After one of its employees quietly settled a personal injury claim with Harris Teeter, failing to reimburse an employee-funded medical plan, officials for Pella Corp. said: Not so fast. The door and window manufacturer asked the U.S. District Court for the Eastern District of North Carolina Western Division to place a hold on any funds from the settlement as it seeks to recoup medical expenses paid from the plan.

In a complaint filed August 21, officials for Pella Corporation Group Medical Plan said the plan paid healthcare providers a total of $69,554 after defendant Scott Schulz slipped on the floor of a Harris Teeter supermarket. The supermarket since settled with Schulz, the complaint said, though his attorneys have so far failed to repay the company’s medical costs. Because the plan includes rights of subrogation and reimbursement, officials for Pella said the company is eligible to seek reimbursement, “out of the proceeds of any personal injury claim brought by Schulz as a result of the Accident.” In seeking repayment, Pella’s attorneys invoked the court’s federal jurisdiction under 28 USC §§1331 and 1337, and the Employee Retirement Income Security Act of 1974 (ERISA). “Defendants have received settlement proceeds, a portion (or all) of which rightfully belongs to the Plan,” the complaint alleged.

Also listed are numerous attorneys, which the company said, “refused to acknowledge the existence of the Plan’s lien.”

According to court documents, Schulz was injured on August 28, 2018. Since that time, plan administrators said they notified his attorneys “on multiple occasions,” alerting them of the company’s right to be reimbursed for paid medical expenses. Schulz then, through the legal assistance of Narron and Holdford, P.A., Ben L. Eagles, Law Office of Kevin Williams, PLLC, and Kevin Williams (also listed as defendants in Pella’s complaint), settled his personal injury claims without Pella’s knowledge or consent and for an undisclosed sum, the complaint said. Meanwhile, Pella authorized The Rawlings Company to pursue a claim for reimbursement. On June 12, 2020, The Rawlings Company received a letter from defendant Williams proposing to resolve the claim “for a mere fraction of its value,” otherwise intending to disburse funds to Schulz within 14 days, court documents said. A representative of The Rawlings Company responded on June 26, 2020, advising that Pella objects to any distribution of the settlement proceeds failing to include full reimbursement for its medical plan. Should the proceeds “be dissipated on non-traceable items,” the company’s plan would be left empty handed, officials said.

Rawlings could have filed suit or moved the Court for an Order requiring us to hold the settlement funds in constructive trust as noted by the Supreme Court in Montanile. Rawlings failed to do so,” said defendant Williams in a letter dated July 15, 2020. “Consequently, disbursement was proper under Montanile.” Conversely, by settling Schulz’s tort claim and distributing the proceeds, “the Narron Defendants and the Williams Defendants unjustifiably induced Defendant Schulz to breach his contract with the Plan, thus tortiously interfering with the Plan’s contract with Defendant Schulz and causing damages to the Plan,” the door and window manufacturer counter alleged.

Pella asked the court to declare its rights regarding reimbursement and recovery, in the meantime also requesting that defendants “be temporarily, preliminarily and permanently enjoined from disbursing, wasting spending, comingling or converting any monies recovered from or on behalf of the Harris Teeter until the Plan’s subrogation and reimbursement rights are resolved.”

The company is tacking legal fees onto the case.

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