants or their beneficiaries through the purchase of insurance or otherwise, (A) medical, surgical or hospital care or benefits…”[2]

Recovery of Settlement Funds

But what is the Plan’s expectations when they have paid for medical expenses, as they are required to do, and the beneficiary recovers money from an at fault party or their insurance carrier?
In theory, subrogation and reimbursement is a logical idea. The health plan lien holder’s mantra is that a Plan should not have to pay for medical treatment when someone else is the reason for the need of that medical treatment. It follows that all costs of a loss should be placed on the wrongdoer and that the Plan can be reimbursed by the actual injured party. And this can function flawlessly when there are enough funds to reimburse all parties who have suffered a loss. The thought that Polly the Plaintiff should not receive a double recovery when someone else actually carried the burden makes logical sense. But what about when there are not enough funds recovered? Settlements can be limited due to policy limits, liability issues, comparative fault, etc.

In equity, the amount any Plan recovers from a settlement fund should be parallel to what the injured plaintiff is recovering for their loss. If the Plan has paid $30,000 in medical expenses and the settlement is limited to $100,000 whether due to policy limits, liability issues, or otherwise, where is the equity in allowing the plan to recover their full $30,000? Why does a Plan have more rights to reimbursement than Penny, the actual injured plaintiff? The inequity that plaintiffs see on a regular basis as it relates to ERISA self-funded liens is disheartening.

Assume that Penny had lost wages of $20,000 while she was recovering from her loss. Assume that she has a hospital lien of $70,000 because her health plan did not pay for the out of network provider that the ambulance drove her to on the day of her loss. Assume that she lost her job and eventually obtained another employer which provided her health benefits leading to another health insurance claim for reimbursement of $50,000. By numbers alone, Penny the plaintiff is not fully compensated for her loss. Why should the original Plan receive their full $30,000? Why has the case law developed to allow a Plan to add one sentence to a 100-page Plan Document that gives it the right to collect in full even if it totals 1/3 of the limited settlement and even when there are other hands out at the table?

Based on those facts, this is not functioning as was originally intended when ERISA was created. As far back as 1997, a District Court judge identified that that a particular case before the court “becomes yet another illustration of the glaring need for Congress to amend ERISA to account for the changing realities of the modern health care system. Enacted to safeguard the interests of employees and their beneficiaries, ERISA has evolved into a shield of immunity that protects health insurers,  utilization review providers, and other managed care entities from potential liability for the consequences of their wrongful denial of health benefits.”[3]

Funding Status

State laws are in place in many places to prevent this type of thievery of settlement funds. In most states, the law generally requires the lien be reduced by attorney fees and be reduced or eliminated completely when the injured plaintiff is not made whole or was partially at fault for the loss. But not all plans are subject to state law. This is where the funding type matters. The United States Supreme Court decided in FMC Corp. v. Holliday that state laws shall not limit a self-funded ERISA Plan from recovering from a settlement if the language of the Plan Plan’s language clearly says so.[4]

So, what constitutes self-funded? An employer Plan is self-funded if the employer pays for the employees’ medical benefits through their own funds. The employer assumes the financial risk directly and is liable for the payment of all medical bills. Compare this to an employer who secures an insurance policy, and the insurance carrier assumes all the financial risk and pays all the medical bills. It is all about where the funds come from to pay the medical claims. The convoluted part is that most self-funded plans use insurance carriers to administer or pay their claims. The big-name insurance carriers are involved in both self-funded and fully insured health plans. The insurance card can look very similar because they both reflect Cigna or Blue Cross.

How do you determine the funding status? You must obtain the relevant documents from the plan administrator.

Supporting Document Request

There is a laundry list of items that the plan participant is entitled to receive under the ERISA statute § 1024(b)(4).[5] “The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, [sic] plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.

      • The Plan Document (written instrument pursuant to 29 U.S.C. § 1102) in effect on the date of injury as well as any document amending, supplementing, or otherwise modifying the Plan Document; Summary Plan Description and employee benefits booklet in effect at the time of injury as well as all documents issued subsequently during any year in which benefits were paid;
      • SPD Wrap Documents;
      • Bargaining Agreement, Trust Agreement, Contract, etc. under which Health Plan is established;
      • Trust Agreement or other document establishing funding for the Plan;
      • Annual Return/Report (IRS/DOL Form 5500), including all attached Financial Schedules;
      • Administrative Services Agreement with any Third-Party Administrator for the Plan;
      • An affidavit from the Plan Administrator attesting to self-funded status of the Plan;
      • A complete statement of benefits paid to or on behalf of claimant/beneficiary;
      • Specific plan component(s) paying benefits (e.g., health, dental, vision, AD&D, disability, etc.);
      • “Stop-loss” or excess/re-insurance coverage (insurer, policy numbers, and attachment points).”

An administrator is required to provide the requested documents. The ERISA statute has created a civil penalty[6] which has been increased to $110/day.[7] Subrogation vendors, insurance carriers, and defense firms regularly state that they do not have all the documents, that they are not the proper party for requesting the documents, that the documents are not necessary to ascertain the funding status of the plan, etc. Essentially, they assert that they are not subject to the penalty for their failure to comply which includes the failure to comply completely.

In this list are documents that will lead you to discover the funding status of the Plan. You will likely not obtain all of them and not all are needed to assess the funding status of the Plan. In order to review what you really need, it is recommended that you ensure that you have the relevant ones to assess the Plan’s rights.

Form 5500

The first to review is the Form 5500.[8] This Form is an IRS document but should be completed by ERISA plans and can give some great guidance if you know what you are looking for as you review the document. The first place to look is section 8 and 9.

Section 8b lists the plans whose funding type will be checked in section 9. Many review this part of the Form and assume that because Insurance is marked in 9a(1) that the health plan is fully insured. But that is an incorrect reading. In fact, looking at this alone cannot give you all the answers, it only leads you down a road. This Form reflects that this employer has both insured plans and self-funded benefit plans. 4A is the health plan, 4B is the Life Insurance, 4D is Dental etc. Section 9 only tells you that some of those are insured and some of those self-funded (paid for by the general assets of the plan sponsor). Perhaps the health is self-funded, but the life insurance and dental are insured. The next step is to look at the Schedules to determine which is which. Schedule A lists the insured coverages and Schedule C lists the self-funded. Unfortunately, even with an 82-page instruction guide,[9] these Forms are often completed incorrectly or incompletely which makes them often unreliable for determining funding status.

The Plan Documents

The most important document to review is the Plan Document. Not only will there be some indication of funding type within this document, but it is also the terms of this document that govern the right of recovery of a self-funded plan. The US Supreme Court held in US Airways, Inc. v. McCutchen[10] that a self-funded plan could claim a right to a disproportionate share of the recovery if the contract were clearly written to eliminate equitable principles. McCutchen argued that a recovery by the US Airways plan, in his case, would be an inequitable windfall to the plan and a complete blow to the injured plaintiff, himself. The Plan attempted to claim full reimbursement of their $66,866 payment towards medical expenses from his $110,000 policy limit recovery even though his net, after attorney fees and costs, was only $66,000.  McCutchen argued that the Plan should take no more than the portion that would be classified as a “double recovery” thereby allowing him to receive compensation for the rest of his damages. .

Ultimately, US Airways had to reduce their reimbursement claim by attorney fees as their policy was silent on that equitable doctrine. Further, when the case was remanded to the lower court, it was discovered that the Court was looking at the wrong document completely. In Cigna Corporation v. Amara, the US Supreme Court indicated that “summary documents, important as they are, provide communication with the beneficiaries about the Plan, but that their statements do not themselves constitute the terms of the Plan.”[11] The Master Plan Document controls and you should not settle for just the Summary Plan Description.

The McCutchen Court held that the Plan should be enforced as written and that both sides should be held to their mutual promises. This is inequity at its finest. McCutchen had no part in agreeing whether certain terms would be part of the contract nor did he have the ability to strike terms from the contract. It is a classic contract of adhesion. One where the Plan is in the power position and able to modify their contracts year over year and ensure that they remain in power. Because of that, any ambiguities are to be resolved in the favor of the injured plaintiff and not the drafter.[12]

This is one place where ERISA self-funded plans and the vendors that handle them miss the mark and yet it was a big focus in the McCutchen decision. They ride the train of power as if simply being an ERISA self-funded plan gives them a strong legal right of recovery in all situations. They conveniently miss the places where their contract language has deficiencies. Instead, they want Polly the plaintiff to overlook those ambiguities or just interpret it based on what the Plan meant to write. It does not work that way! We recently had a case where the Summary Plan Description (SPD) referenced a Master Plan Document (MPD) but the subrogation vendor could only produce two SPDs with different dates.  The representative’s response to our identifying this as a major issue was to still reference a document that does not exist and asked that we refer to the “MPD (also titled SPD but is in fact the MPD).”

At least one court had it right.

“Any burden of uncertainty created by careless or inaccurate drafting of the summary must be placed on those who do the drafting, and who are most able to bear that burden, and not on the individual employee, who is powerless to affect the drafting of the summary or the policy and ill-equipped to bear the financial hardship that might result from a misleading or confusing document. Accuracy is not a lot to ask. And it is especially not a lot to ask in return for the protection afforded by ERISA’s preemption of state law causes of action– causes of action which threaten considerably greater liability than that allowed by ERISA.”[13]


When it comes to ERISA Plans and ensuring that your injured plaintiff retains compensation for her injuries, it is important to make sure that the ERISA Plan has a right to be at the table and has a right to request reimbursement from the settlement funds. This article narrowly focuses on just a few of the many things that must be investigated as it relates to an ERISA Plans demand. Synergy’s Experts are ready to step in and fully review your next ERISA lien.



[2] 29 U.S.C. § 1002(1).

[3] Andrews-Clarke v. Travelers Ins. Co., 984 F. Supp. 49 (D. Mass. 1997).

[4] FMC Corp. v. Holliday, 498 U.S. 52 (1990)

[5] 29 U.S.C. 1024(b)(4).

[6] 29 U.S.C. 1132(c)(1)

[7] 29 CFR 2575.502c-3

[8] Obtain your own at or on the US Department of Labor website to be found here:


[10] 569 U.S. 88 (2013).

[11] Cigna Corp v Amara, 131 S. Ct 1866 (2011).

[12] Contra proferentem is the common law doctrine that contracts and other written instruments should be construed against the drafter.

[13] Hansen v Continental Ins Co, 940 F2d 971 (5th Cir. 1991)


October 20, 2020

Heidi Ahlborn was injured in a very serious car accident in January of 1996. At the time, she was a nineteen-year-old college student pursuing a degree in teaching. She suffered a catastrophic brain injury that left her incapable of finishing college and unable to care for or support herself in the future. When the Arkansas Department of Health tried to assert a lien against Ahlborn’s settlement, she sued, and the case went all the way to the Supreme Court, who found in her favor.

For more information, read this excerpt from Synergy’s CEO, Jason D. Lazarus‘ book ‘The Art of Settlement.’



The Synergy Settlements team will work diligently to ensure your case gets the attention it deserves. Contact one of our legal experts and get a professional review of your case today.