ERISA Argument Over Accident Recovery

Petitioner US Airways sued under the Employee Retirement Income Security Act (ERISA) to recover $66,866 in medical expenses paid for injuries suffered by responded McCutchen, a US Airway employee. McCutchen was injured in a car accident with a third party. The insurance plan entitled US Airways to reimbursements if McCutchen recovered money from a third party. McCutchen had received $66,000 recovery, after her lawyers secured $110,000 in payments (minus the attorneys fees). McCutchen argued that absent overrecovery on his part, US Airways right to reimbursement did not kick in, and that US Airways had to contribute its fair share of the costs to get the recovery, so any reimbursement had to be reduced by 40 percent to cover the lawyer’s contingency fee. The district court held that in an action based on an agreement, the ERISA plan’s terms govern. Neither double recovery or common fund rules can override the contract. But as the plan was silent on the allocation of attorneys’ fees, the common fund doctrine would be used to fill in the void, because without it, the insurer could ride free on the beneficiaries efforts. US Airways, Inc. v. McCutchen (US 11–1285 4/16/13)

Disclaimer: Our blog uses recent cases involving employment law issues. Our office does not represent parties in these cases. The cases are used for information purposes only, and should not be considered legal advice.

2017-12-13T21:46:47+00:00 June 4th, 2013|General Labor Law|