The United States Supreme Court recently held oral arguments in a case which has very important implications for people who get healthcare from their employers. The case deals with the situation where an employee who gets hurt due to someone else’s carelessness then hires an attorney and then makes a recovery from the careless person, or their insurance company. Many employers in this situation use a federal law called “ERISA” (shorthand for the Employee Retirement Income Security Act of 1974) to take 100% of the settlement money away from their employees, regardless of how seriously they were hurt, how much medical care they may need in the future, or how much money they spent to get that recovery. Almost no one knows about this common practice until it affects them personally, and by then it’s too late to do anything about it.
The issue the Supreme Court is going to address is whether or not it’s an “appropriate equitable remedy” (the words used in the ERISA law) for an employer to take 100% of the money away from the injured employee, to reimburse the employer for the medical expenses it provided to the employee. The case is USAir v. McCutchen.
Every employee whoever had this conversation with is absolutely shocked that their employer can completely deprive them of any recovery. Unfortunately, it can occur, and it frequently does. Walmart did this to seriously brain-damaged employee back in 2008, and fought it out in court. Walmart won. It was only after a major publicity backlash that Walmart decided to give in and let its employees keep the money to pay for her ongoing healthcare. For example, see this link: http://articles.cnn.com/2008-04-02/us/walmart.decision_1_wal-mart-retail-giant-health-care-plan?_s=PM:US
I’m saddened, but not surprised, that the comments and questions from the Justices in the Supreme Court during the recent oral argument show that most of them, especially Justice Scalia, lack the sense of indignity almost everyone else experiences on a gut level when they hear about these situations. Nonetheless, it’s unclear what they will do. Hopefully, they will do the right thing and hold this kind of conduct is far from “equitable.”