Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan
136 S. Ct. 651
| SCOTUS | 2016Background
- Montanile, an ERISA plan participant, was injured in a car accident; his ERISA-governed health plan paid at least $121,044.02 in medical benefits.
- Montanile signed a reimbursement/subrogation agreement requiring him to reimburse the plan from any recovery against third parties and to notify the plan before settling.
- Montanile obtained a $500,000 settlement from third parties, paid lawyers and advances, leaving funds (held in counsel’s trust account) sufficient to satisfy the plan’s claim; counsel later released the remainder to Montanile.
- The Plan (Board of Trustees) sued under ERISA § 502(a)(3) seeking enforcement of an equitable lien by agreement and recovery of the $121,044.02, including recovery from Montanile’s general assets after alleged dissipation of the settlement fund.
- District Court and Eleventh Circuit sided with the Plan; Supreme Court granted certiorari to resolve whether, after a participant dissipates an identified settlement on nontraceable items, a fiduciary may enforce an equitable lien against the participant’s general assets.
Issues
| Issue | Plaintiff's Argument (Board) | Defendant's Argument (Montanile) | Held |
|---|---|---|---|
| Whether an ERISA fiduciary may enforce an equitable lien against a participant's general assets after the participant dissipates an identified settlement on nontraceable items | The Plan argued equitable liens by agreement are enforceable against a participant’s general assets even if the specific fund was dissipated; equity historically permitted substitute money decrees/deficiency or "swollen assets" relief to make the plaintiff whole | Montanile argued that equity limits lien enforcement to specifically identifiable funds or traceable purchases; once the fund is spent on nontraceable items, the Plan’s remedy is a personal money claim (legal), not equitable relief under § 502(a)(3) | Court held fiduciaries cannot recover from the participant’s general assets under § 502(a)(3) when the identifiable settlement fund was dissipated on nontraceable items; such recovery is a legal remedy, not "appropriate equitable relief." |
| Whether remand is required to resolve factual tracing/mixing | Plan contended issue was resolved below and recovery from Montanile's assets was proper | Montanile asserted factual disputes about whether funds remained segregated or were commingled/dissipated | Court remanded to decide whether Montanile dissipated the settlement on nontraceable items or kept traceable assets; if funds remain traceable or were used to buy identifiable property, equitable relief may be available. |
Key Cases Cited
- Mertens v. Hewitt Associates, 508 U.S. 248 (1993) (defines "equitable relief" under ERISA § 502(a)(3) by reference to traditional equity remedies)
- Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) (restitution seeking an award of money was legal, not equitable, where the specific fund could not be traced into defendant’s possession)
- Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006) (enforcement of an equitable lien by agreement is equitable where specifically identifiable funds in defendant’s possession are sought)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (discusses limits of equitable relief under ERISA and reaffirms tracing requirement for equitable remedies)
- US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013) (reaffirmed Sereboff analysis: plan terms creating a lien on identifiable settlement proceeds yield equitable relief when those funds remain in beneficiary’s control)