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by Thomas D. Begley, Jr., CELA

Generally, employer-sponsored benefits plans are governed by the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA.[1] However, certain employers and their benefits plans are not subject to ERISA. These include governmental plans;[2] church plans;[3] plans maintained solely for the purpose of complying with applicable Workmen’s Compensation, unemployment compensation, or disability insurance laws;[4] a plan maintained outside of the United States primarily for the benefit of persons who are virtually all non-resident aliens;[5] or an excess benefit plan.[6] ERISA preempts state law that “relates to” an ERISA-governed plan;[7] however, ERISA does not exempt or relieve any person from complying with any law of any state that regulates insurance, banking, or securities.[8] Neither an employee benefit plan nor any trust established under such a plan shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company.[9]

As a result of this statutory framework, any self-insured employee benefit plan regulated under ERISA enjoys federal preemption of state law, but an insurance company insuring such a plan does not. Such insurance companies are regulated by state law, including laws concerning subrogation and reimbursement.[10] If an ERISA plan is insured, the insurance company is subject to state law and the plan is bound by state insurance regulations insofar as they apply to the plan’s insurer. ERISA itself is silent with respect to subrogation and reimbursement, neither requiring a welfare plan to contain a subrogation clause nor barring such a clause or otherwise regulating its content.[11]

[1] 29 U.S.C. § 1003.

[2] 29 U.S.C. § 1003(b)(1).

[3] 29 U.S.C. § 1003(b)(2).

[4] 29 U.S.C. § 1003(b)(3).

[5] 29 U.S.C. § 1003(b)(4).

[6] 29 U.S.C. § 1003(b)(5).

[7] 29 U.S.C. § 1144(a).

[8] 29 U.S.C. § 1144(b)(2)(A).

[9] 29 U.S.C. § 1144(b)(2)(B).

[10] FMC Corp. v. Holliday, 498 U.S. 52 (1990).

[11] Ryan v. Federal Express Corp., 78 F.3d 123 (3d Cir. 1996).

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