:: ERISA Plan Prevails On Plan Reimbursement Claim
. . . the claim for reimbursement is properly brought as a claim for equitable relief in accordance with both ERISA and the terms of the Plan. See Sereboff v. Mid Atl. Med. Servs, Inc., 547 U.S. 356, 126 S. Ct. 1869, 164 L. Ed. 2d 612 (2006) (providing that an ERISA fund was entitled to recover on an equitable relief claim because it sought to recover specifically identifiable funds under ERISA §502(a)(3)); Admin. Comm. of the Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan v. Varco, 338 F.3d 680, 688 (7th Cir. 2003) [*8] (same).
Anderson v. Dergance, 2009 U.S. Dist. LEXIS 51593 (N.D. Ill. June 18, 2009)
This ERISA plan reimbursement case applies the Sereboff holding to find in favor of an ERISA plan’s claims to specifically identifiable funds held in an attorney’s trust account following a personal injury settlement.
The Facts
Cory Dergance was injured at a Dollar General store and subsequently settled a personal injury claim for $ 30,000. Medical bills for the personal injury had been paid by the Painters’ District Council No. 30 Health and Welfare Plan (the “Plan”), administered by Plaintiff Painters’ District Council No. 30 Health and Welfare Fund (the “Fund”), an ERISA multiemployer.
Dergance’s attorney in the personal injury case, Peter Ferracuti, held $ 14,365.13 in benefits paid to Dergance.
The Reimbursement Claim
A dispute over reimbursement led to litigation in which the plan asserted a claim for equitable relief. The issue came before the court in the posture of a summary judgment motion.
First, the claim for reimbursement is properly brought as a claim for equitable relief in accordance with both ERISA and the terms of the Plan. See Sereboff v. Mid Atl. Med. Servs, Inc., 547 U.S. 356, 126 S. Ct. 1869, 164 L. Ed. 2d 612 (2006) (providing that an ERISA fund was entitled to recover on an equitable relief claim because it sought to recover specifically identifiable funds under ERISA §502(a)(3)); Admin. Comm. of the Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan v. Varco, 338 F.3d 680, 688 (7th Cir. 2003) [*8] (same).
As is frequently the case, the plan’s procedures regarding acknowledgment of a repayment obligation created some room for argument over the plan’s rights. Dergance had never signed the “subrogation agreement” document as he was required to do under the plan terms for benefits to be paid.
Thus, the argument:
Citing to Plan section 2.17(b)(5), Ferracuti argues that a subrogation/agreement to repay document had to have been executed in order for the Fund to seek reimbursement. Ferracuti says that no such document was ever created or signed by Dergance.
The court appears to have applied something like an estoppel analysis without specifically describing the basis for its rationale as such. But the notion that the participant could accept benefits under the plan terms and then object to the plan repayment provisions seemed to have provoked the Court.
Dergance received his benefits under the Plan. Neither he nor Ferracuti may now use Plan provisions that are intended to ensure that Eligible Individuals receive their benefits in order to preclude the Fund from recovering the reimbursement to which it is entitled. This is not the type of protection envisioned by the Plan’s clear language.
The Court awarded summary judgment against Dergance and Ferracuti, jointly and severally, in the amount of $ 14,365.13.
Note: The “clear language” cited by the Court was described as follows:
. . . section 2.17(b)(5) of the Plan states that “the Eligible Individual’s entitlement to benefits from the Plan shall be further conditioned upon the execution” of a subrogation/agreement to repay.
The clear language indicates that the execution of the agreement enables an Eligible Individual to seek the benefits to which he is entitled, i.e., the benefits are conditioned upon the execution of the agreement. The section does not indicate that reimbursement is conditioned upon the execution of the agreement. In addition, section 2.17(b)(6) provides that “[n]o benefits shall be payable by the Fund if an Eligible Individual . . . fails to execute a subrogation/agreement to repay.” These sections, including the need for a signature, are explicitly in addition to the Plan provision upon which the Fund relies. According to section 2.17(b)(4), “[n]otwithstanding any other provisions of this Plan, and in addition to such rights of recovery [*9] or offset, the Plan shall have a lien, enforceable as a provision of this plan . . . for the full amount due to the Plan.”
Separation Of Charges - The defendants presented a factual issue on the relatedness of medical payments to the accident. There was a proof problem here, however, as the court observed that:
With regard to the accuracy of the reimbursement amount for medical benefits and disability benefits, Ferracuti relies on a letter from Dergance’s doctor that separates charges related to Dergance’s injury at Dollar General from those related to a separate condition that was treated at the same time (a carpal tunnel release). Ferracuti cannot rely on the letter, as it is not only unsupported by affidavit, but also its contents were not presented in a L.R. 56.1 statement of facts. Even if I were to rely on the letter as evidence, by the doctor’s own admission, “it is difficult to separate the charges attributable to the carpal tunnel release from those that were incurred as a direct result of the laceration.” I have deemed the Funds’ stated reimbursement amounts as accurate.
Joint And Several Liability - The Court held that the lawyer was jointly and severally liable “because it is in possession of at least $ 14,365.13 of Dergance’s recovery.” Thus:
Ferracuti is not merely a nominal defendant, but rather a necessary party, who will be “affected by the judgment [of the court] and against [whom] it will in fact operate.” West Coast Exploration Co. v. McKay, 213 F.2d 582, 592, 93 U.S. App. D.C. 307 (C.A.D.C., 1954). The law firm is subject to suit because it hold funds which are subject to the Fund’s equitable lien.
The caption of the case reveals the the attorney’s professional corporation was the defendant, not the attorney personally. This was proper because the corporation held the funds.
