On Thursday, October 25th, NELA joined AARP in filing an amicus brief in U.S. Airways, Inc. v. McCutchen, an ERISA case currently pending in the United States Supreme Court. While the underlying cause of action in this case was a tort claim, an adverse ruling in this case could have profound consequences for any employees who currently participate in employer-sponsored benefit plans. The brief was drafted by Mary Ellen Signorille of AARP, with the assistance of NELA ERISA experts Jeffrey Lewis (Lewis, Feinberg, Lee, Renaker & Jackson P.C.) and Ronald Dean (Ronald Dean, A Law Corporation).
After James McCutchen suffered a serious automobile accident that left him permanently disabled, a benefit plan sponsored and administered by his employer, U.S. Airways, paid $66,866 for his medical expenses. Mr. McCutchen then recovered $110,000 from third parties, with the assistance of counsel. U.S. Airways filed this suit against him for “appropriate equitable relief” pursuant to § 502(a)(3) of ERISA, seeking reimbursement of the entire $66,866 it had paid, without any allowance for the costs Mr. McCutchen incurred pursuing his claim. This would have reduced his net recovery to less than the amount U.S. Airways demanded; i.e., he would have owed more money than he recovered.
While the District Court ordered Mr. McCutchen to reimburse U.S. Airways for the full amount claimed, the Third Circuit Court of Appeals concluded that he could assert certain equitable limitations, such as unjust enrichment, on U.S. Airways’ equitable claim. The Circuit Court vacated the District Court's order requiring him to pay U.S. Airways the entire $66,866 he recovered, and remanded the case to allow the District Court to fashion “appropriate equitable relief.”
The amicus brief seeks to refute the claim made by the Petitioner and their amici in this case that reimbursement rights are essential to preserving the stability of employer-sponsored benefit plans. AARP’s brief argues persuasively that all available data undermines the employers’ claims about the importance of reimbursement to the financial integrity of benefit plans. Moreover, the brief points out that employees would be deterred from pursuing claims against third parties if they knew that not only would they not get to keep any portion of their recovery, but also that they would have to pay additional money to their employer for the privilege of vindicating their rights. This would result in employers receiving less in reimbursement funds than if their reimbursement power was subject to reasonable, equitable limitations.
A copy of the amicus brief can be downloaded from the NELA Exchange.