As many of you have probably heard, it was a tough day earlier this week in the Supreme Court. Check back in the future for my own comments about SCOTUS’ decision in U.S. Airways v. McCutchen. In the meantime, I want to share with you what Arthur Bryant, Executive Director of Public Justice and the Public Justice Foundation, wrote to PJ members:
The Court issued its long-awaited decision in U.S. Airways v. McCutchen, crafting a rule that, in many cases, will allow ERISA plans to strip their beneficiaries of much-needed compensation when they are injured in an accident. ERISA plans must be enforced according to their terms, the Court held, even where those terms indisputably conflict with principles of equity that have governed for hundreds of years. For the Court, “if the agreement governs, the agreement governs,” and no amount of unfairness will alter that fact.
That holding embraces what is fast becoming this Court’s legacy: an unyielding allegiance to contract language over and above everything else. The Court’s decision in McCutchen applies this concept to ERISA in much the same way it has already done in the consumer and employment contexts. The overriding theme in all of these areas — which, it is worth noting, all involve a corporation imposing a take-it-or-leave-it contract on an individual — is that when something goes into a contract it becomes automatically binding, even if it contradicts basic legal rules that have governed for hundreds of years. Contract, in essence, has superseded the law.
But our effort in McCutchen was not in vain. The Court’s ruling also favored Mr. McCutchen, and the millions of employees and their families who receive health insurance through an ERISA plan. In the second half of its decision, the Court refused to allow U.S. Airways to force Mr. McCutchen to pay all of the collection costs in the case. As the Court explained, not only would that put Mr. McCutchen “in a hole,” but it would force him to “pay for the privilege of serving as U.S. Airways’ collection agent.” Faced with this deeply unpalatable possibility, the Court refused to permit it.
This is Part 1. See the later posts for more on this same issue.
In Homewood (see Sept 12, 2012 post), the insurer didn’t meet its burden to prove that the plaintiff was made whole. That burden was placed squarely on the insurer. Brown v. Snohomish Co. Phys. Corp., 120 Wn.2d 747, 759 (1993). I have tried three subrogation cases to verdict and each time the insurer has failed to meet that burden. In fact, each time the insurer has insisted that all it needed to show was that less than policy limits had been accepted. Thus, my evidence that the plaintiff had not been made whole was essentially uncontested. These insurers are incorrect that acceptance of less than liability policy limits meets the burden of proving that the plaintiff was made whole.
To prove that my client had not been made whole in all three trials, I hired an experienced personal injury lawyer to act as an expert witness and render an opinion that under the facts of each case the plaintiff was not made whole The expert considered all liability and all damage evidence in the tort action, and then opined that the plaintiff was not made whole for various reasons, usually the liablity facts forced a settlement for less than full value of the case.
Liberty Mutual v. Tripp  laid this issue to rest, ruling specifically that there is no presumption of full compensation or prejudice to the insurer simply because a plaintiff settles for less than policy limits. In Tripp, the plaintiff settled for $35,000 out of a $50,000 policy. The court held that it was a question of fact whether the plaintiff had been fully compensated.
NOTE: More on this in the next blog post.
 144 Wn.2d 1, 25 P.3d 997 (2001).
Read a detailed analysis of oral arguments at the U.S. Supreme Court for US Airways v. McCutchen: Bloomberg BNA US Law Week Supreme Court Today Article.
“While in the workers’ compensation arena the use of MSAs has become a routine practice, it remains unclear whether MSAs are always appropriate in the context of personal injury cases. This article will explore the issues and attempt to determine whether a standard of practice for or against the use of MSAs in personal injury cases exists.” Read the article in its entirety by Aaron D Frishman Esq.
As many of you already know, the Supreme Court of the United States (SCOTUS) entertained oral argument for the US Airways v. McCutchen case earlier this week.
Each of you can read the transcript and form your own opinion. However, I would like to add some comments because I flew back to be there for the argument. Also present were my partner Brad Moore and Mike Nelson (from another firm) who originally brought this issue to Public Justice to litigate in the Rose case. They may want to add comments.
J. Sotomayor showed the most knowledge of the record and so if I am correct, will be assigned the opinion if she has a majority.
- CJ. Roberts is well known as a procedural stickler. He always looks for ways to dismiss cases for procedural reasons. (Read The Oath by Jeffrey Toobin. It is about the Obama administration v. the US Supreme court. Very well written and worth the time.Toobin explains how this is the way Roberts approached the defense of cases while in practice, and he does the same thing on the court.) Roberts wants to dismiss the case on the basis that the Plan language was not before the court, only the filed summary document. I would bet he will file a concurring or dissenting opinion on that basis. It is complicated factually. I think that since the Plan was suing based on its Plan, it should have filed it with the Complaint. In fact it never provided the Plan despite numerous requests until about 4 months before this argument.
- The decision may well come down to the distinction between subrogation and a reimbursement lien. There were many questions on this distinction, and it seemed to form the primary differences between the parties.
- Argument for the Plan was by the former Solicitor General, Neal Katyal. He is very smooth, and very good. Our argument was by Matt Wessler, a staff attorney with Public Justice. He is a brilliant young lawyer, and acquitted himself well. I think he understood the issues better than Katyal, and better than the court.
- Most of the questions, and most of the supportive indications, related to the application of the Common Fund Doctrine. This is of course the doctrine that says that the Plan must pay its proportionate share of attorney fees and costs. To me, this is just another part of the equitable defenses that should be allowed, and you cannot separate it from the equitable defenses argument. However, the Solicitor General took exactly this position, ie. the common fund doctrine applies but equitable defenses do not. It is also consistent with what Judge Martinez did at the trial level in our Rose case.
- J. Scalia was aggressive against us from the start. He seemed to take great delight in his questions which he thought made the day for the Plan. As far as he is concerned, the Plan language controls because that is what was agreed to.
- My prediction (and remember, I am always an eternal optimist) is that Sotomayor, Breyer, Kennedy and Ginsberg are solidly with us. Scalia and Roberts are solidly against us. Both Kagan and Alioto seemed favorable early in the arguments, and then seemed against us later. I am not sure about either one of them. And then Thomas. Did you read his question? Did you miss it? It was very significant. It is on one of the pages I am sure. Oh wait, that’s right, Thomas hasn’t asked a question in 15 years or more. Who knows what he is thinking. Since he always follows Scalia, I assume we lose him.
- So my prediction is we win 6-3. But I am very concerned that we may only win the common fund argument, and not the equitable defenses argument. While that would certainly be a win for us, the equitable defense argument is the key to our claims, and I will be very, very disappointed if we lose that argument.
- There is much more that could be said, but I will leave it at that for now.