Subrogation and Repayment Agreement

The purpose of the Plan is to pay covered expenses if they are not paid or payable by anyone else, whether or not such payments are the legal responsibility of the eligible employee or another eligible individual. It is the intent of the Trustees that no person shall receive any profit from the payment of insurance or other benefits, or from the payment of any compensation for injuries.

In some cases, a third party is or may be responsible or liable for paying all or part of the expenses for which a claim is filed with the Plan; such a situation is called a "third party incident." A third party is any person or entity other than the person receiving the services. A third party could be, but is not limited to: a third party tortfeasor (an individual or other entity of any kind who caused harm, such as the driver of another car in an automobile accident); an employee welfare plan or arrangement; a medical or hospital benefit plan; a no-fault or other car insurance policy; an uninsured or underinsured motorist provision or medical pay provision of your car insurance policy; a homeowners' insurance policy; or a liability insurance policy of any kind or nature.

"Subrogation" is a legal term for a rule that gives the Plan the right to be repaid for benefits it pays on a claim if a third party is responsible for paying the expenses for which the claim is made.

"Compensation" includes any judgment, award or any settlement, whether or not the terms of the judgment, award or settlement specifically includes or excludes medical expenses and disability recovery.

If a claim is submitted for expenses for which a third party is or may be legally responsible:

  1. The eligible employee (and any adult eligible individual for whom reimbursement of covered expenses is claimed under the Plan), must agree to and execute a "repayment and subrogation agreement" in a form acceptable to the Trustees or legal counsel for the Trustees before benefits will be payable under the Plan; and
  2. Such eligible employee or other adult eligible individual must agree: (a) that the Plan will have a lien on the proceeds of any recovery arising out of the third party incident to the full extent of its subrogation rights and to the full extent of its rights to repayment under the repayment and subrogation agreement that may be independent of its subrogation rights; (b) that, to the full extent of benefits paid pursuant to the Plan, such recovery will be held in trust for the sole use and benefit of the Plan, and that the Plan shall have the right to obtain payment of such recovery being thus held in trust; and (c) that the Plan may sue in any court of competent jurisdiction to enjoin the use of such proceeds for any purpose other than their payment to the Plan; and
  3. The attorneys for all such persons must sign an agreement that they will honor and enforce the terms of the repayment and subrogation agreements before disbursing the proceeds of any recovery arising out of the third party incident; and
  4. If the injured individual is a minor or is otherwise legally incompetent, the eligible employee and the legally incompetent person's parent, legal guardian or "next friend" must sign a legally binding repayment and subrogation agreement on behalf of the injured incompetent person as a condition precedent to the Plan's obligation to pay any benefits arising out the third party incident.

The repayment and subrogation agreement specifies, among other things, that the eligible employee, and the injured individual, agree:

  1. That the eligible employee and/or the injured individual will repay to the Plan the amount of such assets held in trust for the Plan, whether or not the claimant is made whole by any subsequent recovery; and
  2. That the Trustees may participate in any legal action filed against a third party by or on behalf of the eligible employee and/or the injured individual to recover the expenses; and
  3. That the Trustees may file suit in the name of the eligible employee and/or the injured individual to recover the expenses the Plan pays on the claim if the responsible party does not pay for the expenses voluntarily and if the eligible employee and/or the injured individual does not sue the responsible party for recovery of the expenses; and
  4. The eligible employee and/or the injured individual will notify the Trustees before accepting any payment prior to the initiation of a lawsuit. If the Plan is not notified, and less than the full amount of the benefits advanced by the Plan have been accepted, the eligible employee and/or individual will still be required to repay the Plan, in full, for any benefits paid. The Plan may withhold benefits if the eligible employee and the injured individual waive any of the Plan's rights to recover or fail to cooperate with the Plan in any respect regarding the Plan's reimbursement or subrogation rights. If the eligible employee and eligible individual refuse to reimburse the Plan from any recovery or refuse to cooperate with the Plan regarding its subrogation or reimbursement rights, the Plan has the right to recover the full amount of all benefits paid by methods which include, but are not necessarily limited to, offsetting the amounts paid against future benefit payments under the Plan. Non-cooperation includes the failure of any party to execute a repayment and subrogation agreement and the failure of any party to respond to the Plan's inquiry concerning the status of any claim, request for any information or any other inquiry relating to the Plan's rights.

The Plan shall not be liable for, nor shall it have any obligation to pay, any benefit arising out of a third party incident unless and until a repayment and subrogation agreement in a form satisfactory to the Trustees executed by all persons to the full satisfaction of the Trustees, has been received by the Plan.

No individual will be required to repay to the Plan more than the benefits the Plan pays on the claim, nor more than the gross amount the injured individual receives in recovery, whichever is less, without regard to attorneys' fees and expenses incurred in obtaining any such recovery; however, the Plan may agree to share in the payment of the injured individual's attorney's fees if the Trustees determine it is in the Plan's interest to do so.

The repayment and subrogation agreement, the Plan's right of Subrogation, and the Plan's right to recover assets held in trust for its benefit are separate and distinct rights and obligations, and the failure or invalidity, in whole or in part, of one such right or obligation shall not impair or otherwise adversely affect any other such right or obligation.

If a judgment or settlement is received by or on behalf of the injured individual, the individual on whose behalf the Plan paid benefits shall repay to the Plan the lesser of the full amount of benefits the Plan paid, or the amount of any recovery, whether or not that individual was legally responsible for the payment of those expenses. If such repayment is not made to the Plan, the Plan shall have the right, in addition to any other legal rights it may have, to reduce future benefits on claims made by the eligible employee and any eligible dependent, until the full amount of the agreed upon repayment has been paid to the Plan.

Notwithstanding the foregoing, no benefits will be paid under the Plan if the law or public policy of the state in which the person lives, or in which the claim against the third person has been or may be filed, prohibits the Plan from being reimbursed in the event the person, whether or not a minor, recovers from the third person, unless such prohibition is unenforceable because it is preempted by the Employee Retirement Income Security Act of 1974, as amended.