By: Ron Kramer and Jim Goodfellow
On Monday, June 25, 2012, the United States Supreme Court granted certiorari in U.S. Airways, Inc. v. McCutchen, a case we previously blogged about on December, 15, 2011. By way of review, in McCutchen, the Third Circuit deviated from decisions handed down by five of its sister circuits, including the Seventh Circuit, and concluded that the “appropriate equitable relief” available under ERISA § 502(a)(3) to plan administrators can be limited by equitable defenses, such as unjust enrichment. The court also held that such defenses can override express terms of benefit plans, which otherwise would allow full reimbursement from beneficiaries, regardless of whether the beneficiary was made whole.
The issue presented to the Supreme Court in the petition for certiorari was: “[w]hether the Third Circuit correctly held — in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits — that Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan’s terms give it an absolute right to full reimbursement.”
This case has generated much discussion regarding subrogation rights as well as the interplay between traditional equitable principals and specific plan language. It will be interesting to see how the Supreme Court resolves the split. Stay tuned…