Term: 2012
Docket: 11-1285
Us Airways, Inc., In Its Capacity As Fiduciary And Plan Administrator Of The Us Airways, Inc. Employee Benefits Plan, Petitioner v. James E. Mccutchen Et Al.
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11-1285 U.S. AIRWAYS, INC. V. McCUTCHEN DECISION BELOW: 663 F.3d 671 CERT. GRANTED 6/25/2012 QUESTION PRESENTED: Employee benefit plans often cover a participant's medical bills in the event of injury but require that, if the participant obtains compensation from a third party for that injury, he or she reimburse the plan in full. Under Section 502(a)(3) of the Employee Retirement Income Security Act ("ERISA"), plans may enforce these reimbursement provisions in court by seeking "appropriate equitable relief” to enforce "the terms of the plan." 29 U.S.C. § 1132(a)(3). Twice in recent years this Court has resolved disputes about how Section 502(a)(3) works in reimbursement actions. In the more recent case, Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), the Court expressly reserved a third question about the provision. The Third Circuit, in its words, has now "squarely" answered "the question that Sereboff left open," Pet. App. 9a, and has done so in a way that, as it acknowledged, splits the circuits. The question presented is: Whether the Third Circuit correctly held-in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits-that ERISA Section 502(a)(3) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan's terms give it an absolute right to full reimbursement. LOWER COURT CASE NUMBER: 10-3836
In the 2012 case of US Airways, Inc. v. McCutchen, the U.S Supreme Court ruled in favor of James E. McCutchen who was seeking to limit his obligation to reimburse his employer's health plan for medical expenses it had paid on his behalf after he recovered damages from a third party following an automobile accident. The court held that under Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA), a health-plan administrator could not enforce an equitable lien against a participant’s third-party recovery without considering principles of unjust enrichment and double recovery which would take into account legal costs incurred by participants in obtaining their recoveries.
In the dissenting opinion for US Airways, Inc. v. McCutchen, Justice Scalia argued that the majority's decision to apply "equitable principles" to interpret an Employee Retirement Income Security Act (ERISA) plan was incorrect and inconsistent with previous rulings of the court. He contended that ERISA plans should be enforced as written unless they violate statutory or common law prohibitions. In this case, he believed there were no such violations and thus saw no reason not to enforce the reimbursement provision in its entirety as per its terms. According to him, by allowing equitable defenses against clear contract terms in ERISA plans would undermine predictability and certainty which are key elements of a contractual agreement.
