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
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
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