SCOTUS To Determine Whether Permissible For Self-Funded Medical Plan Can Recover Attorney's Fees Paid to Plaintiff's Counsel

The Philadelphia-based 3rd U.S. Circuit Court of Appeals had ruled in U.S. Airways Inc. v. McCutchen, that the health plan’s attempt to obtain the personal injury proceeds and attorney fees was not allowed under ERISA because it would not amount to “appropriate equitable relief.”  The case is now before the Supreme Court.

McCutchen was injured in an auto accident and incurred nearly $67,000.00 in medical bills, and settled his third-party claim for $110,000.00, after deducting his attorney’s fees, McCutchen walked away with $66,000.00.  US Airways demanded reimbursement of the full $67,000.00.

Ultimately US Airways filed suit for the full amount in the US District Court.  The District Court granted summary judgment to US Airways for the entire amount of the counsel’s fees, $41,000.00 annd more than $25,000 from McCutchen, ruling that the plan language required reimbursement from “any monies recovered”, which included the attorney’s fees.

The third circuit reversed on the grounds that it was inequitable for US Airways to be fully reimbursed when McCutchen recieved less than the full payment for his medical expenses.