Health plan repayment from settlements
US Airways v. McCutchen
In brief
The Court wiped out the Third Circuit’s ruling (vacated it) and sent the case back to the lower court (remanded it), saying the plan controls repayment and the common-fund rule fills its silence on fees.
- Where it stands
- Decided
Decided 5-4 · April 16, 2013 · Opinion by Justice Kagan
- What it’s about
- US Airways sought repayment from James McCutchen’s third-party recovery under its employee benefit plan.
- Who it affects
- For McCutchen’s reimbursement dispute, the plan’s terms govern repayment; the common-fund rule supplies the attorney-fee allocation the plan left unstated.
Summary: written with AI from the case record.
What it's about
The Supreme Court ruled that the plan’s terms govern repayment, but the common-fund rule (sharing legal fees from a recovery) fills the plan’s silence on fees; it wiped out the Third Circuit’s ruling (vacated it) and sent the case back to the lower court (remanded).
The case asked whether fairness-based rules could change the written repayment terms of an employee benefit plan.
Question presented
Did the Third Circuit correctly hold that ERISA Section 502(a)(3) authorizes courts to use equitable principles to determine appropriate equitable relief?
What the Court decided
Holding
In a §502(a)(3) action based on an equitable lien by agreement— like this one—the ERISA plan’s terms govern. Neither general unjust enrichment principles nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules invoked by McCutchen—can override the applicable contract. While McCutchen’s equitable rules cannot trump a reimbursement provision, they may aid in properly construing it. US Airways’ plan is silent on the allocation of attorney’s fees, and the commonfund doctrine provides the appropriate default rule to fill that gap. 663 F. 3d 671, vacated and remanded.
- Result
- Vacated
The Court's reasoning
The Court said the written plan controls because McCutchen’s claim rested on an agreement to repay the plan; fairness rules cannot override its terms. Since the plan did not address attorney’s fees, the common-fund rule fills that gap.
The vote
From the opinions
“I agree with Parts I and II of the Court’s opinion, which conclude that equity cannot override the plain terms of the contract. The Court goes on in Parts III and IV, however, to hold that the terms are not plain and to apply the “commonfund” doctrine to fill that “contractual gap,” ante, at 14.”
What's next
The case returns to the Third Circuit. It must apply the Court’s rule, including the common-fund default for attorney’s fees because the plan is silent.
Documents
Opinions
Audio
Docket activity
New analysis added
AI analysis generated: Case Briefing
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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AI analysis generated: Decision Record
Case data updated: summary, question_presented, generation_metadata
Case data updated: question_presented, extraction_metadata
Audio Recording added: Oral Arguments - McCutchen
Opinion added: US Airways
More questions
- What was Justice Scalia’s objection?
- He argued that the plan plainly required repayment in full, so the common-fund rule should not be used to fill a gap.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.