Virginia: Car Accidents – a Lawyer’s ERISA

Virginia: Car Accidents – a Lawyer’s ERISA

On March 16, 2016, on remand from the United States Supreme Court in 2013, United States District Court for the Western District of Pennsylvania filed electronically its 22-page Memorandum Opinion and companion 2-page Order of Court in US Airways, Inc. v. McCutchen, No. 2:08cv1593, the leading case on ERISA preemption.  It arises out of an automobile accident in which Plaintiff’s personal injury victim had $66,865.82 of accident-related medical expenses paid by his employer’s Health Benefit Plan, yet only recovered by settlement $10,000.00 in liability insurance of the offending motorist and $100,000.00 in underinsured motorist (“UIM”) benefits under the victim’s own auto insurance policy.  Id. at 3.

Significantly, the Summary Plan Description (“SPD”) on which US Airways had predicated its subrogation claim actually differed materially from the underlying Plan document, which dubiously it produced belatedly in McCutchen.  The Plan document “does not contain reimbursement language nor does it entitle US Airways to reimbursement from a participant’s insurance company.”  Id. at 4-5.

As threshold, McCutchen rejected US Airways’ attempt to foreclose consideration of its unfavorable Plan document under the doctrines of waiver and law of the case.  Id. at 6-11.  It then held that the Plan document (which was more favorable to McCutchen) controlled over the SPD re US Airways’ subrogation rights, id. at 11-16; that the Plan’s lien only was against the offending motorist’s liability insurance payment, not also against the victim’s own UIM payment, id. at 16-17; and that under the “common-fund” doctrine the Plan’s lien was subject to reduction for “a reasonable attorney’s fee” on it, i.e., the victim’s “proportional fees and expenses” for it. Id. at 17.

McCutchen observed that ERISA imposes a statutory penalty of up to $110.00/day on the Plan Administrator for failing to provide the Plan beneficiary or his attorney the Plan document within 30 days of written request.  Id. at 17-19.  However, written requests made of entities merely servicing the Plan and/or in formal discovery do not trigger the ERISA penalty.  Id. at 19-20.

Finally, McCutchen rejected McCutchen’s claims for breach of fiduciary duty and US Airway’s claim for equitable estoppel.  Id. at 20-22.  In conclusion, US Airways received only $6,666.66 or less from the $110,000.00 recovered by McCutchen. Id. at 22-24.