Clarifying Subrogation Recovery in a Complex Case

A TPA using The Phia Group’s subrogation services recouped funds the plan had advanced for a chronic medical condition caused by mold in a plan member’s home. The member pursued claims against various parties, including an air conditioning manufacturer, installer, and dealer. More specifically, the member alleged the air conditioning unit had inadequate dehumidifying capacity for the member’s home, resulting in humidity and mold growth throughout the home. For years, the member suffered from various chronic conditions, including headaches and severe stomach cramping, nausea, and dry heaves. Ultimately, the member’s condition worsened, and the member suffered a stroke and an aneurysm, resulting in high medical bills.

The underlying case reached a settlement of $300,000.00. The member had advanced $50,000.00 in out-of-pocket expenses to retain air conditioning experts to prove the mold was caused by the air conditioning unit. The member’s attorney initially only offered the plan a nominal amount of recovery, citing the fact that the settlement funds represented only the member’s compensation for the property damage claims, which exceeded the total settlement amount. The member’s attorney alleged the partial settlement did not represent any compensation for the member’s medical expenses. The Phia Group’s subrogation team maintained the self-funded ERISA plan’s right of recovery and ultimately secured a recovery that was shared equally by the member after the attorney’s fees and costs, which resulted in a reimbursement of $72,000.00.

By partnering with The Phia Group, our client saved $72,000.00 by enforcing the strong plan language and recovery rights under applicable law and compliance with their stop-loss obligations.