Senior Communications Manager
Supreme Court Rejects Effort to Override the Clear Terms of an Employee Benefit Plan under ERISA
Wiley Rein, representing the National Association of Subrogation Professionals and the Self-Insurance Institute of America, Inc., helped persuade the U.S. Supreme Court to reject an effort to use equitable principles to override the clear terms of an employee benefit plan under the Employee Retirement Income Security Act (ERISA).
In US Airways, Inc. v. McCutchen, No. 11-1285, the Supreme Court held on April 16 that equitable doctrines cannot override a reimbursement clause requiring a plan participant to reimburse an employee benefit plan from any money later recovered from a third-party tortfeasor. The Supreme Court reversed a lower court decision allowing equitable defenses, such as unjust enrichment, to defeat the clear terms of a plan requiring reimbursement. In this case, because US Airways sought appropriate equitable relief to enforce the reimbursement clause, McCutchen could not “rely on theories of unjust enrichment to defeat US Airways’ appeal to the plan’s clear terms.” Equitable principles, the Court explained, could only be used to aid in construing the plan. The Court’s decision is consistent with ERISA’s goal of enforcing the “terms of the plan” and protecting “contractually defined benefits.”
The Court’s opinion, authored by Justice Kagan, echoed many of the arguments made in an amicus brief authored by Wiley Rein Appellate attorneys William S. Consovoy and Brett A. Shumate. McCutchen vindicates the principle that employee benefits should be defined by the plan. The decision also ensures that health-plan administrators have the ability to recover plan funds from participants who accept medical benefits but then refuse to honor the reimbursement terms of their agreements after obtaining compensation from third parties through legal action or settlement.
To read the Supreme Court ruling, please click here.
To read the amicus brief, please click here.