Verdict - Summer 2013 - (Page 31)

case updates What’s New? COMPILED BY KIM JOHNSON & SHAUN O’HARA US Airways, Inc. v. McCutchen et al, 133 S.Ct. 1537 (April 16, 2013) On April 17, 2013, the Supreme Court issued its opinion in US Airways, Inc. v. McCutchen et al, 133 S.Ct. 1537 (April 16, 2013). In McCutchen, the Court considered whether under the Employee Retirement Income Security Act (“ERISA”) an injured employee who has medical expenses paid through his employer’s benefit plan – and subsequently sues and recovers damages from a third party who was responsible for the injury – is required to reimburse the benefit plan in full, even when some of the damages went to cover attorney’s fees. The question presented to the Supreme Court was whether the Third Circuit correctly held – in confl ict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits – that ERISA Section 502(a)(3) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan’s terms give it an absolute right to full reimbursement. The underlying facts were as follows. In 2007, a driver crashed into James McCutchen’s vehicle. As a result of the initial impact, another vehicle crashed into McCutchen’s car. The combined accidents resulted in one death and caused two others to suffer brain injuries. McCutchen suffered lifethreatening injuries that required surgery and later required hip replacement surgery and physical therapy. The accident left McCutchen disabled. Prior to the accident, McCutchen entered into a Health Benefit Plan administered by his employer, US Airways. The Plan paid McCutchen $66,866 to cover medical expenses incurred from the accident. After receiving the Plan payout McCutchen sued the driver who caused the crash. McCutchen’s lawyers estimated that McCutchen’s recovery would exceed $1 million; however, they ultimately settled for only $10,000 because the negligent driver had limited insurance coverage and the accident had killed or seriously injured three other people. Subsequently, McCutchen recovered $100,000 in underinsured motorist coverage. From his $110,000 net recovery, McCutchen paid his lawyers 40% in contingency fees and legal expenses and retained less than $66,000. Upon learning of McCutchen’s recovery, US Airways demanded full reimbursement for the $66,866 it paid to cover McCutchen’s medical expenses. In response, McCutchen’s lawyers placed $41,500 in a trust account to reimburse US Airways. US Airways fi led suit for the $41,500 in trust as well as the remaining $25,366 from McCutchen personally. US Airways suit was centered on Section 502(a)(3) of ERISA, which allows plan fiduciaries to sue for “appropriate equitable relief.” Relying on a subrogation clause in the Plan, which required reimbursement for “any monies recovered from a third party,” the trial court decided that US Airways was entitled to the entire $66,866, regardless of legal expenses. On appeal, the Court of Appeals for the Third Circuit decided that Section 502(a)(3) requires courts to provide relief in a manner that is equitable to both parties. The Third Circuit determined that requiring McCutchen to reimburse the Plan fully would be inequitable because it would leave McCutchen with less than full coverage for his medical expenses while unjustly enriching US Airways, which did not exercise its subrogation rights or contribute to the cost of obtaining third-party recovery. The Third Circuit ruled that McCutchen did not have to reimburse US Airways for the entire amount of his medical expenses. US Airways appealed the Third Circuit’s decision to the Supreme Court of the United States. Justice Kagan authored the opinion for the Court, and in a 5-4 vote held that in an ERISA section 502(a)(3) action based on an equitable lien by agreement, the ERISA plan’s terms govern. Neither general unjust enrichment principles nor specific doctrines reflecting those principles can override the applicable contract. The Court, however, held that because the plan was silent with respect to allocating costs of recovery, the common-fund doctrine applies. Under the common fund doctrine, “a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole. As a result, the Third Circuit and the District Court’s opinions were vacated and the case was remanded for further proceedings. Wellstar Health System, Inc. v. Jordan, No. S12G1629, 2013 WL 2150809 (Ga. May 20, 2013) The Supreme Court of Georgia in Wellstar Health System, Inc. v. Jordan, No. S12G1629, 2013 WL 2150809 (Ga. May 20, 2013), held that the Health Insurance Portability and Accountability Act of 1996 (HIPAA) does not entitle an individual to access protected attorney-client work product simply by virtue of the fact that the product contains protected health information. In 2006, James Sutherland performed an elective vaginal hysterectomy on Marilyn Kay Adams Jordan due to a uterine prolapse. Following the surgery, Sutherland informed the Jordans, that he was unable to safely remove Mrs. Jordan’s fallopian tubes and ovaries at the same time during the procedure. In June 2008, Mrs. Jordan was diagnosed with advanced stage ovarian cancer, from which she died in January 2010. Her husband sued Sutherland and Wellstar, Sutherland’s employer, Summer 2013 31

Table of Contents for the Digital Edition of Verdict - Summer 2013

President’s Message
A Primer on Birth Injury Cases and How to Keep Them “Simple” for the Jury
Online Research of Potential Jurors: A Survey of Resources and Ethical Boundaries
Jury Selection and The Millennials
Confessions of a Trial Lawyer Geek: Great iPad Apps for Trial
GTLA Out & About
Ten Ways to Protect Clients Through Workers’ Compensation Settlements
A Letter from Your Listserv Committee
Case Updates: What’s New?
Workers’ Comp: Recent Developments
Champion Members
Welcome New GTLA Members!
Court Reporters Marketplace
Notes: What’s New with GTLA Members

Verdict - Summer 2013

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