In Central States, Southeast and Southwest Areas Health and Welfare Fund v. Gerber Life Insurance Company, No. 13-4834-cv (2nd Cir. 2014), the Second Circuit Court of Appeals (the “Court”) considered whether the plaintiff’s claims are ones for “appropriate equitable relief” under § 502(a)(3) of ERISA, or whether the claims are for legal relief which is not available under that section. The Court concluded that the claims are ones for legal relief.
In this case, Central States, Southeast and Southwest Areas Health and Welfare Fund (“Central States”) is an ERISA employee welfare benefit plan that provides health insurance to participating Teamsters and their dependents. Gerber Life Insurance Company (“Gerber”) issued accident insurance policies that covered, among other things, scholastic sports-related injuries. The claims at issue arose from injuries suffered by several students during scholastic athletic activities. The students were insured by Central States as dependents of plan participants, and were also directly insured by separate accident policies written by Gerber. The central controversy in this litigation is which of the two policies afforded primary and which afforded secondary coverage for the injuries. Although Central States considered its coverage to be secondary, it nevertheless paid the injured students’ claims as an accommodation to them and their families. After it paid the claims, Central States sought reimbursement from Gerber, whom it considered the primary insurance provider. Gerber refused to pay, taking the position that under its coordination of benefits provision, its policies provided only excess, secondary coverage. Central States then brought this lawsuit to recover the amounts it had paid on the claims.
Central States’ complaint alleged various claims for declaratory judgment and injunctive relief pursuant to federal common law and ERISA § 502(a)(3). The district court dismissed the case, finding that Central States’ claims were not equitable in nature so that the relief sought was unavailable under ERISA. Central States appeals. In analyzing the case, the Court determined that Central States sought legal relief, since it seeks to obtain a judgment imposing a merely personal liability upon the defendant to pay a sum of money, as opposed to seeking restitution in equity by identifying (i.e., tracing) particular property held by the defendant but belonging to the plaintiff in good conscience. This result obtains, the Court said, even though it may leave a plaintiff such as Central States without a remedy.