AC Houston Lumber Co. Employee Health Plan v. Berg

This case involved a dispute over medical bill payments when a worker was injured and later received money from a lawsuit. AC Houston Lumber Company's employee health plan paid for an injured worker's medical treatment. The worker then hired an attorney and won money in a personal injury lawsuit against the party who caused the injury. The health plan wanted the attorney to pay back the medical costs from the lawsuit settlement money, claiming it had a legal right (called a "lien") to be reimbursed first. The court ruled in favor of the attorney and against the health plan. The Ninth Circuit Court of Appeals decided that the health plan could not force the attorney to pay back the medical costs because the attorney never signed any agreement promising to honor the plan's claim to the money. Only the employee had signed the reimbursement agreement with the health plan, not the lawyer. This matters for workers because it clarifies that their attorneys cannot be held responsible for paying back employer health plans from lawsuit settlements unless the attorney specifically agreed to do so. However, workers themselves may still be required to reimburse their employer's health plan if they signed such agreements when enrolling in company health benefits.