Imagine this situation happens to your friend, Sally Slipper. On a lovely spring day, Sally walked to a nearby bank on her lunch hour. She rarely took time for lunch from her job as an Administrative Assistant. As she was going to cross a busy intersection, she was watching traffic, the changing lights, and the blinking walk signs. Sally trips and falls on the sidewalk next to the walk sign. She is embarrassed at being on the ground in the middle of the day. Her pants are wet and dirty and her knee is bleeding through her pant leg. But, her right wrist really hurts. She looks down and sees the sidewalk is all broken up around a manhole cover and cement pieces are missing. She didn’t see the broken sidewalk before she fell and thinks to herself that she would have seen this and avoided it if she were paying attention. Her wrist is really tender and starting to swell. She calls her boss and he tells her to go to the ER. At the hospital, she is told she will need surgery. She is embarrassed and scared that she will lose time from work. Sally needs her paycheck but can go for a few weeks without it. But, she cannot type without her wrist being in good shape and she will be in a brace or cast for a while. She is going to have to cancel her weekly tennis match. Her tennis buddies are her social network and she will miss playing and dinner after. She goes home in a sling and tells her son about her day. He says call a lawyer. She refuses as she is embarrassed and still thinks this is all her fault. Ten days later, after having surgery, she decides to call the lawyer. She has never sued anyone before and it is a big decision to even make the case. She just doesn’t want this sidewalk to hurt someone else and she is going to be without a salary and friends for a while.
Her case eventually settles after the Neuwirth Law Office gets involved! However, her health care plan, which she thought was the best in the area now wants to be paid back out of her settlement funds. Blue Cross is allowed to recoup or subrogate its claim and get its money from her settlement. This is thanks to a federal law called ERISA and US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013) (thanks Kagan, J.) In McCutchen, the U.S. Supreme Court said it was just fine to take an entire settlement from an injured person. The McCutchen case was phenomenally poorly lawyered, but that is a story for another day.
ERISA allows Blue Cross to collect the $30,000 it spent on Sally’s surgery out of her settlement even though the injury was caused by a local business that was responsible for the sidewalk. So, Sally has to carve $30k out of her settlement. Let’s say that her settlement is $150,000. Blue Cross will take $30,000 and her lawyer takes $50,000 and Sally ends up with $70,000. You could imaging Sally being pissed at either Blue Cross, her lawyer, or both depending on what Sally is like and how she feels about the settlement.
My beef with Blue Cross is that they are uniformly unwilling to reduce their liens or claims on cases. If Sally and I had never pursued her case Blue Cross would have gotten zero, zip, nada. They could conceivably make a claim against the business that owned the sidewalk but never do it seems. Instead, they wait for me to do my work and then appear with their hand out. All I ever want for my clients in these situations is more money in their pocket. Usually, a health care plan will discuss settlement and reduce their lien by 20% or so if not more. Often, while not legally required, this takes into account my work and that they would not have received anything if the case were not pursued. Blue Cross likely has a policy saying we ain’t doing that or Go fly a kite.