771 F.3d 150
2d Cir.2014Background
- Central States is an ERISA welfare plan that paid medical claims for students ("Common Insureds") who also had direct accident policies issued by Gerber Life; Administrative Concepts processed Gerber claims.
- Central States’ plan contains a coordination-of-benefits rule making Central States secondary when an insured is directly covered by another policy; Gerber’s policy stated it was secondary/excess to other plans.
- Central States paid the claims to avoid delay and then sued Gerber to recover those payments, asserting declaratory/injunctive relief, restitution, and an equitable lien/constructive trust under ERISA § 502(a)(3) and federal common law.
- Gerber moved to dismiss, arguing the claims sought legal (money) relief not cognizable under § 502(a)(3); the district court granted the motion and Central States appealed.
- The Second Circuit reviewed de novo, focusing on Supreme Court precedent (especially Great‑West) distinguishing equitable relief (available under § 502(a)(3)) from legal relief (not available).
- The court concluded Central States sought legal remedies (money from Gerber’s general assets) rather than equitable relief traceable to particular funds or created by an agreement, and affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory/injunctive claims seeking past and future payments are "equitable relief" under § 502(a)(3) | Central States: labels relief equitable; seeks declaration that Gerber is primary and injunctive relief to compel payments | Gerber: claims are effectively requests for money damages (legal relief) and thus not available under § 502(a)(3) | Held: Claims are legal (money claims) and not cognizable under § 502(a)(3); declaratory/injunctive counts dismissed |
| Whether restitution or an equitable lien/constructive trust is available under § 502(a)(3) against Gerber (a third party insurer) | Central States: seeks restitution/equitable lien to recover funds it paid; argues tracing requirement has been relaxed and plan terms/supporting cases permit equitable relief | Gerber: no tracing to particular funds in Gerber’s possession; plan terms don’t create an equitable lien against a third party; relief is legal | Held: Restitution and constructive trust claims are legal because Central States cannot trace funds or show a lien-by-agreement against Gerber; claims fail |
| Whether Sereboff, McCutchen, Thurber eliminate tracing or allow liens against third parties | Central States: later cases relaxed tracing and permit equitable liens by agreement or treat plan terms as creating equitable remedies | Gerber: those cases apply to disputes between plan and beneficiary and don’t authorize equitable liens against non‑parties | Held: Sereboff/McCutchen/Thurber allow plan‑created liens by agreement between parties but do not waive tracing or authorize equitable restitutionary remedies against third parties like Gerber |
| Whether ERISA’s remedial scheme leaves plans without a remedy and courts should expand § 502(a)(3) | Central States: contends practical unfairness and lack of alternative remedies justify equitable relief | Gerber: courts must follow Supreme Court precedent and statutory text; cannot judicially expand remedies | Held: Court acknowledges potential harshness but declines to expand § 502(a)(3); bound by Supreme Court decisions (Great‑West, Mertens, Russell) |
Key Cases Cited
- Great‑West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) (distinguishes equitable relief from legal money judgments and imposes tracing requirement for equitable restitution)
- Sereboff v. Mid Atlantic Med. Servs., Inc., 547 U.S. 356 (2006) (upheld equitable lien by agreement where plan terms identified a particular recovery fund)
- U.S. Airways, Inc. v. McCutchen, 133 S. Ct. 1537 (2013) (recognized plan terms can create an equitable‑lien‑by‑agreement and that courts enforce parties’ contractual commitments)
- Mertens v. Hewitt Assocs., 508 U.S. 248 (1993) (limits availability of certain remedies under ERISA; courts should not expand statutory remedies)
- Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985) (ERISA’s remedial scheme is exclusive and courts must respect its limits)
- Thurber v. Aetna Life Ins. Co., 712 F.3d 654 (2d Cir. 2013) (recognized equitable lien by agreement under plan terms in dispute with beneficiary but did not authorize liens against third parties)