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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

April 25, 2013 

 State and Federal Law Alert

 

 

Supreme Court Decides Equitable Doctrines Do Not Override Terms of ERISA Group Health Plan

 

The U.S. Supreme Court recently decided that equitable relief doctrines, such as the principle of unjust enrichment, do not override the reimbursement provisions of an ERISA-covered group health plan. The Court held, however, that equitable doctrines can be used to interpret ambiguous plan provisions.

 

In US Airways, Inc. v. McCutchen, a group health plan paid over $66,000 for medical expenses incurred by a participant who was injured in a car accident. The participant subsequently received a $110,000 settlement from third parties. However, legal expenses reduced the participant's net recovery to less than the amount of the medical expenses paid by the plan.

 

The plan contained a provision requiring a participant to reimburse the plan for medical expenses it paid from any monies recovered from a third party. Using this provision, the plan sued the participant for the full amount of medical expenses it had paid on his behalf. The participant contended that it would be inequitable to require him to reimburse the plan in full when he had not been fully reimbursed for his medical expenses by the net proceeds of the settlement.

 

The Third Circuit Court of Appeals held that, despite the terms of the plan, a court must apply any relevant equitable relief doctrines and defenses. The Third Circuit then concluded that requiring the participant to fully reimburse the plan was not appropriate because doing so would unjustly enrich the plan and leave the participant with less than full payment of his medical bills. The court also determined that equitable relief required the plan to share in the legal costs borne by the participant in obtaining the settlement.

 

In a 5-4 decision, the Supreme Court reversed the Third Circuit's decision by ruling that the terms of an ERISA group health plan govern and that equitable relief doctrines cannot be used to invalidate them. Specifically, the Court held that where the terms of a group health plan provide the plan with the right to a full reimbursement, a court cannot use equitable relief doctrines to reduce the plan's reimbursement.

 

However, the Court said that this plan document did not specify whether the plan would share in the legal costs incurred by the participant. The Court concluded that where a plan is silent on allocating the costs of obtaining a third-party recovery, equitable relief doctrines provide the appropriate default rules. Therefore, under the equitable relief doctrine called the "common fund doctrine", the Court split the legal costs of the settlement between the participant and the plan.

 

The Court's decision in McCutchen reaffirms the importance of having ERISA welfare plan documents and the fact that precise plan terms supersede otherwise applicable equitable principles. 

 

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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.