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.

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