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Legal Developments
 

   9/21/2012
 

Earlier this month, SHRM signed on to two amicus briefs filed with the Supreme Court on cases involving an employer health plan’s ability to seek reimbursement in the case of personal injury settlements, and an employer’s ability to settle Fair Labor Standards Act cases. 

U.S. Airways v. McCutchen

The U.S. Supreme Court agreed to hear a case involving the application of ERISA’s equitable remedies provision.  In this case, U.S. Airways v. McCutchen, the Court will define the interplay between “equitable relief” and an employer health plan’s ability to seek reimbursement from plan participants who receive personal injury settlements.  SHRM joined the American Benefits Council, ERISA Industry Committee and the U.S. Chamber of Commerce in filing an amicus brief supporting U.S. Airways which argues that the Third Circuit erred in ignoring the health plan language requiring participants to reimburse the plan.

In this case, U.S. Airways’ health plan included a provision requiring that participants who receive a personal injury settlement must reimburse the health plan for costs paid on the participant’s behalf.  A U.S. Airways employee, James McCutchen, was injured in an automobile accident and his treatment paid by the company’s health plan.  After McCutchen brought suit against the other driver involved in the accident and received a monetary award, the health plan sought reimbursement under the terms of the plan.  Although the district court sided with U.S. Airways, the Third Circuit Court of Appeals reversed the district court and ruled that it would be inequitable for U.S. Airways to receive full reimbursement when McCutchen's monetary award did not fully cover his expenses. 

SHRM’s brief focuses on the role of ERISA and the importance of employers’ ability to rely on a plan’s contract language and terms.  Adopting the Third Circuit approach would leave employer plan language open to interpretation and potentially different decisions in each case.  The Court will hear arguments in this case during its session beginning in October.

To read SHRM’s brief in U.S. Airways v. McCutchen, click HERE.

Genesis HealthCare Corp. v Symczyk

SHRM also joined with the Chamber of Commerce, American Health Care Association, National Federation of Independent Business, and National Center for Assisted Living on a brief to the Supreme Court in Genesis HealthCare Corp. v Symczyk.  In this case, the Court will decide whether a case becomes moot when the lone plaintiff receives an offer from the employer which satisfies all of the plaintiff's claims.  In Genesis, the plaintiff, a nurse, sought relief under the Fair Labor Standards Act (FLSA) for unpaid meal breaks on behalf of herself and similarly situated employees but no other employees joined the suit.  The employer offered a settlement to pay all alleged unpaid wages as well as attorney’s costs, fees, and expenses as determined by the court.  The employer then sought to dismiss the case since there was no longer a party with a personal stake in the litigation.  The Third Circuit Court of Appeals overturned the district court’s dismissal and remanded the case to assess the possibility that Symcyzk’s attorneys could identify additional parties to join the suit.

Genesis HealthCare’s brief argues, in part, that once the employer has settled with the original plaintiff, any other potential claimants lack the “personal stake” necessary to maintain the suit in court.  SHRM’s brief endorses Genesis HealthCare’s arguments and focuses on two additional arguments.  First, the SHRM brief argues that, if left uncorrected, the decision will exacerbate the significant burden already placed on employers by an increasing wave of FLSA litigation.  In addition, SHRM emphasizes that Congress designed the FLSA to include a strong government enforcement component allowing the government to enforce the FLSA’s provisions on behalf of employees reducing the need for the court to keep the case open for other potential claimants.

This case is important for the HR profession because of the tremendous increase in FLSA litigation which has grown by almost 300 percent in the past decade.  Allowing courts to keep collective action cases open prevents employers from settling cases and controlling their litigation exposure.

To read SHRM’s brief in Genesis HealthCare Corp. v. Symczyk, click HERE.

Additional coverage of both cases is available on SHRM Online.

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