September 6, 2012 (PLANSPONSOR.com) – Retirement industry groups are urging the U.S. Supreme Court to reverse a ruling addressing appropriate equitable relief under the Employee Retirement Income Security Act (ERISA).
The ERISA Industry Committee (ERIC), along with the American Benefits Council, the Society for Human Resource Management and the U.S. Chamber of Commerce filed with the U.S. Supreme Court an amicus curiae (“friend of the court”) brief that argues, among other things, that “[a]llowing individual courts to decide for themselves, under the guise of equity, which plan provisions will be enforced and under what circumstances, is squarely at odds with ERISA’s objective of establishing uniformity, certainty and predictability. Plan benefits are not established by equity but by plan terms, which should not be overridden because a court might have provided for different plan benefits and terms.”
In addition, the brief argues that subrogation provisions have long been recognized under ERISA (including by the Supreme Court), and that allowing equitable defenses to take precedence over plan provisions would undermine the uniform application and administration of plans and increase plan costs.
In U.S. Airways v. McCutchen, a district granted summary judgment to U.S Airways, agreeing the language in its benefits plan permits it to recoup money it provided for McCutchen's medical care out of the total he recovered from a third party due to an auto accident. On appeal, the 3rd U.S. Circuit Court of Appeals concluded that U.S. Airways's claim for reimbursement is subject to equitable limitations, and vacated the district court's judgment, remanding the case for further proceedings.
In June, the Supreme Court agreed to hear the case (see “Supreme Court to Revisit Reimbursement of Benefits Issue”).