ACS Recovery Services, Inc. v. Larry Griffi, 723 F.3d 518

Background

ERISA § 502(a)(3)(B) authorizes equitable relief to enforce plan terms; ACS seeks such relief to recover Plan expenses from settlement proceeds.
Griffin settled with tortfeasor, with settlement funds structured to benefit a Special Needs Trust (the Trust) under Hartford annuity payments.
Plan paid over $50,000 in medical expenses; settlement funds were directed to the Trust, Judith, and Larry’s attorney, with the Trust as trustee.
Trust funds are funded by an annuity owned by Hartford, with monthly payments to the Trust for Griffin’s benefit; Griffin did not possess the settlement funds directly.
ACS sued Griffin, Judith, the Trust, and Willie Griffin (Trustee) seeking a constructive trust on funds from the settlement; district court and panel rulings were partially reversed on en banc review.
Opinion holds that, under Knudson and Sereboff lineage, the Plan may obtain equitable relief against the Trust and Trustee, but not against Judith; Larry’s liability remains unresolved and requires further development.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Plan may recover from the Trust under § 502(a)(3)(B).	ACS seeks equitable relief via a constructive trust on identifiable funds owed to the Plan.	Trust holds funds not in Griffin’s possession; no equitable lien by agreement against Trust.	Yes; the Trust is liable for equitable relief as to Trust funds.
Whether the Trust and Trustee may be proper defendants under Knudson/Sereboff.	Funds are identifiable and the Trust controls them; defendant possession exists via the Trust.	Knudson requires possession; Griffin lack of possession defeats equitable relief against Trust.	Yes; Trust and Trustee may be defendants for equitable relief.
Whether a claim against Judith Griffin can be sustained.	Judith received proceeds attributable to Griffin’s settlement that should reimburse the Plan.	Judith’s funds are not shown to be Griffin’s settlement proceeds; no reimbursement link.	No; judgment reversed as to Judith.
Whether Larry Griffin can be held liable for equitable relief.	Larry had pre-existing reimbursement obligation and control over identifiable funds.	Larry did not possess or control the disputed funds; relief would be legal, not equitable.	Not decided; remanded for further fact development on possession/control.
What control/possession standards govern ERISA § 502(a)(3) relief in the special needs trust context.	Possession need not be actual; constructive possession via funds identifiable in defendant's possession suffices.	Special needs trusts require possession/control by defendant to sustain equitable relief; must be joined with Hartford.	Court clarifies possession/control framework; relief against Trust as permissible under applicable standards.

Key Cases Cited

Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (U.S. (2006)) (equitable relief via equitable liens by agreement; tracing not always required)
Knudson v. S e v e r e, 534 U.S. 204 (U.S. (2002)) (set framework for when relief is equitable; possession required for restitution)
Bombardier Aerospace Emp. Welfare Benefits Plan v. Ferrer, Poirot & Wansbrough, 354 F.3d 348 (5th Cir. 2003) (three-part test for equitable relief; beneficiary’s possession of funds matters)
Longaberger Co. v. Kolt, 586 F.3d 459 (6th Cir. 2009) (equitable lien by agreement despite commingling funds; tracing not always required)
Horton v. Admin. Comm. for Wal-Mart Stores, Inc. Assocs.' Health & Welfare Plan, 513 F.3d 1223 (11th Cir. 2008) (equitable restitution against conservator; emphasis on identifiable fund in possession)
Shank v. Admin. Comm. Wal-Mart Stores, Inc. Assocs.' Health & Welfare Plan, 500 F.3d 834 (8th Cir. 2007) (constructive trust on a special needs trust fund as equitable restitution)
Gutta v. Standard Select Ins. Plans, 530 F.3d 614 (7th Cir. 2008) (equitable relief against funds held by a trustee; tracing not strictly required)