In U.S. Airways v. McCutchen, the U.S. Supreme Court upheld the ability of U.S. Airways’ health plan to recover medical expenses that it previously paid to the injured party from a third party settlement, but remanded the case for application of the common fund doctrine with respect to attorney's fees. In so holding the Court upheld the express language of the plan, but utilized equitable principles to fill the “contractual gap” when the plan was silent as to the payment of attorney's fees. For plans seeking subrogation or reimbursement of medical expenses, the case offers the following drafting lessons to ensure that there is no “contractual gap” in a plan's language:
McCutchen indicated that a court will enforce a plan’s contractual language. Make sure your plan’s contractual language is broad and contains no “contractual gaps” to avoid having a court define the missing terms.