984 F. Supp. 2d 246
S.D.N.Y.2013Background
- Central States (an ERISA-regulated employee welfare benefit plan) paid $101,686.07 in medical benefits for seven covered individuals injured in high school athletics while also insured by Gerber Life and administered by Administrative Concepts, Inc.
- Central States’ plan contains coordination-of-benefits (COB) rules and a reimbursement/subrogation provision authorizing trustees to sue other plans to recover payments made on behalf of participants/dependents.
- Central States paid the covered individuals to avoid hardship and then sought reimbursement from Gerber and the administrator, who refused, contending their policies were excess/secondary accident policies.
- Central States sued under ERISA § 502(a)(3) seeking declaratory relief, restitution, and equitable remedies (equitable lien/constructive trust) to recover its payments.
- Defendants moved to dismiss under Rule 12(b)(6), arguing § 502(a)(3) does not authorize monetary relief/claims that are legal in nature; the court granted the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Central States may recover reimbursement under ERISA § 502(a)(3) as "equitable relief" | Central States: seeking equitable relief (declaratory relief, restitution, equitable lien/constructive trust) because defendants possess funds that in good conscience belong to the Fund | Defendants: relief sought is monetary/contract-like (reimbursement) and thus legal damages not available under § 502(a)(3) | Court: Held the requested relief is monetary in nature and not the type of traditional equitable relief § 502(a)(3) permits; dismissal granted |
| Whether declaratory relief about plan administration converts monetary claims into equitable relief | Central States: requests declaratory guidance on plan administration (equitable) | Defendants: declaratory requests actually seek money/benefits determinations and are therefore legal in substance | Court: Declaratory/practical requests are substantively monetary and fall outside § 502(a)(3); alternative ERISA provisions govern recovery |
| Whether funds sought are identifiable and traceable such that equitable remedies (constructive trust/equitable lien) are available | Central States: argues defendants have constructive possession of identifiable funds belonging to the Fund | Defendants: no particular, traceable fund in their possession; claim seeks reimbursement for payments made to covered individuals | Court: No identifiable traceable fund in defendants’ possession; equitable restitution unavailable under Great‑West framework |
| Whether precedent (e.g., Sereboff, CIGNA) permits relief here despite monetary character | Central States: distinguishes Great‑West and relies on Sereboff and CIGNA to support equitable remedies/declaratory relief | Defendants: Great‑West controls; plaintiffs’ claims are classic monetary claims; other precedents limit § 502(a)(3) relief | Court: Applied Great‑West analysis; found facts align with legal‑money claims (unlike Sereboff/CIGNA circumstances) and § 502(a)(3) does not authorize relief sought |
Key Cases Cited
- Great‑West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) (equitable relief under § 502(a)(3) requires traditional equitable remedies; personal money‑payment obligations are legal damages)
- Sereboff v. Mid Atl. Med. Servs., 547 U.S. 356 (2006) (reimbursement permitted in equity where plan can identify particular funds in beneficiary’s possession)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (§ 502(a)(3) can authorize equitable plan reformation and related relief where traditional equitable remedies apply)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (§ 502(a)(3) is a safety‑net for equitable relief not otherwise provided by ERISA)
- Nechis v. Oxford Health Plans, Inc., 421 F.3d 96 (2d Cir. 2005) (courts should not cloak contractual/monetary claims with equitable labels to fit § 502(a)(3))