A Victory for Erisa: U.S. Supreme Court Unanimously Holds Equity Doesn’t Trump Plan Language

By Gary Wickert | May 2, 2013

  • May 2, 2013 at 6:46 pm
    Riskinista says:
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    While functioning within their legal rights, US Airways looks like a bully in this matter. An employee, who clearly did not receive anywhere near the appropriate recovery, and they want to claw back what little he got.
    One more reason not to ride their crummy airline in my opinion. I hope you are sleeping better tonight Doug Parker. I am sure that $66,000 pillow helps you sleep at night.

  • May 16, 2013 at 1:41 pm
    lionvt says:
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    Persons who are badly injured by the uninsured or the underinsured are the losers here. If ERISA plan can sit back and take 100% of the recovery, there is no incentive or reason to sue the wrong doer. These plans never enforce their rights on the behalf of the injured. They instead sit back and do nothing and hope to receive the windfall of the personal injury attorney’s work. By removing the practical ability to recover, the only windfall is to the wrongdoer who will now not be sued by the injured party (because they have no incentive) nor the ERISA plan (because they always just sit on their ass and hope for free money).

  • June 4, 2013 at 8:03 pm
    Matt says:
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    Interesting, the big story I’m taking away from this is that for probably around $200 more a year he could have had $500,000 in UM coverage.

    • September 10, 2014 at 11:06 am
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      UM is a must however these overreaching plan now grab the UM indemnity bought and paid for by the employee. This must be stopped with some legislation. Its manifestly unfair and the product of insurers and big business having greater influence over Congress. No one is at the table advocating legislation that is fair to the individual and takes the big picture into account.

  • June 5, 2013 at 11:50 am
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    Stupid. As a practical matter, this decision was stupid. As lionvt said, now there is no incentive for an injury attorney to take an ERISA case. And as lionvt said, ERISA plans almost never bring claims against the wrongdoer. I’m not sure whether an ERISA plan would even have standing to independently bring a claim. This is another example of the court failing to consider the way the real world works.

  • June 20, 2013 at 8:23 pm
    Allan Galbraith says:
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    Mr. Wickert

    I’m curious as to whether you would still find this a “wonderful decision” if you or a member of your family was “grievously injured” yet received not a dime in compensation because an insurance company who had been well paid to assume the risk of loss nevertheless took every dime of the recovery without payment of any of the costs incurred in obtaining the recovery.

    • July 3, 2013 at 2:12 pm
      jack salvatore says:
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      Allan, unless I am mistaken, Wickert was being sarcastic. However, it is important you understand, ERISA PLANS ARE NOT INSURANCE. They are “self-funded” plans, meaning it was US Airways who paid this person’s medical bills. As such, ERISA plans are generally not subject to laws/rules regarding insurance practices. One wonders how the self-funded portion of the ERISA law of 1974 made it into the statutes, since the original law was to protect employee retirement plans. But no one seems to want to discuss that. Suffice to say that ERISA plans a ridiculous abomination and that this ruling is as well.

      • September 10, 2014 at 10:59 am
        sharon miller says:
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        Jack that being said Erisa they should take into consideration that some pension plans are frozen or disappeared altogether and the affect the anti subrogation law in New York doesn’t have with ERISA

  • June 21, 2013 at 12:10 pm
    Gary Wickert says:
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    The subtext of your question reveals a contempt for the very concept of subrogation generally. So let’s start there. Many who do not understand the role it plays in insurance underwriting and our economy consider it “harsh” or “unfair”. Subrogation has been around since Emperor Hadrian in Roman times. Insurance is a plan of risk management or risk sharing. For a settlement “price” or premium, an insured is offered an opportunity to share the costs of a defined possible ecnomic loss. Subrogation is an appropriate and generally accepted source of revenue for an insurer, which goes into the calculation of premiums. Successful subrogation figures into the insurance experience calcualtion as a revenue and helps hold down premiums for society as a whole. It isn’t always “fair” from the standpoint of an injured individual, but neither is workers’ compensation subrogation, which exists in every state. I’ve been practicing law for 30 years and have yet to meet a claimant who felt it was “fair” for the compensation carrier to be reimbursed out of a tort recovery – yet it happens thousands of times ever day. The Supreme Court decision is not “wonderful” for trial lawyers or their clients, but it is indispensible for the entire insurance industry. The premiums you reference in your post take into consideration the significant and valuable subrogation rights protected by this decision. Without them, premiums would be significantly higher.

    • September 10, 2014 at 11:11 am
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      typical propaganda. Wickert you drink the KoolAid of the insurance/business sector. you should advocate for a fair and balanced protocol for subrogation. The law you love is a giant money grab for industry to the prejudice of the individual whose bought and paid for UM protection is now also at risk. These victims did not ‘negotiate’ away these rights they were taken on the sly by a clever employer and a misguided Supreme Court and Congress.

  • December 6, 2013 at 12:53 pm
    legal eagle says:
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    I know this is an old post but:

    “Without [subrogation], premiums would be significantly higher.”

    That’s a bunch of nonsense that insurance companies believe that if they repeat it enough it will become true. Subrogation adds to the bottom line, it doesn’t factor into the premiums or risk. Premiums are high enough for all sorts of reasons, but saying claiming that without subrogation premiums would be even higher is just a scare tactic that insurance companies and ERISA use to keep their subrogation rights unvarnished.

  • March 12, 2014 at 3:18 pm
    Grayce says:
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    Correction on ERISA history. Welfare plans were in it from the beginning. The distinction is that the law requires vesting of pension plan monies, and does not require vesting of “welfare” plans which include medical, dental, life and similar. An employer in the 1980s sometimes bargained vesting in the form of “lifetime” medical insurance. Today, the concept of fully paid, lifetime medical insurance–even with Medicare paying first–is hard for even benefits managers to believe, but it was one more form of deferred compensation. In the wake of FAS 106, many employers used it as incentive to “buy out” their expensive older employees in early retirement arrangements.

  • April 7, 2015 at 12:02 am
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    Dear Mr. Wickert: In all sincerity since you are the expert on ERISA and health care subrogations, and I’m sure the Court has already addressed the basic contractual principles required – arms length negotiations, consideration, etc., but could you point me in that direction as far as the last ruling by the Supreme Court that bound a part-time Union laborer to the terms of a contract he was unable to actually enter into negotiations over? I have a recent case where, after the McCutcheon decision came out, the Union required all members to sign an addendum to that portion of their contract that dealt with insurance subrogation which eliminated all of the equitable defenses and placed the Union’s interest above that of their member’s attorney costs or fees and also was quite explicit about the attorney receiving any settlement funds was now acting as the Union’s fiduciary with regard to those funds. I thought the United States abolished slavery and serfdom long, long ago? How can a non-party to a contract be held to be a fiduciary for someone who is not their client? One final question, if the accident which the Union claims to be entitled to reimbursement occurred prior to the members’ signing of this addendum, and the addendum is silent as to its’ retroactivity, is it still retroactive? Similar to how a complaint in equity is usurped by the terms of a contract. Wouldn’t that be a complaint in contract, not in equity? This Court has me very confused in an area I have followed for awhile now. Your assistance, if possible, in outlining the precedent setting cases that led the Court to where it is at currently would be greatly appreciated. Thank you, Libby G. Fulgione



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