By Bill Cash

December 8th, 2012  8:00am

Last week the Supreme Court heard argument in the case of US Airways, Inc. v. McCutchen.  The court’s decision in this case is expected to have an impact on people who are hurt by others and must enter the court system to seek compensation for injuries and medical bills.  The court will have to decide in this case whether individuals may keep the damages they recover in lawsuits or must turn that money over to their insurance companies.

The facts of the case were tragic but simple.  Mr. McCutchen was driving his car when a young driver lost control of his car and crossed the median.  Mr. McCutchen’s car was hit by the other driver, then by a truck traveling behind him.  He required extensive emergency surgery to survive, then needed months of physical therapy and a complete hip replacement.  He is now functionally disabled.  Mr. McCutchen sued the other driver, but was able to recover only $10,000 because three other people were seriously injured or killed in the same crash.  His own insurance policy also paid out $100,000.  After paying expenses of suit, he was left with less than $66,000.

US Airways covered Mr. McCutchen under a health insurance plan that paid some of his medical bills.  After he received his settlement from the accident, US Airways sued him for $66,866 — the amount it had paid out on his behalf in medical bills.  US Airways reasoned that because it had made payments on his behalf, it should be entitled to reimbursement.  It argued that the 1970’s federal law known as “ERISA” — a highly technical statute understood by few lawyers and loved by none — gave US Airways the right to sue Mr. McCutchen for a refund.  A lower court found for US Airways, awarding Mr. McCutchen’s entire settlement to US Airways, and Mr. McCutchen appealed.

In the Court of Appeals, Mr. McCutchen argued that because his actions — finding and hiring an attorney, paying the expenses of the suit, and participating in litigation — gave rise to the $110,000 he recovered, he should be entitled to retain some of the money.  This was particularly the case because US Airways did nothing to secure the money except stand by and wait for Mr. McCutchen to settle his case.

The Court of Appeals, breaking with other circuit courts around the country, agreed that a fair resolution would be for the parties to divide the funds according to the parties’ contributions and effort expended in recovering those funds.  US Airways appealed from this decision and the Supreme Court agreed to hear the case.

Last week, lawyers for Mr. McCutchen, US Airways, and the federal government participated in argument before the Supreme Court.  The justices appeared focused on the particular language at issue in the US Airways health plan.  The lawyer for the government agreed with Mr. McCutchen that he should be entitled to keep some of the funds on the theory that it was his effort that made the funds available.

Should the court rule for Mr. McCutchen, individuals will have a greater incentive to seek out compensation for legal injuries.  If the court rules for US Airways, health plans will have strengthened rights to take money from plan participants who have been sickened or injured through the fault of another.  A decision by the Supreme Court is expected within a few months.

Bill Cash is an associate at Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, P.A.  Mr. Cash represents people wrongfully injured across the United States.  He concentrates his practice mainly in the area of products liability, including pharmaceuticals and other consumer products, but occasionally also handles other personal injury claims and contract cases.