ERISA lien

What it is

Most employer health plans are governed by the federal Employee Retirement Income Security Act (ERISA). Their plan documents usually include a reimbursement clause: if the plan pays for injury care and the member later recovers from a third party, the plan gets repaid first.

The federal rule

ERISA preempts state laws that relate to employee benefit plans (29 U.S.C. 1144). Insured plans remain subject to state insurance law, but under FMC Corp. v. Holliday (1990), self-funded plans are not, so limits like California Civil Code 3040 generally don't bind them. Two U.S. Supreme Court cases frame the negotiation. In US Airways v. McCutchen (2013), the Court held that clear plan terms control, and that the common-fund doctrine, which makes the plan share the attorney fees, applies only when the plan is silent. In Montanile v. Board of Trustees (2016), it held that a plan can't enforce its lien against a member's general assets once the settlement money has been spent on things that can't be traced, which is why plans aim their claims at funds still held in trust.

Why it matters to a plaintiff firm

Everything turns on whether the plan is self-funded or insured, and on its exact wording. Firms request the plan document and summary plan description early (participants are entitled to them on written request), confirm the funding, compare the claimed charges with the injury, and hold the disputed amount in trust while they negotiate.