Lead Opinion
Opinion by Judge FISHER; Partial Concurrence and Partial Dissent by Judge RAWLINSON.
Leah A. Bilyeu appeals the district court’s dismissal of her claim challenging the termination of her long-term disability benefits under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132. Bilyeu also challenges the district court’s grant of summary judgment in favor of First Unum Life Insurance Company (Unum) on Unum’s counterclaim for restitution of overpaid benefits. We have jurisdiction under 28 U.S.C. § 1291, and we vacate and remand.
We vacate the judgment in favor of Unum on Bilyeu’s claim for denial of benefits. We hold that the district court abused its discretion by dismissing this claim for failure to exhaust administrative remedies. The exhaustion requirement should have been excused because Bilyeu acted reasonably in light of Unum’s ambiguous communications and failure to engage in a meaningful dialogue.
We also vacate the judgment in favor of Unum on Unum’s counterclaim for reimbursement of overpaid long-term disability benefits. Unum has not shown that it is seeking equitable relief because it has not satisfied the elements for an equitable lien by agreement, which is the only form of equitable relief Unum has asserted. These elements are not satisfied because the particular fund subject to the lien, having been dissipated, is no longer in Bilyeu’s possession. Unum thus seeks only the imposition of personal liability against Bilyeu, to be paid out of her general assets. That is quintessentially legal, rather than equitable, relief.
I. BACKGROUND
Bilyeu was employed by Discover Financial Services from 1987 through April 2004. Compl. ¶8. Morgan Stanley Long-Term Disability Plan (the Plan) provides benefits for long-term disabilities to Discover employees. Id. ¶¶ 4-5. Unum is the Plan’s claim administrator, and also the insurer and payor of Plan benefits. Id. ¶¶ 6-7.
Alleging she suffered from several medical conditions that prevented her from materially performing the duties of any occupation, Bilyeu filed a long-term disability (LTD) claim with Unum in April 2004. Id. ¶¶ 9-10. These conditions included Behget’s disease, fatigue and anxiety. Id. ¶¶ 12-18; Clerk’s Record 13-2 at 3. Unum approved the claim in October 2004. Compl. ¶ 11. Under the Plan, benefits for disabilities arising from mental illness are limited to 24 months. Id. ¶ 19. Unum concluded that Bilyeu’s disability was subject to the mental illness limitation. Id. Bilyeu disputed that conclusion. Id. ¶¶ 12-20.
Nearing the 24-month deadline, Dr. Sharon Hogan, a medical consultant for Unum, called Bilyeu’s treating physician, Dr. Kenneth Proefrock, to discuss her medical condition. Clerk’s Record 15.1 at 5-7. On December 6, 2006, Dr. Hogan sent a summary of the conversation to Dr. Proefrock, asking him to respond within 10 business days if he believed the letter inaccurately summarized their conversation. Id. at 6. The letter reflected disagreement between Dr. Hogan and Dr. Proefrock regarding the nature of Bilyeu’s limitations. Dr. Hogan believed “Bilyeu’s fatigue in large part arises from her anxiety and depression, since her Behget’s is not very active.” Id. at 6. It was Dr. Proefrock’s opinion, however, “that her fatigue is mainly physical.” Id. Dr. Hogan also believed that Bilyeu “should have full-time sedentary work capacity,” an assessment with which Dr. Proefrock disagreed. Id. at 5; Clerk’s Record 13-2 at 3.
On December 27, 2006, Unum sent Bilyeu a termination of benefits letter.
The letter then advised Bilyeu:
If you have additional information to support your request for disability benefits, it must be sent to my attention for further review at the address noted on this letterhead, within 180 days of the date you receive this letter.
However, if you disagree -with our determination and want to appeal this claim decision, you must submit a written appeal. This appeal must be received by us within 180 days of the date you receive this letter.
Id. at 4. The “address noted on this letterhead” was:
First Unum Life Insurance Company
The Benefits Center
PO Box 100158
Columbia, SC 29202-3158
Phone: 1-800-858-8843
Fax: 1-800-447-2498
www.unumprovident.com
Id. at 1.
After receiving Unum’s termination of benefits letter, Bilyeu asked Dr. Proefrock to respond to the letter. Compl. ¶ 22. Dr. Proefrock did so, writing a letter to Unum on April 19, 2007. Id. ¶ 23. Dr. Proefrock’s letter was addressed “To Whom It May Concern” and, it appears, faxed to 1-800^47-2498 — the number listed in the letterhead of Unum’s December 27, 2006 termination of benefits letter as the place to send “additional information to support your request for disability benefits.” Clerk’s Record 15-1 at 2-4.
Unum construed Dr. Proefrock’s letter as “new information,” but concluded that it did not “change [the] prior decision” to terminate benefits. Id. at 9. Unum, however, never communicated this conclusion to Bilyeu or, for that matter, contacted Bilyeu or Dr. Proefrock at all in response to the letter. Compl. ¶ 27.
In November 2008, Bilyeu filed a complaint against Unum, alleging that Unum wrongfully terminated benefits under the 24-month mental illness limitation because “[t]he substantial weight of the medical opinion contained in the claim file reasonably supports a finding that [her] disability is not due to ‘mental illness,’ rather, it is due to an autoimmune condition which was exacerbated by anxiety and mental/emotional stressors in [her] life.” Id. ¶20. The complaint sought a reinstatement of benefits under 29 U.S.C. § 1132(a)(1)(B). Id. at ¶ 44.
Unum filed an answer and a counterclaim. In its counterclaim, Unum sought reimbursement of overpaid long-term disability benefits. Unum alleged that it had paid Bilyeu LTD benefits subject to her promise to reimburse Unum for any overpayment arising from her receipt of disability benefits from any other source, including social security disability benefits. Answer and Counterclaim ¶¶ 5-10. Bilyeu subsequently received an award of social security benefits, resulting in an overpayment of LTD benefits in the amount of
Unum then moved to dismiss Bilyeu’s denial-of-benefits claim for failure to exhaust administrative remedies. Clerk’s Record 13. In that motion, Unum contended that the December 2006 termination of benefits letter required Bilyeu to file a written appeal within 180 days, which she failed to do. Id. Unum thus sought dismissal of Bilyeu’s claim. The district court granted the motion, concluding that Bilyeu failed to exhaust administrative remedies and dismissing Bilyeu’s claim with prejudice. Clerk’s Record 21 at 7.
Unum then filed a motion for summary judgment on its counterclaim for reimbursement of overpaid benefits. Clerk’s Record 28. Unum argued that it was entitled to relief under ERISA because it “has an equitable lien by agreement over the long-term disability benefits that it overpaid to Bilyeu.” Id. at 1. Bilyeu opposed the motion, arguing that Unum could not satisfy the requirements for an equitable lien by agreement because it could not establish that the overpaid LTD benefits remained in her possession. Clerk’s Record 30 at 2. The parties stipulated that, by the time Bilyeu was awarded social security benefits, “she had dissipated at least a portion of her LTD benefits.” Joint Statement of Facts ¶ 15. The district court granted Unum’s motion, and it directed the clerk of court “to enter judgment in the amount of $36,597.82 in favor of [Unum].” Clerk’s Record 32 at 6.
The court entered judgment and Bilyeu timely appealed. Clerk’s Record 33, 35.
II. STANDARD OF REVIEW
The district court dismissed Bilyeu’s denial-of-benefits claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Both parties, however, have relied on matters outside the pleadings. Consistent with circuit practice addressing exhaustion, we construe Unum’s motion as an unenumerated motion to dismiss. In addressing that motion, a court may look beyond the pleadings and decide disputed issues of fact. See Payne v. Peninsula Sch. Dist.,
III. BILYEU’S DENIAL-OF-BENEFITS CLAIM: EXHAUSTION OF ADMINISTRATIVE REMEDIES
We hold that the district court abused its discretion by dismissing Bilyeu’s denial-of-benefits claim for a failure to exhaust administrative remedies.
“ERISA itself does not require a participant or beneficiary to exhaust administrative remedies in order to bring an action under § 502 of ERISA, 29 U.S.C. § 1132.” Vaught v. Scottsdale Healthcare Corp. Health Plan,
Here, Unum’s December 27, 2006 termination of benefits letter advised Bilyeu of two courses of action, either of which she was required to undertake within 180 days: (a) providing “additional information to support your request for disability benefits” or (b) “if you disagree with our determination and want to appeal this claim decision, you must submit a written appeal.” After receiving Unum’s letter, Bilyeu asked her treating physician, Dr. Proefrock, to respond, and he did so, writing a letter to Unum on April 19, 2007— well within the 180-day window required in Unum’s letter. Dr. Proefrock addressed his letter “To Whom It May Concern” and faxed it to 1-800-447-2498 — the number listed in the letterhead of Unum’s December 27, 2006 termination of benefits letter as the place to send “additional information to support your request for disability benefits.”
Unum construed Dr. Proefrock’s letter as “new information,” but concluded that it did not “change [the] prior decision” to terminate benefits. Unum, however, never communicated this conclusion to Bilyeu or, for that matter, contacted Bilyeu or Dr. Proefrock at all in response to the letter. Meanwhile, according to Unum, Bilyeu’s deadline to appeal expired sometime after June 25, 2007, 180 days after the termination of benefits letter.
Under the circumstances of this case, exhaustion must be excused. Bilyeu contends that she read the termination of benefits letter as presenting two options— she could either (a) submit additional information or (b) file a written appeal. The letter was ambiguous, so Bilyeu’s reading was not unreasonable. On the contrary, given that it would have made no sense to appeal the adverse benefits decision while simultaneously submitting additional medical information from her physician, as she was invited to do by Unum, her reading of the letter was entirely appropriate.
We recognize that the letter is also susceptible to the reading proffered by Unum — that Bilyeu was required to file an appeal within 180 days even if she submitted additional medical information. But the letter could have been, and should have been, much clearer on this point. Bilyeu was not represented by counsel and, we presume, had no legal training. She should not be saddled with a loss of her legal rights because she misconstrued a confusingly worded communication from her plan’s claims administrator. Cf. Saffon v. Wells Fargo & Co. Long Term Disability Plan,
IV. UNUM’S COUNTERCLAIM
A. Bilyeu Waived Her Argument That Unum Lacks Statutory Standing as a Fiduciary
Bilyeu argues for the first time on appeal that Unum lacks standing to seek equitable restitution under ERISA because Unum is not a plan “fiduciary.” This is a challenge to Unum’s statutory standing. Cf. Leeson v. Transamenca Disability Income Plan,
Unlike constitutional standing, which is jurisdictional, we presume that statutory standing may be waived. See Leeson,
B. The District Court Improperly Awarded Legal Relief
Unum paid Bilyeu long-term disability benefits pursuant to Bilyeu’s agreement to reimburse Unum “any overpayment resulting from my receipt of benefits from other sources.” Joint Statement of Facts ¶ 12. The agreement stated in pertinent part:
Please pay me the disability benefit with no reduction for amounts received by other sources until a final determination of my eligibility to receive those benefits is made. I understand that this may result in an overpayment by the Insurer. I agree to notify the Insurer within 48 hours of receiving notice of any and all decisions, to supply the Insurer with a copy of the final decision, and to repay any overpayment incurred as a result of receiving any other benefits from those sources specified in the policy....
By selecting [this] Option ..., I understand that the Insurer has agreed to pay me an unreduced benefit based upon my written promise herein to pay the Insurer any overpayment resulting from my receipt of benefits from other sources, as outlined in my policy. I agree to reimburse the Insurer any such overpayment within thirty (30) days of my receipt of such funds.
If I fail to pay the Insurer the overpayment within the thirty (30) day period specified above, I understand that the Insurer may reduce future payments under the policy in order to recover the overpaid benefits.
I also understand that I shall be liable to the Insurer for the full amount of any such overpayment, plus applicable statutory interest, and for all reasonable*1091 costs (including attorney’s fees) of collection of the overpaid benefits.
Id. Bilyeu subsequently received social security disability benefits, but did not reimburse Unum. /<1¶¶ 16-19. Unum filed a counterclaim for reimbursement of the overpaid benefits.
Ordinarily, a contracting party in Unum’s position would file a claim for breach of contract and seek relief in the form of a judgment for money damages.
A civil action may be brought ... (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.
29 U.S.C. § 1132(a) (emphasis added). Unum therefore cannot sue for damages under ERISA; it must show that it is seeking equitable relief.
Unum contends it has made this showing because it is seeking an equitable lien by agreement. Clerk’s Record 28 at 1, 6-7; Answering Brief at 36. The Supreme Court has recognized an equitable lien by agreement as a form of “equitable relief’ authorized by § 1132(a)(3)(B). See Sereboff v. Mid Atl. Med. Servs., Inc.,
The Sereboffs were beneficiaries of a health insurance plan governed by ERISA and administered by Mid Atlantic. See id. at 359,
The Supreme Court held that Mid Atlantic could enforce the terms of the Acts of Third Parties provision through an equitable hen by agreement — “the familiar rul[e] of equity that a contract to convey a specific object even before it is acquired will make the contractor a trustee as soon as he gets a title to the thing.” Id. at 363-64,
The Court also made clear that, to satisfy the requirements for an equitable lien by agreement, Mid Atlantic was not required to trace the funds in the Sereboffs’ tort recovery back to Mid Atlantic’s own possession. See id. at 364-65,
The Court declined to say whether a rule requiring the plaintiff to trace the fund or property back to the plaintiffs own possession would apply to a claim for equitable restitution. That question was beside the point, because Mid Atlantic was seeking an equitable lien by agreement, not equitable restitution. With regard to an equitable lien by agreement, the Court held that “no tracing requirement of the sort asserted by the Sereboffs applies.” Sereboff,
As relevant here, we read Sereboff as establishing at least three criteria for securing an equitable lien by agreement in an ERISA action. First, there must be a promise by the beneficiary to reimburse the fiduciary for benefits paid under the plan in the event of a recovery from a third party. Second, the reimbursement
1. Here, the first criterion is clearly satisfied. Bilyeu does not dispute that she promised to reimburse Unum for an overpayment of long-term disability benefits arising from her receipt of benefits from other sources, including social security disability benefits.
2. It is less clear whether the second criterion is satisfied. Unum contends that the reimbursement agreement specifically identified the overpaid long-term disability benefits as the particular fund, distinct from Bilyeu’s general assets, from which it is to be reimbursed. In Unum’s view, once Bilyeu received her social security disability benefits, the specifically identified fund—the overpaid long-term disability benefits—came into existence, and Unum was allowed to impose a lien against that fund. This argument is plausible, but problematic. Unlike the third party tort recovery in Sereboff and the contingency fee in Barnes, the overpaid disability benefits are not a particular fund, but a specific amount of money encompassed within a particular fund — the long-term disability benefits Unum paid to Bilyeu. As an amount of money, the overpayment is specific. As property or as a fund, however, the overpayment is lacking in specificity because it is an undifferentiated component of a larger fund. The overpayment has never existed as a distinct object or fund. See 53 C.J.S. Liens § 19 (2012) (“In order that an equitable lien may arise by contract, the agreement of the parties must deal with some specific property, and it is also essential that the property or fund intended to be appropriated or charged should be identified or described with a reasonable degree of certainty.” (emphasis added) (footnote omitted)); 4 John Norton Pomeroy, A Treatise on Equity § 1235, p. 696 (5th ed.1941) (explaining that an equitable lien applies to “some particular property, real or personal, or fund, therein described or identified” (emphasis added)); Sereboff,
Unum’s reimbursement agreement would have avoided these problems if, consistent with Sereboff, it had identified the third party recovery — here, Bilyeu’s social security disability benefits — as the particular fund enlisted to serve as security for the overpayment of benefits. Of course, that would not have worked in this case: Under the Social Security Act, Bilyeu could not assign her social security benefits, and Unum could not attach them. See 42 U.S.C. § 407(a).
3. Even assuming that Unum could satisfy the second criterion, Unum has not satisfied the third criterion — the requirement that the specifically identified fund be within Bilyeu’s “possession and control.” Sereboff,
Here, by contrast, Bilyeu asserts, and Unum has not refuted, that Bilyeu has spent the overpaid benefits.
We recognize that a number of circuits have interpreted Sereboffs discussion of tracing rules as a signal that a fiduciary can assert an equitable lien — presumably against a beneficiary’s general assets— even if the beneficiary no longer possesses the specifically identified funds. See Funk v. CIGNA Grp. Ins.,
We are unpersuaded by the view of those other circuits. The tracing issue in Serebojf was whether Mid Atlantic could obtain an equitable lien against specifically identified funds when Mid Atlantic had never possessed those funds itself — an issue that has no relevance here. See Sereboff,
This conclusion — that the fiduciary must recover from specifically identified funds in the beneficiary’s possession, rather than from general assets — is consistent not only with Sereboff but also with the Supreme Court’s decisions in Knudson and CIGNA Corp. v. Amara, — U.S. -,
Unum’s argument that an equitable lien can be enforced against general assets when the specifically identified property has been dissipated finds no support in the traditional doctrine governing equitable liens by agreement. See 4 Pomeroy, A Treatise on Equity § 1235, p. 696 (5th ed.1941) (explaining that an equitable lien may be enforced when the specifically identified property is in the hands of the contractor — or in the hands of a subsequent possessor with notice of the lien, a qualification not relevant to Bilyeu’s case). If the property or fund subject to the lien (or proceeds to which the property or fund can be traced), are no longer in the defendant’s possession, then there is no res against which the equitable lien can be enforced. See 53 C.J.S. Liens § 46 (2012) (“[A] lien that is not satisfied voluntarily may be enforced by an action to foreclose, in which a court may order the property securing the debt or obligation to be sold and its proceeds applied on the demand of
In sum, although the district court’s decision may have produced an equitable result, the court erred because Unum has not shown that it is seeking equitable relief. We remand, affording Unum the opportunity to establish that it has identified a particular fund (the second criterion) and that the overpaid long-term disability benefits, or assets to which the overpaid benefits can be traced, remain in Bilyeu’s possession (the third criterion). See 53 C.J.S. Liens § 24 (2012) (“An equitable lien for advances may exist where advancements of money or funds are made on the faith of certain property, real or personal, under an agreement or circumstances showing that it was the intention of the parties to pledge such property as security for the advancements, provided the specific property or its proceeds on which the advancements were invested can be traced or identified.” (emphasis added) (footnote omitted)); 2 Dan B. Dobbs, Law of Remedies § 6.1(4) (2d ed. 1993) (discussing enforcement of an equitable lien in the case of commingled funds).
“An equitable lien can be established and enforced only if there is some property which is subject to the lien.” In this case there is no “identifiable res” on which a hen can be imposed, because the allegedly misallocated funds have been disbursed. Therefore the court erred in granting ... a lien on funds.
Id. at 1507 (citation omitted) (quoting Restatement (First) of Restitution § 161 cmt. e (1937)).
V. CONCLUSION
The district court abused its discretion by dismissing Bilyeu’s denial-of-benefits claim for a failure to exhaust administrative remedies. The court also erred when it concluded that Unum had satisfied the requirements for an equitable hen by agreement. The judgment of the district court is therefore vacated and the case is remanded for further proceedings.
VACATED AND REMANDED. Costs of appeal are awarded to Bilyeu.
Notes
. We disagree with the dissent’s conclusion that the outcome of this case is controlled by
. Unum has, in fact, asserted a state-law claim for breach of contract. Clerk's Record 5 at 7-8 (Answer and Counterclaim); Clerk's Record 28 at 8 (motion for summary judgment). Bilyeu contends Unum has abandoned that claim and that, in any event, the claim is preempted by ERISA. Clerk's Record 30 at 9. Unum’s contract claim has not been adjudicated, and we express no opinion as to its merits.
. An equitable lien by agreement is a traditional form of equitable relief. According to Pomeroy’s Treatise on Equity,
The doctrine may be stated in its most general form, that every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property, real or personal, or fund, therein described or identified, a security for a debt or other obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the property so indicated, which is enforceable against the property in the hands not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees, and purchasers or encumbrancers with notice. Under like circumstances, a merely verbal agreement may create a similar lien upon personal property.
4 John Norton Pomeroy, A Treatise on Equity § 1235, p. 696 (5th ed.1941); see also Restatement (Third) of Restitution § 56 cmt. d (2011) ("[T]he failure to transfer a promised share of an identifiable fund may justify specific relief to the claimant, frequently accomplished via equitable lien.”).
. Section 407 states:
The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
42 U.S.C. § 407(a).
. The burden to show that the overpaid benefits remain in Bilyeu's possession presumably falls on .Unum. See Restatement (First) of Restitution § 215 cmt. b (1937) (“A person whose property is wrongfully taken by another is not entitled to priority over other creditors unless he proves that the wrongdoer not only once had the property or its proceeds, but still has the property or its proceeds or property in which the claimant's property or its proceeds have been mingled indistinguishably.”); accord Epolito v. Prudential Ins. Co. of Am.,
. The kind of tracing we discuss here is distinct from the theory of tracing rejected in Sereboff. The issue in Sereboff was whether a plaintiff is required to trace the specific property or particular fund back to the plaintiff's own possession. Sereboff makes clear that that sort of tracing is not required for an equitable lien by agreement. See Sereboff,
. We recognize that "the fact that ... relief takes the form of a money payment does not [necessarily] remove it from the category of traditionally equitable relief.” Amara,
Concurrence Opinion
concurring in part and dissenting in part:
I agree with the majority that Plaintiff Leah Bilyeu (Bilyeu) waived her argument that Unum Life Insurance Company (Unum) lacks statutory standing. I respectfully disagree on ah other issues.
Bilyeu argues on appeal, as she did before the district court, that a fax sent by her physician Dr. Proefrock to Dr. Hogan, the physician for Unum, satisfied the exhaustion requirement under the Employee Retirement Income Security Act of 1974 (ERISA). However, the letter denying Bilyeu’s claim explicitly directed her that if she disagreed with the determination denying disability benefits, she was required to submit an appeal in writing to: First Unum Life Insurance Company at PO Box 100158, Columbia, SC 29202-3158, Fax: 1-800-447-2498 www.unumprovident.com.
Rather than submitting an appeal as directed, Bilyeu elected to provide additional information pursuant to a different paragraph of the denial letter. This information was sent to Unum’s physician ad-visor rather than to the benefits center as directed in the denial letter from Unum.
The district court found that because the letter from Bilyeu’s physician to Unum’s physician did not comply with the appeal procedure, Bilyeu did not exhaust the ad
A district court abuses it discretion only if the district court applied an incorrect legal rule in view of the relief requested or made a factual finding that was “illogical, implausible, or without support in inferences that may be drawn from the record.” United States v. Hinkson,
The district court explained its ruling by observing that the letter from Bilyeu’s physician did not indicate that Bilyeu desired to appeal the Plan’s decision. See District Court Opinion, p. 6. The district court also noted that the letter from Bilyeu’s physician was faxed to Unum’s physician advisor rather than to Unum, as instructed in the communication from Unum to Bilyeu. See id. Because the letter from Bilyeu’s physician did not comply with the appeal procedure and did not seek administrative review, the district court found that Bilyeu failed to exhaust the available administrative remedies. See id. The district court specifically ruled that Bilyeu’s submission of additional medical information was no substitute for filing an appeal as directed.
The district court correctly identified and applied governing precedent. As noted in Diaz,
The district court faithfully adhered to this precedent when it precluded Bilyeu’s claim due to her failure to submit an appeal to Unum, the benefits administrator. See Id. (“By not submitting a written appeal to the Benefits Administrator, [the Plaintiff] failed to comply with the Plan’s internal review procedures and hence did not exhaust the available administrative remedies....”); see also Sarraf v. Standard Insurance Co., 102 F.3d 991, 993 (9th Cir.1996) (“Under Diaz, [Plaintiffs] failure to request in writing review of the Administrator’s adverse decision precludes the instant claims under the ERISA plan.”), citing Diaz,
Because the district court followed well-established precedent in requiring exhaustion of the prescribed administrative remedy, the majority understandably refrains from holding that the district court abused its discretion by applying an incorrect legal rule. Rather, the majority excuses Bilyeu’s lack of exhaustion by attributing to Unum a purported failure “to establish or follow reasonable claims procedures.” Majority Opinion, p. 1088. (internal quotation marks omitted). The majority cites to Barboza v. Cal. Ass’n of Prof'l Firefighters,
The majority concedes that the provisions of the denial letter sent to Bilyeu were susceptible to the reading argued by Unum as well as the reading urged by Bilyeu. See Majority Opinion, p. 1089. That concession guts the majority’s analysis, because a decisionmaker’s choice between two viable interpretations of the facts cannot constitute abuse of discretion as a matter of law. See Hinkson,
I also part company with the majority in its analysis of the district court’s ruling on the merits of Unum’s counterclaim.
Like the majority opinion, I start my analysis with the United States Supreme Court’s decision in Sereboff v. Mid Atlantic Medical Services, Inc.,
Applying the precepts of Sereboff to the facts of this case, I reach the same conclusion as the majority opinion regarding the existence of an equitable trust. The ERISA Plan provided that Bilyeu could receive full long-term disability benefits premised upon her agreement to reimburse Unum for any overpayment due to receipt of benefits from any other sources. Thus, any overpayment due to receipt of benefits from other sources would constitute the particular fund to which a constructive lien in favor of Unum applied. See id.
Although all parties agree that Bilyeu was obligated to reimburse Unum, the majority opinion lets Bilyeu off the hook, accepting her argument that she has already spent the money paid to her by Unum and, therefore, those specific proceeds can never be recovered. In doing so, the majority opinion creates an unwarranted circuit split and completely disregards the concept of fairness, the paramount principle of equity. See Things Remembered, Inc. v. Petrarca,
In Cusson v. Liberty Life Assurance Co. of Boston,
The claimant argued that the ERISA fiduciary advanced a legal claim rather than an equitable claim, and therefore, the claim was barred. See id. at 230. The First Circuit rejected this argument, concluding that it was inconsistent with the Supreme Court’s reasoning in Sereboff. See id. at 231. The First Circuit concluded that the rule of equity imposes a constructive trust on the proceeds as soon as they are acquired by the recipient of those proceeds. See id. The First Circuit reasoned that because the contract between the ERISA fiduciary and the ERISA beneficiary put the ERISA beneficiary on notice that reimbursement would be required if the ERISA beneficiary was overpaid, enforcement of the resulting constructive trust constituted equitable relief. See id. Because the circumstances in Cusson are virtually identical to the facts in this case, there is no principled basis upon which Cusson can be distinguished.
Similarly applying Sereboff, the Third Circuit in Funk v. CIGNA Grp. Ins.,
In Gilchrest v. Unum Life Insurance Co. of America,
The Seventh Circuit reached the same result in Gutta v. Standard Select Trust Ins. Plans,
In Dillard’s Inc. v. Liberty Life Assurance Co.,
In an effort to distinguish the rulings of five of our sister circuit courts, the majority relies on an out-of-circuit district court decision, Epolito v. Prudential Ins. Co. of America,
The Florida district court also gave extremely short shrift to the Eleventh Circuit decision in Admin. Comm. for the Wal-Mart Stores, Inc. Assocs.’ Health & Welfare Plan v. Horton,
The majority opinion seeks to bolster the district court’s ruling in Epolito by reference to Great-West Life & Annuity Ins. Co. v. Knudson,
The majority’s reliance on general language in Amschwand v. Spherion Corp.,
The main problem with the majority’s reliance on CIGNA Corp. v. Amara, — U.S. -,
Another problem with the majority’s reliance on Amara is that the quoted language is entirely consistent with the analysis in Sereboff. See
The final problem with the majority’s reliance on Amara is that it never mentions, let alone purports to overrule, the analysis in Sereboff. Importantly, because
The majority opinion also quotes at length from various treatises. See Majority Opinion, pp. 1095-96. However, it is well-established that treatises are a compilation of general principles of law, rather than concrete application of principles of law to a defined set of facts. See Hart v. Massanari,
I am also not persuaded by the majority’s citation to Bonneville Power Admin. v. Wash. Pub. Power Supply Sys.,