Supreme Court Clarifies Subrogation Rights, Emphasizes Need For Precise Plan Language

Plan sponsors, particularly those that sponsor self-funded health plans, should review plan document provisions in light of the recent decision of the Supreme Court of the United States in US Airways, Inc. v. McCutchen. In McCutchen, the Court may have reopened the door to some defenses commonly asserted by participants in cases involving subrogation rights under health plans. Subrogation rights allow a plan to "step into the shoes" of the participant to obtain a recovery of the plan expenses from a third party who caused an injury to the participant.

The following highlights the key points in the opinion:

• The Court held that equitable rules will not override the clear terms of a plan. If the plan clearly disallows the use of a particular defense, then such defense should not be permitted.