US Airways, Inc. v. McCutchen
2011 U.S. App. LEXIS 22883
3rd Cir.2011Background
- US Airways, as plan administrator, paid $66,866 for McCutchen's medical expenses after a car accident.
- McCutchen recovered $110,000 from third parties, with attorney assistance; net recovery fell short of $66,866 due to 40% fees.
- US Airways demanded full reimbursement of $66,866, without credit for McCutchen's legal costs.
- Rosen Louik & Perry placed $41,500 in a trust; district court considered reimbursement against these funds and McCutchen's personal funds.
- ERISA § 502(a)(3) action sought equitable relief (constructive trust or equitable lien) to enforce subrogation/reimbursement terms.
- Court debates whether equitable defenses like unjust enrichment limit the fiduciary's recovery under 'appropriate equitable relief.'
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unjust enrichment limits ERISA reimbursement claims | McCutchen: unjust enrichment applies to cap relief. | McCutchen: no equitable limit; full plan recovery allowed by terms. | Unjust enrichment may limit relief; remand for appropriate equitable relief. |
| Whether plan language allowing 'any monies recovered' permits full reimbursement | Plan language permits full recovery from third-party proceeds. | Language should not defeat equitable limitations; apply traditional limits. | Plan language subject to equitable principles; cannot compel full recovery without considering unjust enrichment. |
| Whether § 502(a)(3) relief is subject to traditional equitable defenses | Relief should be limited by traditional equitable doctrines. | ERISA provides broad equitable relief specific to plan terms. | Yes; § 502(a)(3) relief is subject to traditional equitable defenses. |
| What constitutes 'appropriate equitable relief' on remand | Balance recovery to avoid windfall and ensure beneficiary not overcompensated. | Allow full enforcement where plan terms require it. | Remand for detailed fact-finding to tailor appropriate relief. |
Key Cases Cited
- Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (U.S. 2002) (distinguishes equitable relief from legal restitution; funds must be identifiable)
- Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (U.S. 2006) (equitable lien by agreement; identified funds matter; limits of 'appropriate' relief)
- Mertens v. Hewitt Associates, 508 U.S. 248 (U.S. 1993) (limits of equitable relief; careful reading of 'appropriate' modifier)
- CIGNA Corp. v. Amara, 131 S. Ct. 1866 (U.S. 2011) (equitable reform/refinement of plan terms; limits on contract sanctity through equity)