Monday, June 25, 2012

Supreme Court agrees to hear an ERISA health benefits case for 2012-2013 term

While all eyes were focused this morning on whether the U.S. Supreme Court would issue its widely-anticipated ruling on the constitutionality of the Patient Protection and Affordable Care Act (PPACA), lost amidst all the hubbub is the fact that the Court agreed to hear another health benefits-related case during the next term. In legal parlance, the Court “granted cert” in the U.S. Airways v. McCutchen case.

The issue presented is whether the U.S. Court of Appeals for the Third Circuit correctly held, in conflict with several other circuits, that equitable relief under ERISA Sec. 502(a)(3), available to health benefits plan administrators, can be limited by equitable defenses, such as unjust enrichment. According to the Third Circuit, these equitable defenses can override express plan terms that would otherwise allow for full reimbursement from beneficiaries.

In this case, after a health plan participant was injured in a car accident, the health plan paid $66,866 in medical benefits on his behalf. After a lawsuit, the participant recovered $110,000. However, once attorney’s fees were taken out, the participant received less than $66,000, which is less than the amount the participant was required to repay to the health plan, leaving him worse off than if he had not sued at all.

A decision in this case is expected during the Court’s next term, which starts in October, 2012.


Post a Comment