US Airways, Inc. v. McCutchen

Whether § 502(a)(3) of the Employee Retirement Income Security Act (ERISA) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid even when the plan’s terms give it an absolute right to full reimbursement.

After Respondent, who was employed by Petitioner, suffered a serious injury in an automobile accident, Petitioner administered a benefit plan which paid $66,866 for Respondent's medical expenses. Respondent also recovered $110,000 from third parties. Petitioner sought to enforce its subrogation right and demanded reimbursement of the entire $66,866, which would have reduced Respondent's net recovery to less than the total amount he demanded. Petitioner filed suit for "appropriate equitable relief pursuant to § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"). The District Court allowed the subrogation claim ordering Respondent to repay Petitioner in full. The Court of Appeals for the Third Circuit reversed and remanded to the District Court to fashion "appropriate equitable relief."

On appeal Petitioner argues that the Third Circuit incorrectly held—in conflict with the Fifth, Seventh, Eighth, Eleventh and D.C. Circuits—that § 502(a)(3) of ERISA authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid even when the plan’s terms give it an absolute right to full reimbursement.