906 F.2d 985 (4th Cir. 1990), 89-2123, Provident Life & Acc. Ins. Co. v. Waller

Docket Nº:89-2123, 89-2124.
Citation:906 F.2d 985
Party Name:PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY, Plaintiff-Appellant, v. Mary J. WALLER, Defendant-Appellee. PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY, Plaintiff-Appellee, v. Mary J. WALLER, Defendant-Appellant.
Case Date:June 27, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

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906 F.2d 985 (4th Cir. 1990)



Mary J. WALLER, Defendant-Appellee.



Mary J. WALLER, Defendant-Appellant.

Nos. 89-2123, 89-2124.

United States Court of Appeals, Fourth Circuit

June 27, 1990

Argued March 6, 1990.

As Amended July 10, 1990.

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William Hitchcock Lindsey, Bounds & Dorsey, P.C., Roanoke, Va., for plaintiff-appellant.

W. Carrington Thompson, Chatham, Va. (Thomas L. Phillips, Phillips, Phillips & Phillips, Rustburg, Va., on brief), for defendant-appellee.

Before MURNAGHAN, Circuit Judge, BUTZNER, Senior Circuit Judge, and KAUFMAN, Senior United States District Judge for the District of Maryland, sitting by designation.

MURNAGHAN, Circuit Judge:

We are presented with several difficult questions regarding the scope of the Employee Retirement Income Security Act of 1974 ("ERISA") and the power of the federal courts to fill in the interstices of this comprehensive and labyrinthine statute. Specifically, we address whether the Provident Life & Accident Insurance Co. ("Provident") may recover monies advanced to one of its plan participants, Mary J. Waller, after she was injured in an auto accident. In response to Provident's action under ERISA for recovery of the advanced benefits, the district court concluded that Provident was not entitled to reimbursement because it did not comply with one of the provisions of the ERISA-governed plan. On Provident's appeal, we conclude that a failure to repay this advance would unjustly enrich Waller and contradict the intent of both ERISA and the plan. Accordingly, we reverse the order of the district court and enter judgment for Provident.


Waller was employed by Burlington Industries and a participant in its qualified self-funded employee benefit plan, which is administered by Provident. The plan pays life, medical and disability benefits to or on behalf of its participants, such as Waller. However, the plan specifically provides in an "Acts of Third Parties" provision that

Medical and disability benefits are not payable to or for a person covered under the Group Plan when the injury or illness to the covered person occurs through the act or omission of another person. However, payment for medical care expenses ... for an injury or illness in which a third party is liable may be advanced by Provident. For this to happen, the covered person must sign an agreement to repay the Group Plan in full any payments advanced ... from the judgment or settlement he or she receives....

(Emphasis added.)

On February 21, 1986, Waller was injured in a car accident in which she was not at fault. On Waller's written request, Provident advanced her $5,922.53 in medical expenses despite never obtaining a signed repayment agreement. 1 Waller later recovered damages from the third party in excess of what the plan paid out to her. After Waller refused to reimburse the

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plan, Provident brought an action under ERISA, 29 U.S.C. Sec. 1132(a)(1)(B), (e)(2) (1982), for recovery of the advanced monies plus costs and attorney's fees. Although admitting to receiving the money from a third party, 2 Waller filed an answer questioning the district court's jurisdiction under Sec. 1132(a)(1)(B). She also filed a counterclaim under Sec. 1132(a)(1)(B) requesting a declaratory judgment that the Virginia anti-subrogation statute, Va.Code Ann. Sec. 38.2-3405, precluded reimbursement and was not preempted by ERISA. Finally, Waller requested class certification on behalf of all plan beneficiaries who had repaid money advanced by Provident.

The district court denied Waller's motion to certify the class but denied Provident's motion for summary judgment and entered judgment in favor of Waller. The district court found that although ERISA preempted the Virginia anti-subrogation provision, Provident's failure to require Waller to sign the repayment provision constituted noncompliance with the terms of the plan and therefore barred its recovery of advanced expenses. Provident appeals that conclusion and Waller appeals the district court's denial of class certification.


In its complaint, Provident alleged federal jurisdiction under ERISA Sec. 502(a)(1)(B), 29 U.S.C. Sec. 1132(a)(1)(B) (West 1985). Waller maintains that Sec. 1132(a)(1)(B) does not provide a federal cause of action for plan administrators. We agree, but nonetheless conclude that the district court had jurisdiction under the federal question provision.


Section 1132(a)(1)(B) provides, in relevant part, that "[a] civil action may be brought ... by a participant or beneficiary ... to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan" (emphasis added). Here, Provident was neither a participant nor beneficiary but rather the administrator of Burlington's self-funded plan. 3 Although we have not yet addressed the scope of Sec. 1132(a), most of our sister circuits have limited federal jurisdiction to the suits by the entities specified in the statute. See, e.g., Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286, 1288-89 (5th Cir.1988) ("Where Congress has defined the parties who may bring a civil action founded on ERISA, we are loathe to ignore the legislature's specificity."); Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir.) ("legislature [did not] intend[ ] to grant subject matter jurisdiction over suits by employers, funds, or other parties not listed in Sec. 1132[a]...."), cert. denied, 464 U.S. 845, 104 S.Ct. 148, 78 L.Ed.2d 138 (1983). 4 Such a conclusion is amply supported by the Supreme Court's decision in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 21, 103 S.Ct. 2841, 2852, 77 L.Ed.2d 420 (1983), which noted that "[t]he express grant of

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federal jurisdiction in ERISA is limited to suits brought by certain parties ... as to whom Congress presumably determined that a right to enter federal court was necessary to further the statute's purposes." Finally, at least two courts specifically have concluded that plan administrators may not bring suit under Sec. 1132(a)(1)(B) of ERISA. See Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1104 (6th Cir.1983); In Re Sheppard, 658 F.Supp. 729, 734 (C.D.Ill.1987). We find ourselves in agreement with this view, and so conclude that Provident cannot bring suit under Sec. 1132(a)(1)(B). 5


Ordinarily, the failure to state the federal statutory or constitutional provision under which a claim arises warrants dismissal for lack of subject matter jurisdiction. However, it is well settled that courts may excuse pleading defects if the facts alleged in the complaint and the relief requested demonstrate the existence of a substantial federal question. See Schlesinger v. Councilman, 420 U.S. 738, 744 n. 9, 95 S.Ct. 1300, 1306 n. 9, 43 L.Ed.2d 591 (1975) (Sec. 1331 "nowhere mentioned" in complaint but facts "demonstrate the existence of a federal question"); Blue v. Craig, 505 F.2d 830, 844 (4th Cir.1974) ("[I]f facts giving the court jurisdiction are set forth in the complaint, the provision conferring jurisdiction need not be specifically pleaded.") (quoting Williams v. United States, 405 F.2d 951, 954 (9th Cir.1969)); 5 C. Wright & A. Miller, Federal Practice & Procedure: Civil Sec. 1209, at 92 (1969 & Supp.1989) ("failure to name the particular statute ... under which the action arises is not fatal if the remainder of the complaint shows that a federal question actually is involved or relied upon by the pleader"). We believe that the balance of Provident's complaint demonstrates that a federal question is involved, see 28 U.S.C. Sec. 1331(a) (1982). 6

Section 1331(a) provides that district courts "shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States." A suit "arises under" federal law if federal law creates the cause of action. American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916); Cook v. Georgetown Steel Corp., 770 F.2d 1272, 1274 n. 2 (4th Cir.1985). Although the issue was at one point in doubt, see T.B. Harms Co. v. Eliscu, 339 F.2d 823, 827-28 (2d Cir.1964) (Friendly, J.), cert. denied, 381 U.S. 915, 85 S.Ct. 1534, 14 L.Ed.2d 435 (1965), there is no longer any question that the word "laws" in Sec. 1331(a) embraces claims founded upon federal common law. In Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972), the Supreme Court concluded that "Sec. 1331 jurisdiction will support claims founded upon federal common law as well as those of a statutory origin." City of Milwaukee involved a public nuisance suit brought by the State of Illinois against four Wisconsin cities and a city sewage commission for dumping raw sewage into Lake Michigan. The Court, asked to exercise its original jurisdiction because a state was a party, declined but instead...

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