Princeton, Aetna Have No Right to Seek Repayment from Man’s Personal Injury Settlement, Class Action Says

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A proposed class action alleges Princeton University and Aetna Life Insurance Company are among a number of parties who have unlawfully sought coverage reimbursements from portions of personal injury settlements reached by participants in the Ivy League school’s health insurance plan. 

The 81-page lawsuit against the Trustees of Princeton University, the Princeton University Benefits Committee, plan administrator Aetna and subrogation specialist the Rawlings Company, LLC alleges the parties have run afoul of the Employee Retirement Income Security Act of 1974—ERISA—and New Jersey law by “assert[ing] repayment demands” for plan benefits against proposed class members’ personal injury recoveries. 

The plaintiff, who the suit says was involved in a 2016 injury-causing accident for which he submitted claims for medical benefits and received a settlement, alleges the defendants are seeking reimbursement from the proceeds of his settlement on the basis of language in the “About Your Benefits” summary of his health plan. The suit alleges, however, that the following language is legally insufficient to allow the defendants to seek repayment from the plaintiff’s settlement, and plan members, at any rate, are not personally responsible for repaying health plan benefits that the plan paid out as a result of injuries caused by other parties: 

“Subrogation 

In the event that you suffer an injury or sickness as a result of an alleged negligent or wrongful act or omission of a third party, the Princeton University Health Care Plan has the right to pursue subrogation against any person or insurer. 

The Princeton University Health Care Plan will be subrogated and succeed to your right of recovery against any person or insurer. The Princeton Health Care Plan may use this right to the extent of the benefits under the Plan. You must agree to help the Princeton University Health Care Plan use this right when requested.”

Accordingly, the lawsuit says, Princeton’s health insurance plan under which the defendants have demanded and recovered repayment from the plaintiff contains no repayment obligation requiring the man to reimburse any of the defendants. Even if the above language were enforceable, the plan’s terms only allow the defendants a right of subrogation, and do not authorize a right of reimbursement against the plan member or the individual’s personal injury recovery, the complaint argues. 

Still further, the lawsuit states that even if the language in the summary of the Princeton health insurance plan were enforceable, New Jersey law, in particular the state’s Collateral Source Statute, prohibits the defendants’ repayment demands. 

The case claims the plaintiff, in response to the defendants’ “unlawful lien and repayment demands,” involuntarily and under protest paid the parties, who the lawsuit describes as having “actually undertook long term and repeated actions” before recovering “hundreds of thousands of dollars in repayment” from the man and proposed class members. As a result of the defendants’ conduct, the lawsuit claims, the plaintiff’s counsel in the personal injury case is “ethically bound to refuse to provide the funds to Plaintiff.” 

“Defendants actively took part in the plan or design to recover repayment despite the Plan not having any repayment obligation requiring Plaintiff and class members to repay Defendants and New Jersey law prohibiting Defendants from asserting repayment demands against Plaintiff’s and class members’ personal injury recoveries,” the lawsuit claims. 

The suit, initially filed in the Montgomery County, Pennsylvania Court of Common Pleas, has been removed to federal court given the ERISA allegations made therein. 

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