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Scott Cooper
Scott Cooper
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Court Holds ERISA Plans May Not Always Refuse To Reduce Reimbursement By Fees

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In U.S. Airways v. McCutchen on November 16, 2011 the Court of Appeals for the Third Circuit issued an opinion in a case involving the argument that an ERISA lien may be reduced by attorneys fees, not made upon the made whole doctrine, based upon equitable grounds for unjust enrichment. This was a case in which an ERISA lien was put forward by U.S. Airways after the personal injury settlement. It had not asserted any claim for reimbursement during the pendency of the litigation. The Plan sought 100% reimbursement and was not willing to reduce its claim by any amount for attorneys fees or costs.

The trial court in the Western District of Pennsylvania held that the lien had to be paid with no reduction for fees and costs. The Third Circuit reviewed, and reversed. It uses equitable principles to find their is more to "appropriate equitable relief" than an absolute payback of the whole asserted lien. The case is remanded to the trial court to make a record of the facts to be used to determine the equities, and rule on whether the fees and costs should be partitioned some to the employer holding the ERISA lien.

http://www.ca3.uscourts.gov/opinarch/103836p.pdf

Scott B. Cooper

Schmidt Kramer PC
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