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Minnesota Case Shows ERISA Can Be Shield And Sword

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Big insurance companies have sometimes used the Employee Retirement and Income Security Act (ERISA) as a shield to prevent paying out disability claims, but a pending case from Minnesota shows that insurers can use ERISA as a sword, too.

It's complicated, but as first reported by Minnesota Lawyer, the trustees of the South Central Minnesota Electrical Workers' Family Health Plan are arguing that one of their beneficiaries, Travis R. Schurhammer, should have to pay all his own legal fees associated with a personal injury settlement. The health plan paid more than $150,000 in disability benefits to Schurhammer after he was injured in a snowmobile accident in 2014. When Schurhammer settled the snowmobile case, the health plan claimed it was owed the full amount of disability payments back. The law firm that represents Schurhammer sued the benefits plan, arguing that it should help pay his bills, too.

In response, the health plan has filed an emergency order in federal court, claiming that ERISA preempts Minnesota law and bars Schurhammer from forcing his benefits plan from sharing his legal costs. It may well be the first time such a case is heard in Minnesota, reporter Barbara L. Jones notes:

The plan has two claims against Schurhammer-that he must pay all attorney fees incurred in obtaining the $800,000 settlement, and if the plan is forced to pay attorney's fees ... Schurhammer must indemnify it. If the case is decided under federal law, as the plaintiffs say it should be, its refusal to pay attorney fees is supported.

Schurhammer's lawyers have asked U.S. District Court Judge Susan Richard Nelson to dismiss the plan's claims. The matter is set for hearing Oct. 6. But it illustrates just how complicated ERISA litigation can be and how aggressive some plan administrators can be in asserting their claims under the law.

If you or a loved one needs help through the ERISA minefield, the experienced attorneys at Underwood Law Offices stand ready to be your guide. Contact us for a free consultation today.

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