3RD CIRCUIT ADDRESSES EQUITY OF ERISA REIMBURSEMENT CLAIMS
Posted on Nov 22, 2011For the first time since the US Supreme Court discussed the scope of ERISA reimbursement claims in the case of Sereboff v. Mid-Atlantic Medical Services, a federal court has gone in a different direction in evaluating the equitable relief available for a health plan who has paid benefits in a situation where an injured person receives a settlement or judgment from a third party tortfeasor. The Third Circuit Court of Appeals in US Airways v. McCutcheon discussed how the term "appropriate" should be interpreted in the ERISA statutes in evaluating whether a health plan's reimbursement claim is truly equitable. In the US Airways case, decided on November 16, 2011, The Third Circuit Court of Appeals vacated a district court decision which ordered 100% reimbursement to US Airways (a self-funded ERISA plan), and also remanded the case to fashion "appropriate equitable relief." The court held that ERISA Section 502(a)(3) must be consulted in determining an ERISA plan's rights to enforce its plan terms. Section 502(a)(3) limits the available relief to an injunction or "other appropriate equitable relief." The court held that Congress thereby intended to limit the relief an ERISA plan has against a plan participant through the application of equitable defenses and principles, such as unjust enrichment to the plan.
It is still uncertain as to how this case will affect the landscape of ERISA reimbursement claims, or if it will be followed in the 8th Circuit (Misssouri is in the 8th Circuit). But one thing is for certain--a federal court has finally applied equitable principles to an equitable reimbursement claim under ERISA. Here's hoping that other circuits will follow this Third Circuit decision.
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