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U.S. Airways, Inc. v. McCutchen, Equitable Relief, and Third-Party Work Accidents

In a recent 5-to-4 ruling, the U.S. Supreme Court decided in favor of an airline mechanic who had been badly injured in a car accident.

Our Boca Raton injury lawyers understand the primary question was how compensation was to be divided and whether the amount he reimbursed his own insurance company after receiving third-party compensation was to be less attorneys fees.

In the end, the court ruled in favor of the mechanic, finding that attorneys’ fees should be considered when reimbursement is being figured.

The justices vacated the earlier ruling in the case, U.S. Airways, Inc. v. McCutchen. Additionally, certain technical questions were remanded back to the lower appellate court.

At the end of the day, this case is about ensuring that injured workers are not penalized for seeking experienced legal representation on issues of third-party compensation.

Here’s the crux of what happened:

Employee benefit plans usually cover a participant’s medical bills in the event of an injury, even if that injury did not occur at work and wasn’t work-related. However, in a lot of those plans, the health insurance company requires that if an individual obtains compensation from a third party for that injury, he or she has to reimburse the plan “in full.” This is called appropriate equitable relief under Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA). Basically, insurers want to make certain that injured parties aren’t being compensated twice for the same injury.

But the way these plans are written, they don’t allow for the plaintiff’s attorney fees in those third-party cases.

Here, the injured party, James McCutchen, was seriously injured in a car accident. His employee benefit plan offered about $67,000 to cover his medical expenses. Like many others, this plan required the employee to pay back those expenses out of any amount he recovered from the third party.

McCutchen filed a personal injury lawsuit and recovered $100,000 in that case. The benefit plan demanded reimbursement for the full amount – that $67,000 – without taking into account the legal fees that McCutchen had accrued. That reduced his recovery amount to less than the amount demanded – meaning he would actually be losing money in the case – about $900.

Justice Elena Kagan, in writing the opinion for the majority, said that first of all, third-party compensation usually does not come free, meaning that attorneys are needed in order to obtain those benefits. Further, the health plan agreement was silent on attorneys’ fees, meaning that either McCutchen was required to pay back every dollar he received from that third party or only the true amount of the recover, after all costs are deducted.

Because the language was ambiguous, she said, ordinary fairness would require the second interpretation. Otherwise, the injured party is actually made worse off by pursuing third-party compensation.

When an accident victim is represented by an experienced personal injury law firm, these complications are taken into account from the early stages of a case. In many cases, your medical debts can be negotiated. In some cases, insurance company reimbursement may be required. Failure to properly address these issues can further harm accident victims seeking to make a recovery.

Call Freeman, Mallard, Sharp & Gonzalez — 1-800-561-7777 for a free appointment to discuss your rights.

Additional Resources:
Supreme Court Rules in Favor Of 1 Worker, but Not Another, April 16, 2013, By Adam Liptak, The New York Times

More Blog Entries:
Broward Authorities Investigate Deadly Port Accident, April 10, 2013, Boca Raton Injury Lawyer Blog

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