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Tuesday, November 27, 2012

Employer Not Entitled to Restitution of $548K in Overpaid Contributions

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An employer is not entitled to restitution of $548,257 it mistakenly overpaid to multiemployer health and pension funds, the U.S. Court of Appeals for the Eighth Circuit ruled Nov. 23 (Greater St. Louis Construction Laborers Welfare Fund v. Park-Mark Inc., 8th Cir., No. 11-3746, 11/23/12). 

The employer mistakenly paid the contributions to the funds for work performed by its employees on projects that were outside the jurisdiction of the applicable collective bargaining agreement. The employer ceased making any CBA-required contributions after the funds determined that the employer was not entitled to credit for the overpayments.

The funds filed a lawsuit in the U.S. District Court for the Eastern District of Missouri in November 2010, seeking to recover unpaid and untimely contributions under ERISA Section 502(g)(2). Park-Mark argued that a setoff should be applied to any recovery the funds received and later included a counterclaim seeking restitution. The funds later moved for summary judgment.

In November 2011, the district court recognized that a federal common-law cause of action exists for overpayments mistakenly made under ERISA but determined that “equity did not demand a refund” of Park-Mark's overpayment and Park-Mark appealed.

Judge Bobby E. Shepherd, writing for the court, determined that the employer demonstrated that it mistakenly made the overpayments but failed to demonstrate that restitution was equitable.

The court explained that restitution was inequitable if Park-Mark obtained a benefit from the overpayments and now sought repayment. The fund argued that “Park-Mark employees received insurance-coverage benefits and pension benefits reflecting the greater overpayments” and that the fund would have to “deduct pension credits from Park-Mark's employees that were based on the overpayments” if restitution were ordered. According to the appeals court, “Park-Mark presented insufficient evidence to refute the Funds' proof that refunding the overpayments would adversely affect Park-Mark's employees.” 

The appeals court concluded that equity did not favor refunding Park-Mark's overpayments and affirmed the district court decision.

 

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