The Federal District Court in Oklahoma found that an attorney who represents a plan participant in a third party action may be liable to the ERISA plan if he does not preserve the ERISA plan medical lien in a third party settlement. The court recognized that ERISA created remedies that are equitable in nature, including the imposition of a constructive trust over settlement proceeds. As a matter of law, the court found that an ERISA plans right to subrogation can extend to an attorney who fails to protect an ERISA medical lien by distributing settlement funds without reimbursing the plan. The court found that a factual determination still needs to be made to decide if the attorney breached his fiduciary obligation to the plan by acting in concert with the plan participants to avoid the ERISA plan lien.
Pioneer Telephone Cooperative, Inc. v. Terry, et al¸ 2009 U.S. Dist. LEXIS 106606 (2009)
Filed: November 16, 2009