Court Tosses Multiemployer Health Plan's Claims for Relief Under ERISA 502(a)(3)

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A multiemployer health plan's claims against the insurers and administrator that denied reimbursement of medical expenses cannot proceed under Section 502(a)(3) of the Employee Retirement Income Security Act, because the plan seeks legal relief, rather than equitable relief, the U.S. District Court for the Northern District of Texas held Oct. 18 (Central States, Southeast and Southwest Areas Health and Welfare Fund v. Health Special Risk Inc., N.D. Tex., No. 3:11-cv-02910-D, 10/18/12).

Chief Judge Sidney A. Fitzwater denied the plan's requests for declaratory judgment, injunctive relief, and an equitable lien, finding that all these claims sought the same monetary relief--reimbursement for medical expenses the plan argued should have been covered by the insurers. These claims sought legal relief unavailable under ERISA Section 502(a)(3), the court said.

After dismissing all the plan's ERISA claims, the court allowed it to proceed in its claim for subrogation under state insurance law.

Plan's Claim for Reimbursement.

Markel Insurance Co., Federal Insurance Co., and Ace American Insurance Co. provided accident medical insurance to Teamsters union participants and beneficiaries covered by the Central States, Southeast and Southwest Areas Health and Welfare Fund. When the insurers refused to pay certain medical expenses on behalf of Central States members on the grounds that their policies provided only excess coverage, Central States paid the members' expenses and sought reimbursement from the insurers' third-party administrator, Health Special Risk Inc. (HSR). HSR also denied Central States' claim for reimbursement.

Central States filed suit against the insurers and HSR, seeking a declaratory judgment and an injunction prohibiting them from violating the health plan's choice of benefits provisions; it also sought restitution, an equitable lien, and imposition of a constructive trust. After the court dismissed the complaint on the grounds that Central States could not recover monetary relief under ERISA Section 502(a)(3), Central States filed an amended complaint, adding claims of subrogation and unjust enrichment.

Court Tosses Claims for Monetary Relief.

The court once again dismissed Central States's request for an injunction and declaratory relief, finding 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.” Because Central States' request for declaratory judgment was “essentially indistinguishable from a demand for payment,” the court found that it could not proceed under ERISA Section 502(a)(3).

The court also denied Central States' request for an equitable lien and a constructive trust and found that, although equitable remedies were sometimes available when plan beneficiaries sue their own plan, those remedies were unavailable to Central States, because it failed to allege any fiduciary relationship between itself and the defendants. Central States' claim of unjust enrichment also failed, the court concluded, because none of the defendants received any money or property from Central States; rather, they refused to reimburse Central States for amounts it paid from its own pocket. This constituted a claim for legal relief that could not proceed under ERISA Section 502(a)(3), the court said.

Subrogation Claim Can Proceed.

However, the court held that Central States could go forward with its claim for subrogation because, “as subrogee, the ERISA plan is not suing as an ERISA plan fiduciary, but instead is stepping into the shoes of its insureds.” The court found that “an ERISA plan as subrogee is entitled to assert any claim against a third party that its insureds could have asserted,” without being limited to claims for equitable relief. Because the insurers' and HSR's motion to dismiss was based solely on their assertion that Central States sought only monetary relief, the court allowed the subrogation claim to proceed. However, because the court had dismissed all Central States' ERISA claims, leaving only its claim under state insurance law, it then directed Central States to submit a brief outlining its position on whether the court should continue to exercise jurisdiction over the case.

Central States was represented by Roger Albright of Law Office of Roger Albright, Dallas, and Francis J. Carey of Central States Law Department, Rosemont, Ill. HSR and the insurers were represented by Alicia G. Curran, Jennifer K. Kenchel, and Raymond A. Kresge of Cozen O'Connor, Dallas and Philadelphia.


The full text of the opinion is at http://op.bna.com/pen.nsf/r?Open=jwie-8zbjjb.