In an order dated March 30, 2015, the United States Supreme Court granted certiorari in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, Docket No. 14-723.  Montanile is a case from the Eleventh Circuit that will be of great interest to ERISA plan participants and plan fiduciaries alike because it should definitively answer once and for all the question of whether an ERISA fiduciary can recover overpayments to a participant as an equitable lien under the “other equitable relief” provision of 29 U.S.C. § 1132(a)(3) if the fiduciary is unable to identify a particular fund in the participant’s possession and control at the time of the lawsuit. In other words, can a fiduciary recover overpayments from the participant’s general assets? Currently six circuits, the First, Second, Third, Sixth, Seventh and Eleventh allow such a recovery and the Eighth and Ninth do not.

Montanile was injured in an auto accident and the National Elevator Industry Health Benefit Plan (the “Plan”) paid $121,044.02 to Montanile’s medical providers. Montanile settled with the other driver for $500,000 and, under the terms of the Plan, it sought reimbursement of the money it paid to the medical providers. By the time the Plan sought reimbursement though, the funds had been dissipated so the Plan sought reimbursement in the form of an equitable lien by suing Montanile in the Southern District of Florida. The district court granted summary judgment to the Plan based on the majority rule, as the 11th Circuit had not yet ruled on such a case. The 11th Circuit affirmed the district court in an unreported 2-1 decision. See Board of Trustees of the Nat. Elevator Industry Health Ben. Plan v. Montanile, No. 14-11678, 2014 WL 6657049 (11th Cir. Nov. 25, 2014).

This is a very important case for both participants and fiduciaries because the issue of reimbursement comes up in all three major types of cases under ERISA: healthcare cases, disability cases and pension cases. In healthcare cases, as in Montanile, the plan is usually seeking repayment of medical expenses after the injured party settles with the tortfeasor. In disability cases, the issue arises because the plan is often only obligated to pay the difference between the monthly disability payment set out in the plan documents and funds received from other sources, most often Social Security Disability Income, and SSDI often takes months or even years to be awarded, resulting in a large overpayment that the participant is contractually required to pay back to the plan. Finally, in pension cases, the issue often crops up after years of miscalculated overpayments are discovered by the plan. The Court’s decision in this case will have lasting effects on plans because, among other things, many plans, especially healthcare and disability plans, are priced to take into account the reimbursements. However, whichever way the Court decides, it will bring more certainty to an area of ERISA law that has been anything but certain for years.  Because these types of cases come up so frequently, all ERISA plan fiduciaries and practitioners, both plaintiff and defense counsel, should be watching this case very closely.

Policy Language in an Individual Policy can be Interpreted Using ERISA Precedent

In a recent case, Florida Tube Corporation v. MetLife Insurance Company of Connecticut, No. 14-10824, 2015 WL 1189210 (11th Cir. Mar. 17, 2015), the Eleventh Circuit determined that the “due proof” language in an individual life insurance policy, which required proof of death “satisfactory” to MetLife, could be interpreted using the same principles of interpretation as those used in a similar ERISA-governed policy. This holding could assist both insurance companies and courts in interpreting policy provisions contained in non-ERISA policies that are similar to those contained in ERISA plans.

The plaintiffs in this case were two corporations that were the beneficiaries of a life insurance policy insuring the life of their president, Antonio Fernandez.  The companies both filed for bankruptcy in the early 2000s and Fernandez and his wife filed for bankruptcy in 2004.  Allegedly, Fernandez took off in his own plane from an airport in the Dominican Republic on August 18, 2008 en route to Puerto Rico and never made it. His assistant had dropped him off at the airport and conveniently “remembered” that he heard Fernandez mention some concerns about electrical or battery problems with the plane and he claimed he saw Fernandez board the plane alone.

No wreckage or a body was ever found but a representative of the beneficiaries contacted MetLife, which provided them with claim forms and requested that they provide a copy of Fernandez’s death certificate. MetLife was provided with a death certificate from the Dominican Republic’s Central Electoral Board (“CEB”), which listed the date of death as August 13th, not the 18th.  Eventually, the CEB issued a certificate with the correct date but the CEB formed a commission to investigate the authenticity of the second certificate and in September 2009 instructed government agencies to refrain from using the certificate because it was “full of irregularities” and declared it null and void.

MetLife also conducted an investigation and learned that the death proceeds formed an “indispensable” part of the Fernandezes’ bankruptcy reorganization plan and MetLife was unable to find any evidence regarding Fernandez’s status or location. After it informed the beneficiaries of its findings and continued lack of sufficient proof of death, their attorney sent an NTSB report to MetLife, which had been based solely on information released to it by the Dominican government and which neither named Fernandez nor made any conclusion beyond presuming that the pilot was dead and the aircraft had been destroyed. The attorney claimed that it was sufficient proof of death.  MetLife rejected the NTSB report as not “sufficient” proof of Fernandez’s death and refused to pay the death claim. In a shocking development, the beneficiaries sued.

The district court granted summary judgment to MetLife based on the policy’s requirement that a beneficiary had to give MetLife due proof of death, which was defined in the policy as a copy of a certified death certificate, a copy of certified death decree from a court, a written statement of an attending physician “or any other proof satisfactory to us.” Since the beneficiaries could not produce any of the first three, the court was left to construe the “proof satisfactory to us” provision. In doing so, it applied precedent set forth in Tippett v. Reliance Standard Life Insurance Co., 457 F.3d 1227 (11th Cir. 2006), an ERISA matter in which the court had held that the phrase “satisfactory . . . to us” vested a plan administrator with discretion to determine whether the information provided was sufficient. Despite the beneficiaries’ arguments that an ERISA case should not be used to review MetLife’s interpretation, the court stated that nothing in Tippitt’s holding limited its use to ERISA cases and noted that “the incentive for proof provisions in insurance policies is the same whether or not ERISA is involved.” Based on that interpretation, the court affirmed the district court and held that plaintiffs had not provided “due proof” of death, as required by the policy.


In Hoyle v. DTJ Ents., Inc., Slip Opinion No. 2015-Ohio- 843 (Mar. 12, 2015), the Supreme Court of Ohio precluded insurance coverage for virtually every employer intentional tort claim, stating “[w]e hold that an insurance provision that excludes coverage for acts committed with the deliberate intent to injure an employee precludes coverage for employer intentional torts, which require a finding that the employer intended to injure the employee.”  Id. ¶ 1. As such, insurers are likely not obligated to indemnify an insured, even when the policy at issue purports to extend coverage to “substantial certainty” cases.

The case stemmed from a workplace injury in which plaintiff Duane Hoyle was injured when he fell from a ladder-jack scaffold.  He claimed that the injury was caused by his employer’s failure to provide the bolts and pins necessary to safely secure the ladder jacks to the ladders, which he framed, at least in part, as a claim that a safety guard had been removed by the employer.  Id. ¶ 2-3. Hoyle sued his employer under claims of intentional tort and Cincinnati Insurance Company (“CIC”), which insured the employer under a commercial general liability policy (“CGL”), intervened and file a declaratory judgment action claiming that it had no duty to indemnify the employer should Hoyle prevail on his claim. Id. ¶ 6.

The CIC policy at issue generally excluded “coverage for bodily injuries that may reasonably result from the insured’s intentional acts or that the insured expected or intended” but the employer had also paid for an endorsement that provided coverage “for those sums that an insured becomes legally obligated to pay as damages because of bodily injury sustained by your employee in the workplace and caused by an intentional act to which this insurance applied.” As such, the policy purported to extend to coverage to substantially certainty employer torts otherwise excluded under the general policy.  However, even the endorsement excluded coverage “for acts committed by or at the direction of an insured with the deliberate intent to injure.”  Id. ¶ 17-18.

Under the Ohio’s Worker’s Compensation statute, employers are immune from liability and the employee’s only remedy is through a Worker’s Compensation claim but Ohio courts have held that that immunity does not extend to intentional acts. The present Worker’s Compensation statute, Ohio Revised Code § 2745.01, took effect in 2005 and limits employer liability to those cases where the employer committed the act with intent to injure “or with the belief that the injury was substantially certain to occur.”  R.C. 2745.01(A).  However, the statute defines “substantially certain” to mean that “an employer acts with deliberate intent to cause an employee to suffer an injury  . . . .”  R.C. 2745.01(B).  Therefore, even “substantially certain” claims still require proof of intent.  The statute does have one small opening for an injured worker if the injury was allegedly caused by the removal of a safety guard by creating a rebuttal presumption that such a removal was committed with an intent to injure if that removal was the direct cause of the injury.  R.C. 2745.01(C).  In other words, no matter the theory, the plaintiff must prove that the employer acted with a deliberate intent to injure, even under the rebuttable presumption, which ultimately requires intentional conduct.  The Ohio Supreme Court declared the statute constitutional in Kaminski v. Metal & Wire Prods. Co., 125 Ohio St.3d 250, 2010-Ohio-1027, 927 N.E.2d 1066.  Hoyle, ¶ 9.

In its declaratory judgment action, CIC claimed that even if Hoyle prevailed on his employer intentional tort claims, any liability would be excluded from coverage since it necessarily had to be based on the employer’s deliberate intent to injure him.  The trial court granted summary judgment to the employer on Hoyle’s claims based on sections A and B of the statute but determined that there were genuine issues of material as to the claim based on section C’s rebuttable presumptions with regard to the removal of a safety guard. The trial court also granted CIC’s motion for summary judgment but the appeals court reversed that ruling stating “[a]lthough the deliberate intent to injure may be presumed for purposes of the statute where there is a deliberate removal of a safety guard, . . . this does not in itself amount to ‘deliberate intent’ for purposes of the insurance exclusion.”  Id. ¶ 20 (emphasis in original).  As such, the appeals court suggested that an employee could prevail on an employer intentional tort claim without proving deliberate intent under the policy.

The supreme court disagreed.  It held that whether Hoyle established intent through direct evidence or through an unrebutted presumption, he still could only prevail against the employer by proving intent to injure, the very claim specifically excluded by both the general CGL policy and the endorsement.  As such, the court held that there was no set of facts under which CIC could be legally liable under the policy’s coverage.  Id. ¶ 27.

By ruling this way, and interpreting the statute the way it did, it appears that the Ohio Supreme Court has effectively precluded insurance coverage for all employer intentional tort claims in Ohio, even the narrow field of substantially certain claims.