Press Release – Weil Gotshal – Friday, 19 May 2006 – LAWFUEL – Press Release Service – Weil Gotshal obtained a unanimous decision from the Supreme Court in favor of Mid Atlantic Medical Services, a United Health Group company that administers self-funded ERISA welfare plans. After paying benefits to plan beneficiaries injured by third parties, Mid Atlantic sought reimbursement from funds the beneficiaries had recovered independently in a litigation settlement. Mid Atlantic invoked ERISA § 502(a)(3), which permits a beneficiary or fiduciary of a plan to bring a claim seeking “appropriate equitable relief” to enforce the terms of a plan, which in this case required reimbursement from the third-party settlement.
These types of ERISA reimbursement actions are important to the plans because they help keep health costs down and ensure that the burden of the health care costs falls on those who cause them to be incurred, rather than forcing employers and other employee participants to bear the costs of care in those circumstances.
These kinds of reimbursement recoveries add up to more than a billion dollars in health care costs savings annually for plans and plan administrators like Mid Atlantic, and it was important to the industry to ensure the continuing viability of reimbursement actions. In an opinion written by Chief Justice Roberts, the Supreme Court secured reimbursement rights for plan fiduciaries, reasoning that a “constructive trust or equitable lien on a specifically identified fund” constitutes a proper §502(a)(3) action and that Mid Atlantic satisfied that requirement by seeking reimbursement from the specific funds recovered from third parties by the plan beneficiaries.
Weil Gotshal partner Gregory S. Coleman, head of the firm’s Supreme Court and Appellate Litigation Practice Group, argued the case before the Supreme Court.