Health Plan Entitled To Restitution Under Plan's Subrogation Clause

Administrative Committee of Wal-Mart Stores, Inc. v. Shank, ___F.3d ___(8th Cir. Aug. 31, 2007) is an important ERISA decision. 

Wal-Mart's self-insured health care plan paid out $469,216 in medical costs for a employee who was severely injured in a car accident. The employee settled a tort law suit for $700,000 and the plan sought reimbursement of the money it paid under a subrogation clause in the plan.

Wal-Mart brought suit under 502(a)(3) of ERISA which authorizes equitable relief. Whether this type of claim would be viable was questionable until 2006. In 2006, the Supreme Court decided Sereboff v. Mid-Atlantic Medical Services, 126 S.Ct. 1869 (2006), and held that restitution was available as an equitable remedy when plaintiff sought to recover specifically identifiable funds. That is what the plaintiff sought here and it was entitled to summary judgement.

While the decision may seem somewhat harsh, it appears to be legally correct. Particularly, after Sereboff, it appears that restitution is available when plans have subrogation clauses.

Mitchell H. Rubinstein