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September 9, 2005.

MARIA LASZOK, Defendant.

The opinion of the court was delivered by: KATHARINE HAYDEN, District Judge


Plaintiff Unum Life Insurance Company of America ("Unum") is seeking recoupment of an overpayment of disability benefits paid out to defendant Maria Laszok ("Laszok") under an "employee welfare benefit plan," as defined by the Employee Retirement Income Security Act of 1974 ("ERISA"). By way of present motion, Unum requests summary judgment be entered against Laszok for the overpayment balance of $25,420.65 and moves for attorneys' fees and costs under 29 U.S.C. § 1132(g)(1). Laszok has filed a cross-motion for summary judgment asserting that Unum's complaint must be dismissed because it fails to state a cause of action under Fed.R.Civ.P. 12(b)(6) and has also submitted an application for an award of attorneys' fees and cost pursuant to 29 U.S.C. § 1132(g)(1). These cross-motions are appropriately filed because there are no material facts in dispute: Unum did overpay and Laszok has not returned the full amount she received.

For the reasons set forth below, the Court denies Unum's motion for summary judgment and grants Laszok's cross-motion for summary judgment. Both parties' applications for attorneys' fees and cost are denied.


  The parties have stipulated to the following in a Stipulation of Facts dated January 28, 2005. Laszok was an employee of St. Michael's Hospital/Cathedral Health Care Systems Inc. ("Cathedral Healthcare") and as such was covered under Cathedral Healthcare's "employee welfare benefit plan" (the "Plan"), as defined by the Employee Retirement Income Security Act of 1974, amended ("ERISA"), 29 U.S.C. § 1001 et seq.. The Plan provided eligible employees, including Laszok, with long-term disability ("LTD") benefits. Unum issued a policy of group LTD insurance that funded, in whole or in part, these benefits. Unum assumed the authority to determine eligibility under the policy.

  Due to a disability commencing on November 1, 1996, Laszok submitted a claim under the Plan's LTD insurance and was approved for a monthly benefit in the amount of $2,453.75 for a 24-month period, following a 180-day elimination period. She began receiving monthly LTD benefits in the full amount on April 30, 1997 and continued to receive full monthly payments from Unum up to the scheduled termination date, April 30, 1999.

  The Plan's LTD insurance policy required "other income benefits" to be deducted from an insured's monthly LTD benefit payments, including the estimated amount of social security disability benefits the insured would be entitled to. Monthly payments would not be reduced if the insured signed the "Company's Agreement Concerning Benefits," promising to repay Unum for any overpayment created by an award of social security disability benefits. Laszok signed this agreement.

  On April 29, 1999, Unum learned during the period that Laszok was receiving LTD benefits, she was retroactively awarded monthly social security disability benefits of $1,267.00. Under the terms of the Plan and the Company's Agreement Concerning Benefits, this retroactive award of social security benefits created an overpayment of LTD benefits in the amount of $29,183.23. Unum immediately sought recovery from Laszok. On June 9, 1999, Unum received a check in the amount of $3,569.25 from Laszok's sister towards the overpayment. And on January 27, 2000 Unum recouped an additional $193.33, leaving an overpayment balance of $25,420.65. To date, even after Unum made repeated demands, Laszok has not paid the remaining balance of the overpayments.


  Unum argues that it is entitled to reimbursement of the overpaid LTD benefits as an ERISA fiduciary pursuant to 29 U.S.C. § 1132(a)(3), and alternatively, under federal common law. The Court will address each of Unum's proposed causes of action in turn.

  A. "Equitable Remedy" under 29 U.S.C. § 1132(a)(3)

  Under the statutory scheme of ERISA, a fiduciary may commence a civil action to obtain appropriate equitable relief to redress any violation of the terms of the plan or to enforce any provision of the terms of the plan. See 29 U.S.C. § 1132(a)(3). Unum, which qualifies as a fiduciary because it had the discretion to grant or deny LTD benefits to the Plan's participants, asserts this provision authorizes an action for restitution to recover overpayments made to Laszok. The Supreme Court has determined that § 1132(a)(3) does not authorize all relief falling under the "rubric of restitution;" rather it only authorizes that which is equitable in nature. Great-West Life & Annuity Insurance Co. V. Knudson, 534 U.S. 204, 212 (2002). This holding establishes that regardless of how Unum labels its claim for relief, the Court must determine whether the relief sought is truly equitable. Id. In Great-West, the plan beneficiary was injured in a car accident, and the plan fiduciary advanced money to cover the cost of medical expenses. Later, the beneficiary received money from a settlement agreement with the tortfeasor. Based on the plan's reimbursement provision, the fiduciary sued the beneficiary seeking recoupment of the overpayments of benefits and prayed for various equitable remedies. Under these facts, the Supreme Court held that (1) the plan fiduciary was not entitled to an injunction against "[beneficiary's] failure to reimburse the plan," or to specific performance of the "past due monetary obligation." The Court reasoned that the restitution being sought should be deemed "legal," not "equitable," and therefore not an appropriate remedy under ERISA. Id. at 210-11. Distinguishing between legal and equitable restitution, the Supreme Court held that "a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession." 534 U.S. at 213. On the other hand, if "the property [sought to be recovered] or its proceeds have been dissipated so that no product remains, [the plaintiff's] claim is only that of a general creditor, and the plaintiff cannot enforce a constructive trust of or an equitable lien upon other property of the [defendant]." Id. at 213-214. Under those circumstances, the plaintiff is seeking a legal remedy — the imposition of personal liability on the defendant to pay a sum of money which the plaintiff is owed — and so his claim falls outside § 1132(a)(3). Id. at 210. In rejecting the plan fiduciary's claim for restitution, the majority wrote that "[plaintiff] seeks, in essence, to impose personal liability on [defendant] for a contractual obligation to pay money — relief that was not typically available in equity." On that basis, the Court held that § 1132(a)(3) did not authorize the plan fiduciary's action for specific performance and restitution under the plan's reimbursement provision. 532 U.S. at 210-11.

  Laszok argues that the case at bar is indistinguishable from Great-West and asserts that Unum's claim is "legal rather than equitable in nature and therefore barred by Fed.R.Civ.P. 12(b)(6) and 29 U.S.C.A. § 1132(a)(3)." (Laszok Opposition, at 5.) Like the plaintiff in Great-West, Unum seeks, in essence, to impose personal liability on Laszok for money owed under the Plan, an action the Supreme Court has categorized in Great-West as an action at law.

  In determining whether this deprives Unum of its cause of action, the Court notes that some courts have held that reimbursement of overpaid benefits is recoverable under the majority's holding in Great-West, if the fiduciary seeks "to recover funds (1) that are identifiable, (2) that belong in good conscience to the [fiduciary], and (3) that are within the possession and control of the defendant beneficiary," as opposed to dissipated. Bombadier Aerospace Employee Welfare Benefits Plan v. Gerrer Poirot and Wansbrough, 354 F.3d 348, 356 (5th Cir. 2003); see also Admin. Comm. of the Wal-Mart Stores, Inc. Assocs.' Health and Welfare Plan v. Willard, 393 F.3d 1119, 1122 (10th Cir. 2004); Admin. Comm. of the Wal-Mart Stores, Inc. Assocs.' Health and Welfare Plan v. Varco, 338 F.3d 680 (7th Cir. 2003).*fn1 Here Unum does not contend that the particular funds are identifiable or in the control of the defendant. Nor does Unum present any other argument to refute Laszok's contention that Unum is seeking legal restitution. Instead, Unum maintains it is entitled to reimbursement pursuant to ...

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