ERISA Reimbursement v. Special Needs Trust
In many cases where a child is permanently injured in an accident or medical mistake the settlement funds are placed into a Special Needs Trust for the benefit of the child. This technique allows parents to provide a better quality of life for their child while maintaining eligibility for benefits programs to provide the minimum medical coverage. Insurance companies that paid for treating a child’s injuries seek to recover their expenses against the settlement as you may expect.
Recently, U.S. District Judge John P. Fullam made an interesting decision in Mills v. London Grove Township. Judge Fullam strictly interpreted the insurance company’s claim for reimbursement to only exist against the ERISA beneficiary which in this case was the child’s father. The litigation on behalf of the child, Grace, was settled by placing the funds directly into a Special Needs Trust to provide ongoing care. Judge Fullam relied partially on this fact to deny the insurance company’s claim for reimbursement against the funds allocated to Grace’s Special Needs Trust.
This is an important decision for parents with children that have been injured and that use a Special Needs Trust to provide for their child. If the decision stands on appeal, parents can hope to preserve more of their child’s funds for their own care without reduction by insurance reimbursement claims.
You can read the full opinion here.
For additional information on Special Needs Trusts in Connecticut, click here.
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