:: Tutorial: Unit 1 – Subrogation & Reimbursement – Requirement of A Res

The current state of equitable claims for recovery of funds under ERISA originated with Mertens, blossomed in Knudson and flowered in Sereboff.  This series focuses on one aspect of ERISA “recovery” cases – must there be a “res”?

If an ERISA plan is to recover funds from a plan beneficiary, as for example, in a case of alleged overpayment, or in a case of subrogation or reimbursement, must the funds be in the possession of the defendant?

The courts of appeal differ about whether Sereboff requires that the funds be in the claimant’s possession for imposition of the equitable lien.  

Several courts of appeal have held that the beneficiary need no longer possess the specifically identified funds.

  • Cusson v. Liberty Life Assurance Co. of Bos., 592 F.3d 215, 231 (1st Cir. 2010);
  • Funk v. Cigna Corp. Ins., 648 F.3d 182, 194 & n.14 (3d Cir. 2011);
  • Longaberger Co. v. Kolt, 586 F.3d 459, 466-69 (6th Cir. 2009);
  • Gutta v. Std. Select Ins. Plans, 530 F.3d 614, 621 (7th Cir. 2008)

On the other hand, the Ninth Circuit has constructed a three-part test for recovery of an equitable lien by agreement under Sereboff, including a requirement that the funds be within the possession and control of the beneficiary.  See, Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d 1083, 1094-95 (9th Cir. 2012), cert. denied sub nom. First Unum Life Ins. Co. v. Bilyeu, 185 L. Ed. 2d 178, 2013 WL 598478 (2013).

More on this topic will appear in Unit 2.