Previously, the primary question with respect to ERISA liens was whether the plan could write a policy provision which abrogated the common fund doctrine. In Longaberger v. Kolt, 2009 U.S.App.LEXIS 25047 handed down yesterday, the 6th Circuit amazingly held that the plan could also write a provision that allows the plan's lien to take super-priority over every other lien. Yes, that includes an attorney lien.
In Longaberger, the attorney settled that case for a total of $135,000.00. The plan paid a total of $113,668.31 for the plaintiff's medical. The 6th Circuit held that the plan was entitled to full reimbursement of their lien. Instead of $86,018.18, the plaintiff walks away with $10,303.31. For the attorney's hard work? Instead of $45,000.00, he gets...$7,110.56. It appears that common sense in Ohio leaves something to be desired. One can only hope the plaintiff's attorney appeals this case to the Supreme Court. Aside from the constitutional issues, there appears to be no logical reason for allowing full reimbursement of the plan's lien simply because they wrote that their lien has super-authority. Does this mean that their lien has super-authority over Medicare liens? That would be an interesting battle. Additionally, why not also write a provision that says the attorney who handles the case will do so pro bono?
Hopefully, the Supreme Court will soon reverse this very poor and unjust decision.