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U.S. Supreme Court Declines to Hear Appeal of New York Anti-Subrogation Case

Mar 3, 2015

On February 23, 2015, the U.S. Supreme Court declined to hear an appeal in Wurtz v. Rawlings Co., LLC, 2014 WL 3746801, Second Circuit 2014.

This decision means insurers generally can no longer seek reimbursement from a plaintiff’s tort settlement for medical expenses the insurer paid in connection with injuries caused by negligent third parties, according to the American Association for Justice (AAJ).

In July 2014, the U.S. Court of Appeals for the Second Circuit handed down a decision that New York State’s anti-subrogation law, which ended the rights of private health insurers to seek reimbursement for medical benefits paid out of a tort settlement, was not preempted by the Employee Retirement Income Security Act (ERISA) and that the law was found applicable to health insurers providing ERISA coverage.

In Wurtz v. Rawlings, the plaintiffs brought a class action seeking, among other things, to stop the Rawlings Company, LLC, Oxford Health Plans (N.Y.), Inc., and UnitedHealth Group Incorporated from pursuing reimbursement of medical benefits from plaintiffs’ tort settlements, which was contrary to Section 5-335 of the law, AAJ reports. The class action lawsuit was originally filed in New York State Supreme Court but was removed by defendants to federal court. The District Court granted the defendants’ motion to dismiss for failure to state a claim based on ERISA preemption. The Court of Appeals for the Second Circuit vacated the District Court’s decision and remanded the matter to the District Court holding that the plaintiffs’ claims were not subject to complete ERISA preemption. The Supreme Court’s decision to decline to hear the appeal of the Court of Appeal’s decision allows the class action lawsuit to proceed. The class action alleges that the insurers violated New York State’s anti-subrogation law by recovering medical benefits paid on behalf of injured plaintiffs from their tort settlements.

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