The United States Supreme Court decided in Montainile v. Board of Trustees of the National Elevator Industry Health Benefit Plan that a plan administrator may not bring a subrogation claim against a participant whose third party settlement is dispersed into non-traceable items.
The decision is actually not that clear cut. The plaintiff had filed a negligence claim for uninsured motorist’s insurance, obtained a settlement of $500,000, but the trustees of the plan did not file their claim within the time limit set by the plaintiff’s attorney…and thus were denied reimbursement. The court upheld original decisions to deny the payment, mainly because of the timing issue.