Weighing In on US Airways Inc. v. McCutchen

95527899 -- supreme courtThe U.S. Supreme Court decision Tuesday in the case of US Airways v. McCutchen appears to be a big one for those handling or administering benefit claims and reimbursements under the Employee Retirement Income Security Act. So say legal experts already weighing in.

Hogan Lovells, the law firm representing US Airways, said in a statement released Wednesday that the decision “provides clear guidance to employer sponsors that reimbursement provisions will be enforced by the courts as written. In essence, the Court ruled that an employee (James McCutchen) who receives medical payments for an injury pursuant to an employer-sponsored health-benefits plan may not avoid the reimbursement requirements of that plan by arguing (as McCutchen’s lawyers had) that such reimbursement is “inequitable.”

Neal Katyal, co-director of Hogan Lovell’s appellate practice and former acting solicitor general of the United States who argued the case, calls the decision “a victory not only for US Airways, but for all ERISA employee-benefits plans, because it prevents individual judges from rewriting plan terms according to their own notions of equity,” which he argued the Third Circuit Court of Appeals had done.

According to this analysis by Michelle Anderson of Fisher & Phillips summing up the decision and its impact, “the supremacy of a written ERISA-governed plan still reigns as [the Court] reversed the ruling of an appellate court which had held that a court in equity can ignore unambiguous subrogation reimbursement language, and simply rewrite the terms of an ERISA-governed plan in line with its own ideas of what was ‘fair and equitable.’ ”

Here’s what she says the ruling means for employers:

Although this is a win for those self-funded plans governed by ERISA, plan fiduciaries and administrators are wise to review with their counsel the subrogation, reimbursement and attorney fee and costs provisions in the written documents to ensure conformity to the law in this area.

Undoubtedly, those who litigate in the personal-injury arena will continue to develop new theories to test the sufficiency of ERISA, since taking the claim of injured persons who have had their expenses paid by a medical plan will be less attractive if the ability to collect fees and recover damages for their client will be secondary to the rights of the plan.

Her analysis offers a complete synopsis of the case, which many of you probably already know. This piece by Allison Bell on the LifeHealthPro site also sums up the facts of the case, saying the decision basically now establishes that “a federal court can use equitable law principles when a group health plan contract governed by [ERISA] is silent about a legal issue.”

And finally this, from Mayer Brown, stresses the need by employers — in light of this case — to review their ERISA-plan paperwork very carefully:

The Court’s decision in McCutchen establishes that contractual provisions requiring reimbursement of benefits paid according to an ERISA plan will be enforced according to their unambiguous terms. The ruling will thus be of interest to all businesses that offer such plans to their employees or administer them on behalf of other entities. At the same time, the Court’s decision highlights the need to draft reimbursement provisions in ERISA plan documents that are as clear and comprehensive as possible. Doing so will minimize (although likely not eliminate) the potential for courts to apply equitable rules as “gap fillers” when the plan language is silent or ambiguous.