Dakotas & Western Minnesota Electrical Industry Health & Welfare Fund Ex Rel. Stainbrook v. First Agency, Inc.
2017 WL 3297339
8th Cir.2017Background
- Jacob Plassmeyer, a college baseball player, injured his knee in 2014 and incurred medical expenses covered by two policies: a student accidental-insurance policy issued by First Agency/Guarantee Trust (FA) and an ERISA-governed health plan (Dakotas) through his father.
- Both insurers denied payment: FA asserted its policy was excess to Dakotas; Dakotas asserted its plan’s coordination-of-benefits (COB) clause made FA primary.
- Dakotas’ trustees (ERISA fiduciaries) sued FA in federal court under ERISA § 502(a)(3) for a declaratory judgment enforcing the plan’s COB provision and declaring FA primarily liable for Jacob’s incurred medical expenses.
- The district court denied FA’s motion to dismiss and granted Dakotas summary judgment that FA’s policy is primary; it also awarded Dakotas reduced attorneys’ fees and non-taxable costs.
- On appeal the Eighth Circuit affirmed the declaratory-judgment ruling and the primary-liability holding, but reversed the award of attorneys’ fees and costs as an abuse of discretion and remanded for amended judgment.
Issues
| Issue | Plaintiff's Argument (Dakotas) | Defendant's Argument (FA) | Held |
|---|---|---|---|
| Whether ERISA fiduciaries may bring a § 502(a)(3) claim seeking declaratory relief to enforce a plan’s COB provision | Trustees may obtain equitable relief (declaratory judgment) as a modern analog to a trustee’s historic bill for instructions to determine plan liabilities | § 502(a)(3) equitable relief does not encompass this declaratory action; Dakotas’ claim is not the sort of equitable restitution/enforcement authorized | Affirmed: § 502(a)(3) permits an ERISA fiduciary to seek declaratory equitable relief to enforce plan terms (bill-for-instructions tradition supports this) |
| Whether the requested relief is equitable (per Mertens/Knudson/Sereboff/Montanile framework) | Declaratory judgment to determine primary coverage is historically equitable (bill for instructions) and differs from claims for money from a defendant’s general assets | Analogous plan-enforcement suits have been rejected as seeking legal money damages; FA contends relief is effectively monetary and therefore unavailable | Held equitable: relief is coercive declaration of rights (not a personal-money judgment) and therefore "appropriate equitable relief" under § 502(a)(3) |
| Which insurer is primary under conflicting COB clauses | Dakotas: its COB clause applies and makes FA primary because FA’s policy is secondary only where another plan covers a specific risk | FA: its policy covers multiple risks (including sports-related accidents) and therefore Section 10.6 of Dakotas’ plan does not make FA primary | Held FA is primarily liable; federal common law gives effect to the ERISA plan’s COB provision when clauses conflict |
| Whether district court properly awarded attorneys’ fees under 29 U.S.C. § 1132(g)(1) | Fees appropriate: FA previously lost similar rulings and Dakotas prevailed | FA: its arguments (e.g., ERISA inapplicability and limits of § 502(a)(3)) were colorable and not frivolous | Reversed: district court abused its discretion in awarding fees; FA’s positions were not so plainly wrong to justify fees |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (preemption and ERISA’s enforcement scheme)
- Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (scope and exclusivity of ERISA § 502 remedies)
- Mertens v. Hewitt Associates, 508 U.S. 248 (§ 502(a)(3) equitable remedies limited to traditional equity remedies)
- Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (denial of § 502(a)(3) relief when suit seeks money from defendant’s general assets)
- Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356 (equitable restitution when recovery targets specifically identifiable funds)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (ERISA’s trust-law language and fiduciary duties)