Mertens v. Hewitt Associates
Encyclopedia
Mertens v. Hewitt Associates, 508 U.S. 248
(1993), is the second in the trilogy of United States Supreme Court
ERISA preemption
cases that effectively denies any remedy for employees who are harmed by medical malpractice
or other bad acts of their health plan if they receive their health care
from their employer.
, Sterling Professor of Law and Legal History at Yale University
the trouble got off to a bad start with Justice John Paul Stevens
' dicta in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985) a case where the plaintiff was an employee who after getting her improperly denied disability income insurance benefits paid in full also sought money damages for physical and emotional injury for the delay of six months while the employer had denied payment. Because Section 502(a)(2) of ERISA ran to the benefit of the employee benefit plan (rather than the employee) and because the Ninth Circuit gave the plaintiff victory based on that section instead of Section 502(a)(3) which ran to the employee, the case was presented to the High Court in an awkward procedural posture. This mistake in choosing which section of ERISA to base the claim would lead to an error by Justice Scalia
later in Mertens.
Because the plaintiff in Russell won in the Ninth Circuit, and because all Ninth Circuit decisions must be reversed by the High Court, Justice Stevens' dicta said that "remedying consequential injury even under the authorization for 'appropriate equitable relief' in section 502(a)(3) would entail the creation of an implied cause of action, contrary to the Court's established constraints on the implication of causes of action under federal statutes." Langbein at 1341. Stevens then suggested that ERISA was only concerned with protecting employee benefit plans not employees. This error in construing that Section 502(a)(2) limit to plans into a limit to all of ERISA remedy led to the High Court in denying an effective remedy to employees under ERISA Section 502(a)(3) in Mertens.
When Mertens reached the High Court, Russell was already in the U.S. Reports suggesting that money damages for consequential injury sounding in ERISA is an implied right of action rather than an express right.
in 1980, when Kaiser began to phase out its steelmaking operations, prompting early retirement by a large number of plan participants. Respondent did not, however, change the plan's actuarial assumptions to reflect the additional costs imposed by the retirements. As a result, Kaiser did not adequately fund the plan, and eventually the plan's assets became insufficient to satisfy its benefit obligations, causing the Pension Benefit Guaranty Corporation
(PBGC) to terminate the plan...." Mertens, 508 U.S. 248, 250.
Professor Langbein asserted that from this incorrect division, Scalia disjoined any possibility of money damages for make whole remedy because he construed Section 502(a)(3) to be limited to a purely equitable remedy. The reason this preemption decision was wrongly decided is that back in the old days in England's courts of equity, it was possible for the court to order money to be paid.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1993), is the second in the trilogy of United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
ERISA preemption
Federal preemption
Federal preemption refers to the invalidation of US state law when it conflicts with Federal law.-Constitutional basis:According to the Supremacy Clause of the United States Constitution,...
cases that effectively denies any remedy for employees who are harmed by medical malpractice
Medical malpractice
Medical malpractice is professional negligence by act or omission by a health care provider in which the treatment provided falls below the accepted standard of practice in the medical community and causes injury or death to the patient, with most cases involving medical error. Standards and...
or other bad acts of their health plan if they receive their health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
from their employer.
Background
According to John H. LangbeinJohn H. Langbein
John H. Langbein is the Sterling Professor of Law and Legal History at Yale Law School. He is an expert in the fields of trusts and estates, comparative law, and Anglo-American legal history....
, Sterling Professor of Law and Legal History at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
the trouble got off to a bad start with Justice John Paul Stevens
John Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
' dicta in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985) a case where the plaintiff was an employee who after getting her improperly denied disability income insurance benefits paid in full also sought money damages for physical and emotional injury for the delay of six months while the employer had denied payment. Because Section 502(a)(2) of ERISA ran to the benefit of the employee benefit plan (rather than the employee) and because the Ninth Circuit gave the plaintiff victory based on that section instead of Section 502(a)(3) which ran to the employee, the case was presented to the High Court in an awkward procedural posture. This mistake in choosing which section of ERISA to base the claim would lead to an error by Justice Scalia
Antonin Scalia
Antonin Gregory Scalia is an American jurist who serves as an Associate Justice of the Supreme Court of the United States. As the longest-serving justice on the Court, Scalia is the Senior Associate Justice...
later in Mertens.
Because the plaintiff in Russell won in the Ninth Circuit, and because all Ninth Circuit decisions must be reversed by the High Court, Justice Stevens' dicta said that "remedying consequential injury even under the authorization for 'appropriate equitable relief' in section 502(a)(3) would entail the creation of an implied cause of action, contrary to the Court's established constraints on the implication of causes of action under federal statutes." Langbein at 1341. Stevens then suggested that ERISA was only concerned with protecting employee benefit plans not employees. This error in construing that Section 502(a)(2) limit to plans into a limit to all of ERISA remedy led to the High Court in denying an effective remedy to employees under ERISA Section 502(a)(3) in Mertens.
When Mertens reached the High Court, Russell was already in the U.S. Reports suggesting that money damages for consequential injury sounding in ERISA is an implied right of action rather than an express right.
Facts
Hewitt Associates "was the plan's actuaryActuary
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms ....
in 1980, when Kaiser began to phase out its steelmaking operations, prompting early retirement by a large number of plan participants. Respondent did not, however, change the plan's actuarial assumptions to reflect the additional costs imposed by the retirements. As a result, Kaiser did not adequately fund the plan, and eventually the plan's assets became insufficient to satisfy its benefit obligations, causing the Pension Benefit Guaranty Corporation
Pension Benefit Guaranty Corporation
The Pension Benefit Guaranty Corporation is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and...
(PBGC) to terminate the plan...." Mertens, 508 U.S. 248, 250.
Procedure
Plaintiff Mertens sued for a breach of fiduciary duty under ERISA. They asserted that it was a breach for an actuary to allow the employer, the Kaiser steel company, to select actuarial assumptions rather than have the professional actuary choose reasonable assumptions. Plaintiff sought "appropriate equitable relief" under Section 502(a)(3) not 502(a)(2) chosen by the Ninth Circuit in Russell.Decision
From this word "equitable" Justice Scalia made new law by basing the decision on the purported (ahistorical) bifurcation of English Courts into equity courts and law courts where plaintiffs sue for injunctions and money damages respectively.Professor Langbein asserted that from this incorrect division, Scalia disjoined any possibility of money damages for make whole remedy because he construed Section 502(a)(3) to be limited to a purely equitable remedy. The reason this preemption decision was wrongly decided is that back in the old days in England's courts of equity, it was possible for the court to order money to be paid.
See also
- List of United States Supreme Court cases, volume 508
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court