In this appeal from a judgment of the United States District Court for the Southern District of New York (Román, Judge) we consider whether plaintiffs-appellants’ claims are ones for “appropriate equitable relief’ under § 502(a)(3) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(3), or whether the claims are for legal relief which is not available under that section.We conclude that the claims are ones for legal relief and thus affirm the judgment of the district court.
See Great-West Life & Annuity Ins. Co. v. Knudson,
BACKGROUND
Central States, Southeast and Southwest Areas Health and Welfare Fund is an ERISA employee welfare benefit plan that provides health insurance to participating Teamsters and their dependents. Gerber Life Insurance Company issued accident insurance policies that covered, among other things, scholastic sports-related injuries. Administrative Concepts, Inc. is the claims processor for the Gerber policies.
The claims at issue arose from injuries suffered by several students during scholastic athletic activities. The students were insured by Central States as dependents of plan participants, and were also directly insured by separate accident policies written by Gerber. The central controversy in this litigation is which of the 'two policies afforded primary and which afforded secondary coverage for the inju
The Gerber policy, on the other hand, purportedly provided coverage only in excess of whatever was paid by other medical insurance coverage. The relevant portion of the policy stated:
The Company will pay Reasonable Expenses that are not recoverable from any Other Plan. The Company will determine the amount of benefits provided by Other Plans without reference to any coordination of benefits; non duplication of benefits, or similar provisions.... This Blanket Student Accident Insurance is secondary to all other policies.
Joint App’x at 167.
Although Central States considered its coverage to be secondary, it nevertheless paid the injured students’ claims as an accommodation to them and their families in order to avoid delays and undue administrative burdens to beneficiaries who un-disputedly were entitled' to have their claims covered by medical insurance. After it paid the claims, Central States sought reimbursement from Gerber, whom it considered the primary insurance provider. Gerber refused to pay, taking the position that under its coordination of benefits provision, its policies provided only excess, secondary coverage. Central States then brought this lawsuit to recover the amounts it had paid on the claims.
Central States’ complaint alleged various claims for declaratory judgment and injunctive relief pursuant to federal common law and ERISA § 502(a)(3). Claims I and II sought to establish Gerber’s obligation to pay future and past claims. Claim III sought restitution, and Claim IV sought the imposition of an equitable lien and a constructive trust to secure reimbursement for the claims Central States had paid.
Gerber moved pursuant to Rule 12(b)(6) to dismiss the complaint on the grounds that, notwithstanding the equitable labels placed on the claims, Central States was actually seeking legal relief that was not available under § 502(a)(3). Gerber also contended that ERISA preempted Gerber’s federal common law claims.
The district court granted Gerber’s motion. The court reasoned that Central States’ claims were not equitable in nature and that the relief sought was, therefore, unavailable under ERISA. The court entered judgment and Central States appealed.
See Cent. States, Se. & Sw. Area Health & Welfare Fund v. Gerber Life Ins. Co.,
DISCUSSION
The Supreme Court has emphasized in no uncertain terms that ERISA is a “comprehensive and reticulated statute” that includes a “carefully crafted and detailed enforcement scheme” that courts are not at liberty to alter.
Great-West,
(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)(3) (emphasis added).
The resolution of this appeal turns principally on the Supreme Court’s discussion in
Great-West Life & Annuity Insurance Co. v. Knudson
of what relief is equitable in nature and what relief is legal in nature under § 502(a)(3). It is undisputed that if the relief sought by Central States is legal relief, Central States cannot succeed under § 502(a)(3). In
Great-West,
an ERISA welfare benefit plan paid the medical expenses of a beneficiary who suffered injuries in a car accident. When the beneficiary later settled a tort suit arising from the accident and received the settlement proceeds in a special needs trust, the ERISA plan sued the beneficiary under a term of the Plan which allowed it “to recover from the [beneficiary] any payment for benefits paid by the Plan that the beneficiary is entitled to recover from a third party.”
The beneficiary prevailed. The Supreme Court held that the “equitable” label applied to a claim was not determinative, and that courts must examine “the basis for the plaintiff’s claim and the nature of the underlying remedies sought.”
Id.
at 213,
In cases in which the plaintiff could not assert title or right to possession of particular property, but in which nevertheless he might be able to show just grounds for recovering money to pay for some benefit the defendant had received from him, the plaintiff had a right to restitution at law through an action derived from the common-law writ of as-sumpsit. In such cases, the plaintiffs claim was considered legal because he sought to obtain a judgment imposing a merely personal liability upon the defendant to pay a sum of money.... Such claims were viewed essentially as actions at law for breach of contract (whether the contract was actual or implied).
In contrast, a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant’s possession. A court of equity could then order a defendant to transfer title (in the case of the constructive trust) or to give a security interest (in the case of the equitable lien) to a plaintiff who was, in the eyes of equity, the true owner.
Id.
at 213,
I. Declaratory Judgment Claims
As noted, Central States alleged two claims (Claims I and II) styled as declaratory judgment claims, one for unpaid and future expenses and one for the past expenses incurred by the insureds. 1 Central States asserted that subject matter jurisdiction existed for these claims under federal common law and under the Declaratory Judgment Act, 28 U.S.C. § 2201(a). Joint App’x at 15 ¶ 17. Central States did not allege that these claims arose under § 502(a)(3), or that ERISA’s jurisdictional provision, 29 U.S.C. § 1132(e), otherwise provided a basis for the claim. Both claims were properly dismissed.
Following
Great-West,
we are not free to fill in unwritten gaps in ERISA’s civil remedies by reading into the statute additional causes of action derived from federal common law. As the Supreme Court has emphasized, ERISA’s express remedies, as the product of long and careful study and compromise, should remain exclusive.
Great-West,
Even though Central States labeled Claims I and II as ones for declaratory and injunctive relief, the claims seek money damages. They seek a declaration that Gerber has primary responsibility for paying the claimants’ future and past expenses, and injunctive “relief’ compelling the payments. This approach, however, cannot survive
Greatr-West,
in which the Court noted that “an injunction to compel the payment of money past due under a contract, or specific performance of a past due monetary obligation, was not typically available in equity.”
II. Restitution and Equitable Lien/Constructive Trust Claims
Central States makes two further claims. Claim III seeks restitution from
As previously noted, Great-West held that the key factor in that examination is whether a claimant was seeking restitution from a defendant’s general funds, in which case the claim was legal, or whether a claimant was seeking to recover money that could be traced to a particular fund held by a defendant, in which case the claim was equitable. Central States acknowledges the existence of that tracing requirement but contends that cases decided after Greab-West have eliminated it. Our examination of those cases indicates that while this tracing requirement may have been somewhat loosened, it is still very much in force.
The relief sought by Central States is not equitable because it does not assert title or right to possession of particular property, but simply asserts a claim against Gerber’s general assets. For this reason, Central States cannot “trae[e]” the money it claims to “particular funds or property in [Gerber’s] possession,” but rather can only “show just grounds for recovering money to pay for some benefit” that Gerber has received from it, namely the payment of the common insureds’ claims. Id. As the Great-West Court explained, “[i]n such cases, the plaintiffs claim was considered legal because he sought to obtain a judgment imposing a merely personal liability upon the defendant to pay a sum of money.” Id. Because legal remedies are not available under § 502(a)(3), Claims III and IV fail as well.
Central States argues that several subsequent case
s—Se
reboff
v. Mid Atlantic Medical Services, Inc.,
In
Serebojf,
Mid Atlantic, an ERISA fiduciary, sued to recover from the Marlene and Joel Sereboff medical expenses it had paid out on their behalf. The plan document — a contract between the Sere-boffs and their ERISA plan, Mid Atlantic — “specifically identified a particular fund, distinct from the Sereboffs’ general assets — ‘[a]ll recoveries from a third party (whether by lawsuit, settlement, or otherwise).”’
In US Airways, Inc. v. McCutchen, an ERISA plan asserted a claim to recover payments made when the beneficiary later received a tort settlement. The plan terms required “full reimbursement” of the expenses it had paid. In an effort to avoid repaying the plan, the beneficiary asserted two equitable defenses to full repayment: first, that the plan was entitled to no more than the amount he received from a third party to compensate for the loss that his plan covered, and second, that under the common fund doctrine, he could pass on a share of his lawyer’s fees to U.S. Airways because it shared in the recovery. The Supreme Court held that these defenses were overridden by the terms of the plan requiring that reimbursement be “full,” as the terms created “the modern-day equivalent of an equitable lien by agreement.” Id. at 1546.
In
Thurber v. Aetna Life Insurance Co.,
an ERISA-governed welfare benefit plan sued to recover disability insurance payments to a beneficiary that were rendered overpayments when the beneficiary also received payment from a no-fault insurance provider.
From these cases, Central States advances three arguments: (1) that the Supreme Court’s focus on the terms of the plan in Sereboff and McCutchen render the plan terms equivalent to a constructive trust or equitable lien, or permit the assertion against a third-party of a lien by agreement authorized by the plan terms; (2) that Gerber is properly treated as a trustee of the funds claimed by Central States; and (8) that “courts have moved away from any tracing requirement, indicating that tracing identifiable funds is not essential to a claim for an equitable lien.”
Central States is correct that the Supreme Court in Sereboff and McCutchen, and our court in Thurber, focused heavily on the terms of the plan, and in fact, permitted the terms of the plan to override certain rules of equity, including the strict tracing requirements normally applicable to equitable restitution. Both courts did so, however, only because the plan terms constituted a contract between the parties involved in the lawsuit. All three cases involved disputes between the plan and one of its beneficiaries. None involved the assertion of claims against a third-party such as Gerber.
As the Fifth Circuit explained in rejecting the same argument raised by Central States here in another case it brought against a third party provider,
Central States also argues that we recognized in
Thurber
that “a party who takes possession of settlement funds with knowledge of a plan’s lien, holds those funds in constructive trust for the benefit of the plan” and, therefore, that “by refusing to pay the medical bills of the Common Insureds, [Gerber] breached [its] fiduciary duties as [a] constructive trustee[].” Appellants’ Br. 18. Central States then relies upon the Supreme Court’s statement in
Amara
that “equity courts possessed the power to provide relief in the form of monetary ‘compensation’ for a loss resulting from a trustee’s breach of duty” to support its claim for monetary relief.
CIGNA Corp. v. Amara,
— U.S. -,
This argument fails because, as we recognized in Thurber, only a beneficiary who was party to an agreement with the' plan and thus had taken on a duty to repay the funds to the plan, holds such funds in constructive trust for the plan. The agreement said nothing about third parties. In any event, Gerber did not “take[ ] possession of settlement funds with knowledge of a plan’s lien.” Appellants’ Br. 18. In fact, it took possession of no funds. It merely contested its liability to pay the Common Insureds’ claims.
Finally, Central States argues that courts have moved away from tracing requirements and they are no longer essential to a claim for an equitable lien. This argument proves too much. The case law is still clear that any relaxation of the tracing rules has been limited to the assertion of equitable liens by agreement (something Central States does not assert), a remedy that is distinct from equitable liens as a matter of restitution (which it does assert).
See Sereboff
Here, Central States’ claims are classic legal ones. There is no equitable lien by agreement because there is no agreement between Central States and Gerber that “specifically identified ' a particular fund, distinct from [Gerber’s] general assets” nor “a particular share of that fund to which [Central States] was entitled.”
Sereboff,
III. In the Circumstances Presented by This Case, ERISA Plans May Have No Remedy
The line of cases culminating in
Great-West
has been heavily criticized for unnecessarily reviving the historical division between law and equity, ignoring-the background principles of trust remedy law against which Congress enacted ERISA, and adopting an unnecessarily narrow interpretation of § 502(a)(3) that excludes forms of relief Congress intended to make available under ERISA. Commentators have repeatedly noted that as a result of this case law ERISA plans and beneficiaries are, in some circumstances, deprived of remedies.
See, e.g., Aetna Health, Inc. v. Davila,
The circumstances of this case bolster such criticisms. Because Central States’ claims are legal claims barred by this line of cases, if Central States’ benefits are indeed secondary, it may well have no apparent venue in which to seek to recover the funds paid on behalf of the Common Insureds or similarly situated future claimants because all avenues of relief appear closed. Absent the involvement of an ERISA plan, claims between insurance companies over conflicting coordination of benefits provisions are normally raised and resolved in state courts.
See Winstead v. J.C. Penney Co., Inc.,
Prior to the Supreme Court’s limiting interpretation of “appropriate equitable relief’ and its restriction of federal common law remedies, federal courts offered equitable and common law-based remedies to ERISA plans. For example,
Winstead v. Indiana Insurance Company,
Left with no option to recover payments made for its participants’ convenience, but which may not be required under its coordination of benefits provision, Central States may be forced to deny those claims. Assuming that the other carrier also denies the claim, as happened here, a beneficiary, knowing he has coverage from one of the two carriers (for example, for a broken arm) and desiring to take advantage of the coverage, would be forced into the unenviable position of bringing suit against both carriers, thereby incurring the attendant costs and delays of protracted multi-party litigation. Such a claim might be brought under § 502(a)(1), which permits “ ‘a participant or beneficiary* to bring a civil action ‘to enforce his rights under the terms of the plan,’ without reference to whether the relief sought is legal or equitable.”
Great-West,
The paradoxical result is that as an ERISA plan, Central States has fewer remedies than it would if it were a non-ERISA plan, and its beneficiary, through no fault of his own, is considerably worse off for having two policies that coincidentally had conflicting language than he would be if he had only one. One might think that the underlying purposes of ERISA and of equitable relief generally would permit a court to fashion an appropriate remedy. Indeed, the Supreme Court has noted recently that it is “a maxim of equity” that “[e]quity suffers not a right to be without a remedy.’ ”
Amara,
However, the Supreme Court has made its reading of § 502(a)(3) clear: “[i]t is ... not our job to find reasons for what Congress has plainly done.”
Great-West,
CONCLUSION
To summarize, we hold that although Central States might well be left without an appropriate remedy as a result of this decision, and that in the future its beneficiaries may be put in the unfortunate position of having to sue their insurance companies to receive benefits to which they are indisputably entitled, the claims raised by Central States are legal, not equitable, and therefore may not be brought under
Notes
. The first claim seeks a declaration that Gerber is liable “to pay unpaid and future covered medical expenses relating to the accidental injuries sustained by the [Common Insureds]/' and seeks an injunction preventing Gerber from violating Central States' coordination of benefits provisions. We have concerns as to whether Central States has sufficiently alleged that any such claims exist, or that there is any reasonable likelihood of future claims from the Common Insureds. We do not address this issue because it was mentioned only in passing and not adequately discussed in the parties’ briefs.
. Central States avers that preemption is likely. The issue was raised in a previous suit brought by Central States over the same issue. There, the Northern District of Texas held any state law claims to be preempted.
Central States, Se. &
Sw.
Areas Health and Welfare Fund v. Health Special Risk, Inc., et al.,
No. 11-Civ.-2910-D,