benefits for an injured party. The insurer is not able to seek reimbursement for its expenditures on behalf of the insured (Section 1720), but neither is the insured able to recover twice, once from the insurer and again from the tortfeasor (Section 1722).
In Austin, the plaintiff contended he should be allowed to seek damages from the defendant, Dionne, including amounts which had already been paid to him by his ERISA disability plan. Austin based his argument on ERISA's preemption of Section 1722. Austin, 909 F. Supp. at 276. The district court held that ERISA would only preempt Section 1722 when "application of the prohibition against double recovery has the effect of regulating, and interfering with, claims by or against an employee benefits plan operating under ERISA." Id. at 278. The Government essentially argues that this case, like Austin v. Dionne, deals only with State regulation of one party's right to sue another party.
One possible way to reach the conclusion advocated by the government would be to find that preemption is inapplicable unless the ERISA plan is a party to the suit. Indeed, the overwhelming number of cases dealing with ERISA preemption involve the plan as a party. See, e.g., FMC, supra; Travitz v. Northeast Dept. ILGWU Health and Welfare Fund, 13 F.3d 704, 710 (3d Cir.) (finding that § 1722 was preempted where plaintiff attempted to use it to justify her refusal to reimburse ERISA plan's exclusion clause), cert. denied, 128 L. Ed. 2d 888, 114 S. Ct. 2165 (1994); Electro-Mechanical Corp. v. Ogan, 9 F.3d 445 (6th Cir. 1993) (finding preemption and upholding plan's right to subrogation); Provident Life and Accident Ins. v. Linthicum, 930 F.2d 14 (8th Cir. 1991) (same).
The Government's argument, however, reads too much into Austin. There is no reason why the plan must be a party to the suit in order for ERISA to protect the plan's right to reimbursement. In Austin, the district court was careful to note that neither party to that action had argued that the ERISA plan would be "entitled to subrogation of the amounts paid by Dionne to Austin." Austin, 909 F. Supp. at 278 n.7. This is clearly not so in the instant case. Indeed, the record in this case unambiguously reveals that the Plan has already notified the Danowskis of its reimbursement claim, which it bases on the Plan language expressly providing that it is entitled to seek reimbursement.
See Danowski Aff., exhibit B at 49; Silverman Aff., exhibit E.
As Austin makes clear, a policy of prohibiting double recoveries should "be given full effect, so long as doing so does not shift liability to the . . . fund operating under ERISA." Austin, 909 F. Supp. at 278 (emphasis added). This case, therefore, is in harmony with Austin, because it is precisely one in which the "application of the prohibition against double recovery [would have] the effect of . . . interfering with claims by . . . an employee benefits plan operating under ERISA. Id.
Moreover, the threat of double recovery in this situation is illusory. It is now well settled that plaintiffs, like the Danowskis, can make no future claim of entitlement to any amount demanded by the Plan as reimbursement, because unambiguous subrogation provisions in ERISA plans "must be enforced as written." Ryan v. Federal Express Corp., 78 F.3d 123, 128 (3d Cir. 1996). Unless New Jersey's Collateral Source Rule is preempted by ERISA in this instance, the Plan will have no fund against which to assert its legitimate claim for reimbursement, and the subrogation scheme contained in the Plan will be frustrated. Accordingly, I conclude that, in this case, New Jersey's Collateral Source Rule, N.J. Stat. Ann. § 2A:15-97, is preempted by ERISA.
For the reasons set forth above, the motion of the defendant, the United States of America, to dismiss the claim of Stanley Danowski for reimbursement of medical expenses for his alleged failure to comply with the notice provisions of the FTCA, and for partial summary judgment, based upon N.J. Stat. Ann. § 2A:15-97, will be denied. The court will enter an appropriate order.
STEPHEN M. ORLOFSKY
United States District Judge
Dated: May 3, 1996
This matter having come before the Court on May 3, 1996, on the motion of defendant, the United States of America, to Dismiss the Claim of Stanley Danowski and for Partial Summary Judgment, Jerrold Allen, Esq., and Robert M. Silverman, Esq., of Soffian & Allen, appearing on behalf of the plaintiffs, Ryan Danowski and Stanley Danowski, and Dorothy Donnelly, Esq., Assistant United States Attorney, of the office of the United States Attorney for the District of New Jersey, appearing for defendant, the United States of America; and,
The Court having considered the complaint, the answer, and the briefs, declarations and affidavits filed in support of and in opposition to this motion, for the reasons set forth in this Court's OPINION filed concurrently with this ORDER;
It is on this 3rd day of May, 1996, ORDERED that:
1. Defendant's motion to dismiss the claim of Stanley Danowski for reimbursement of medical expenses is DENIED; and,
2. Defendants' motion for partial summary judgment based upon the application of N.J. Stat. Ann. § 2A:15-97 is DENIED.
STEPHEN M. ORLOFSKY
United States District Judge