Supreme Court Issues Ruling In U.S. Airways ERISA

The United States Supreme Court held today in U.S. Airways, Inc. v. McCutchen, in a 5-4 decision, that the terms of an ERISA plan cannot be overridden by equitable principles in an action for equitable relief under ERISA Section 502(a)(3). In an opinion authored by Justice Elena Kagan, the Supreme Court vacated and remanded a decision by the U.S. Court of Appeals for the Third Circuit declining to enforce a health plan provision (that required participants to reimburse the plan for amounts received in third-party recoveries) against a participant who was not made whole by a third-party settlement. The majority also ruled that, while equitable principles cannot trump a reimbursement provision, they may aid in properly construing it. Because the U.S. Airways plan was silent as to the allocation of attorneys' fees, the Supreme Court found that the equitable "common fund" doctrine provided the appropriate default rule to fill that gap. In a short dissenting opinion, Justice Antonin Scalia disagreed with the majority's use of the common fund doctrine to fill a gap in plan language. Chief Justice Roberts and Justices Thomas and Alito joined the dissent. We will provide a more in-depth analysis of this decision in the near future. The Court's decision can be found at the link below:

http://www.supremecourt.gov/opinions/12pdf/11-1285_i4dk.pdf