Mertens v. Hewitt Associates

Mertens v. Hewitt Associates
Mertens v. Hewitt Associates
	Supreme Court of the United States
Argued February 22, 1993; Decided June 1, 1993
Full case name	William J. Mertens, Alex W. Bandrowski, James A. Clark, and Russell Franz, Petitioners v. Hewitt Associates
Citations	508 U.S. 248 ( more ) 113 S. Ct. 2063; 124 L. Ed. 2d 161; 1993 U.S. LEXIS 3742; 61 U.S.L.W. 4510; 16 Employee Benefits Cas. (BNA) 2169; 93 Cal. Daily Op. Service 3918; 7 Fla. L. Weekly Fed. S 319
Prior history	948 F.2d 607 (9th Cir. 1991); cert. granted, 506 U.S. 812(1992).
Court membership
	Chief Justice William Rehnquist Associate Justices Byron White · Harry Blackmun ; John P. Stevens · Sandra Day O'Connor ; Antonin Scalia · Anthony Kennedy ; David Souter · Clarence Thomas
Case opinions
Majority	Scalia, joined by Blackmun, Kennedy, Souter, Thomas
Dissent	White, joined by Rehnquist, Stevens, O'Connor
Laws applied
	Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

Last updated April 24, 2019

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.

The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. Established pursuant to Article III of the U.S. Constitution in 1789, it has original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. It also has ultimate appellate jurisdiction over all federal court and state court cases that involve a point of federal constitutional or statutory law. The Court has the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution or an executive act for being unlawful. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The court may decide cases having political overtones, but it has ruled that it does not have power to decide nonjusticiable political questions. Each year it agrees to hear about one hundred to one hundred fifty of the more than seven thousand cases that it is asked to review.

In the law of the United States, federal preemption is the invalidation of a U.S. state law that conflicts with federal law.

Medical malpractice is a legal cause of action that occurs when a medical or health care professional deviates from standards in his or her profession, thereby causing injury to a patient.

Background

According to John H. Langbein, 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.^[1] This mistake in choosing which section of ERISA to base the claim would lead to an error by Justice Scalia later in Mertens.

John Harriss 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.

Yale University is a private Ivy League research university in New Haven, Connecticut. Founded in 1701, it is the third-oldest institution of higher education in the United States and one of the nine Colonial Colleges chartered before the American Revolution.

John Paul Stevens is an American lawyer and jurist who served as an Associate Justice of the United States Supreme Court from 1975 until his retirement in 2010. At the time of his retirement, he was the second-oldest serving justice in the history of the Court, the third-longest serving Supreme Court Justice in history. Stevens was considered to have been on the liberal side of the Court at the time of his retirement.

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 actuary 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.

An actuary is a business professional who deals with the measurement and management of risk and uncertainty. The name of the corresponding field is actuarial science. These risks can affect both sides of the balance sheet and require asset management, liability management, and valuation skills. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms.

The Pension Benefit Guaranty Corporation (PBGC) is a United States federally chartered corporation created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations. Subject to other statutory limitations, PBGC's single-employer insurance program pays pension benefits up to the maximum guaranteed benefit set by law to participants who retire at 65. The benefits payable to insured retirees who start their benefits at ages other than 65 or elect survivor coverage are adjusted to be equivalent in value. The maximum monthly guarantee for the multiemployer program is far lower and more complicated.

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.

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for example, a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to another party, who, for example, has entrusted funds to the fiduciary for safekeeping or investment. Likewise, asset managers, including managers of pension plans, endowments, and other tax-exempt assets, are considered fiduciaries under applicable statutes and laws. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice, or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

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.

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References

↑ What ERISA means by "Equitable": the Supreme Court's Trail of Error in Russell, Mertens, and Great-West, by John Langbein, 103 Colum. L. Rev. 1317, 1340 (2003).

External links

Text of Mertens v. Hewitt Associates, 508 U.S. 248(1993) is available from: Cornell CourtListener Google Scholar Justia Library of Congress Oyez (oral argument audio)

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[1] What ERISA means by "Equitable": the Supreme Court's Trail of Error in Russell, Mertens, and Great-West, by John Langbein, 103 Colum. L. Rev. 1317, 1340 (2003).