Tuesday, June 26, 2012

SCOTUS Grants Cert in ERISA Case

On Monday, while the Supreme Court was busy not deciding the health care case, it found time to grant certiorari in two employment law cases. I already blogged about the supervisor liability case, Vance v. Ball State Univesity. The other employment law case is U.S. Airways, Inc. v. McCutchen (3d Cir. opinion here).

My beloved home circuit (aka the Third Circuit) has parted ways with a number of other circuit courts on an important ERISA issue, creating a circuit split. It looks like the Supreme Court will now resolve that split. I try to avoid bold predictions... but when the Supreme Court allows five circuit court decisions to stand, and grants cert on the one with a different holding, you have to think the non-conforming decision is in trouble.

So, what's the issue? Per the Petition for Writ of Certiorari (available here), the question presented is:
Employee benefit plans often cover a participant’s medical bills in the event of injury but require that, if the participant obtains compensation from a third party for that injury, he or she reimburse the plan in full. Under Section 502(a)(3) of the Employee Retirement Income Security Act (“ERISA”), plans may enforce these reimbursement provisions in court by seeking “appropriate equitable relief” to enforce “the terms of the plan.” 29 U.S.C. § 1132(a)(3).
Twice in recent years this Court has resolved disputes about how Section 502(a)(3) works in reimbursement actions. In the more recent case, Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), the Court expressly reserved a third question about the provision. The Third Circuit, in its words, has now “squarely” answered “the question that Sereboff left open,” Pet. App. 9a, and has done so in a way that, as it acknowledged, splits the circuits.
The question presented is: Whether the Third Circuit correctly held—in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits—that ERISA Section 502(a)(3) 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.
Now, I know what you're thinking: "I love statutory interpretation of ERISA provisions!" Don't we all? It looks like we'll soon get a ruling on this issue from the highest court in the land.

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