RESPONDENT: Board of Trustees of the National Elevator Industrial Health Benefit Plan
LOCATION: U.S. Court of Appeals for the Eleventh Circuit
DOCKET NO.: 14-723
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit
CITATION: 577 US (2016)
GRANTED: Mar 30, 2015
ARGUED: Nov 09, 2015
DECIDED: Jan 20, 2016
Ginger D. Anders - Assistant to the Solicitor General, for the United States as amicus curiae, for the petitioner
Neal Kumar Katyal - for the respondent
Peter K. Stris - for the petitioner
Facts of the case
In late 2008, Robert Montanile was involved in a car accident that resulted in significant injuries. Montanile was covered by an employee welfare benefit plan administered by the Board of Trustees of the National Elevator Industrial Health Benefit Plan (Plan). After Montanile’s accident, the Plan dispersed over $120,000 to cover Montanile’s medical expenses. Montanile later sued the driver of the other car involved in the accident, eventually obtaining a $500,000 settlement. Per its terms, the Plan then requested that Montanile reimburse the initial $120,000 disbursement. When Montanile and the Plan were unable to reach an agreement, the Plan sued Montanile.
The Plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA), which allows plan administrators to recover overpayment from a beneficiary when the recovery would constitute “appropriate equitable relief”. The trial court held that the terms of the Plan required Montanile to repay the initial $120,000, and that this repayment was appropriate equitable relief in part because the Plan was able to identify a source of funds within Montanile’s possession—the $500,000 settlement. Montanile appealed and claimed that the repayment would not be equitable relief because the settlement had been spent or disbursed to other parties. The U.S. Court of Appeals for the Eleventh Circuit held that, because the Plan had a right to reimbursement, the Plan’s lien against Montanile’s $500,000 settlement attached before Montanile spent or disbursed the funds. Therefore, Montanile could not evade the repayment by claiming the settlement funds had been spent or disbursed.
For purposes of the Employee Retirement Income Security Act of 1974, is a reimbursement to an employee welfare benefit plan “appropriate equitable relief” if the identified source of the reimbursement has already been spent or disbursed?
Media for Montanile v. Board of Trustees of the National Elevator Industrial Health Benefit PlanAudio Transcription for Oral Argument - November 09, 2015 in Montanile v. Board of Trustees of the National Elevator Industrial Health Benefit Plan
Audio Transcription for Opinion Announcement - January 20, 2016 in Montanile v. Board of Trustees of the National Elevator Industrial Health Benefit Plan
John G. Roberts, Jr.:
Justice Thomas has our opinion this morning in case 14-723, Montanile versus Board of Trustees of the National Elevator Industry Health Benefit Plan.
This case comes to us on a writ of certiorari to the United States Court of Appeals for the Eleventh Circuit.
Petitioner Robert Montanile was injured in an auto accident with a drunk driver.
His injuries required hospitalization and he incurred significant medical expenses.
Those expenses were paid by Montanile's employee health benefit plan, which is administered by the Board of Trustees of the National Elevator Industry Health Benefit Plan, the respondent here.
This plan is regulated under the Employee Retirement Income Security Act of 1974, commonly called ERISA.
Although the plan paid his medical expenses, the plan reserved the right to obtain reimbursement from Montanile for the medical expenses it had covered if Montanile recouped anything from third parties.
Montanile eventually obtained $500,000.00 settlement.
After paying his attorneys about $240,000.00 remained.
Montanile's attorneys initially kept this amount in a separate account.
The plan sought reimbursement but the parties failed to agree on Montanile's repayment obligations.
At that point Montanile's attorney released the remaining settlement funds to Montanile.
Six months later the Board sued Montanile in Federal District Court under ERISA seeking to impose an equitable lien on any settlement funds in Montanile's possession, but Montanile asserted that he had by now spent almost all the settlement money on intangible things like child care and food.
The District Court entered judgment for the Board.
It reasoned that even if the Board could not identify specific settlement funds in Montanile's possession, the Board could still enforce its lien against Montanile's general assets.
The Eleventh Circuit agreed and affirmed.
In an opinion filed with the clerk today, we now reverse the judgment of the Eleventh Circuit and remand for further proceedings.
We hold that if a plan participant spends all of the money in a separate specifically identified fund, ERISA does not allow the plan to enforce its equitable lien against that fund, nor can the plan to go after the plan participant's general assets.
This holding flows from §502(a)(3) of ERISA which authorizes suits by ERISA plans against plan participants.
That provision allows plan administrators like the Board to sue someone like Montanile only for appropriate equitable relief to enforce the terms of the plan.
Our precedents establish that the term equitable relief in §502(a) is limited to those categories of relief that are typically available in equity during the days of the divided bench, meaning the period before 1938 when courts of law and equity were separate.
We thus look to premerge equity practice to determine whether the Board could enforce the equitable lien against Montanile's general assets.
Standard equity treatises make clear the Board could not do so.
A plaintiff at equity could ordinarily enforce an equitable lien only against specifically identified funds that remained in the defendant's possession.
When a defendant spent the entire identifiable fund on intangible items like entertainment or travel that destroyed the equitable lien.
The plaintiff here may have a personal claim against the defendant's general assets but recovering out of those assets is a legal remedy not an equitable lien.
And because §502(a)(3) is limited to equitable remedies, the Board could not sue Montanile if he indeed spent all of the settlement funds in this fashion, because the lower courts incorrectly held that the Board could recover out of Montanile's general assets, they did not determine whether Montanile kept his settlement funds separate from his general assets, nor did those courts determined whether Montanile spent the entire settlement fund.
The record is unclear on both of these points and a remand is in order and necessary so that the District Court can resolve those factual issues.
For these reasons and others set forth in our opinion we reverse the judgment of the Eleventh Circuit and remand for further proceedings consistent with this opinion.
Justice Alito joins all but Part III-C of the opinion, and Justice Ginsburg has filed a dissenting opinion.