American Journal of Law & Medicine

Equitable Relief under ERISA: Supreme Court Allows a Fiduciary to Recover Expenses Paid to a Beneficiary Who Subsequently Recovered Damages from a Third Party in a Tort Action Lawsuit--Sereboff v. Mid Atlantic Medical Services (1).(Select Recent Court Decisions)

Equitable Relief under ERISA: Supreme Court Allows a Fiduciary to Recover Expenses Paid to a Beneficiary Who Subsequently Recovered Damages from a Third Party in a Tort Action Lawsuit--Sereboff v. Mid Atlantic Medical Services, 126 S. Ct. 1869 (2006).

The Supreme Court unanimously held that a fiduciary's attempt to recover expenses paid to a beneficiary, who subsequently recovers damages from a third party in a tort action lawsuit, constitutes equitable relief under the Employee Retirement Security Act of 1974 ("ERISA"), (2) so long as the action is equivalent to the recovery of a contractually-created equitable lien on specifically identifiable funds in the beneficiary's possession. (3)

Marlene Sereboff and her husband, Joel, (the "Sereboffs") received health insurance under her employer-sponsored plan. (4) The plan was administered by respondent Mid Atlantic Medical Services, Inc. ("Mid Atlantic") and covered by ERISA. (5) The contract contained an "Acts of Third Parties" provision that applied when a third party's act or omission caused a beneficiary's illness or injury. (6) In the event a beneficiary receives benefits under the plan for such injuries, the beneficiary must "'reimburse [Mid Atlantic]' for those benefits from '[a]ll recoveries from a third party (whether by lawsuit, settlement, or otherwise)."' (7) Shortly after their involvement in an automobile accident, the Sereboffs filed a tort action lawsuit in California state court seeking compensatory damages for their resulting injuries. (8) In accordance with the "Acts of Third Parties" provision in their contract, Mid Atlantic notified the Sereboffs repeatedly during the litigation of its intention to claim a lien on the Sereboffs' recovery equivalent to the $74,869. …

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