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From Roger Baron: Supreme Court Decides McCutchen (Bad News for ERISA Beneficiaries)

Reprinted with Permission from Roger Baron

Here is the holding, as set forth in the concluding paragraph of the Court’s opinion.

Our holding today has two parts, one favoring US Airways, the other McCutchen. First, in an action brought under §502(a)(3) based on an equitable lien by agreement, the terms of the ERISA plan govern. Neither general principles of unjust enrichment nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules—can override the applicable contract. We therefore reject the Third Circuit’s decision. But second, the common-fund rule informs interpretation of US Airways’ reimbursement provision. Because that term does not advert to the costs of recovery, it is properly read to retain the common-fund doctrine. We therefore also disagree with the District Court’s decision. In light of these rulings, we vacate the judgment below and remand the case for further proceedings consistent with thisopinion.

Unfortunately, the holding as to the “common fund doctrine” is specific as to McCutchen only.  This opinion appears to endorse the notion that a plan can indeed contract around the “common fund doctrine” also.  The Opinion states,

Only if US Airways’ plan expressly addressed the costs of recovery would it alter the common-fund doctrine.

To view the opinion click HERE

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