Admin. Comm. v. Gauf

• Decision Date: 11 August 1999
• Docket Number: No. 98-3131,98-3131
• Citation: 188 F.3d 767
• Parties: (7th Cir. 1999) ADMINISTRATIVE COMMITTEE, as Administrator of the Associates' Health and Welfare Plan, Plaintiff-Appellant, v. PATRICIA A. GAUF, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 767

188 F.3d 767 (7th Cir. 1999)

ADMINISTRATIVE COMMITTEE, as Administrator of the Associates' Health and Welfare Plan, Plaintiff-Appellant, v. PATRICIA A. GAUF, Defendant-Appellee.

No. 98-3131

United States Court of Appeals, Seventh Circuit

Argued January 20, 1999

Decided August 11, 1999

Appeal from the United States District Court for the Southern District of Illinois. No. 98 C 111--Paul E. Riley, Sr., Chief Judge.

Before COFFEY, RIPPLE and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

Patricia Gauf was employed by Wal-Mart and was covered under Wal- Mart's Associates' Health and Welfare Plan ("the Plan"). The Plan is administered by the Administrative Committee ("the Committee"). In this action, the Committee seeks an order compelling Ms. Gauf to reimburse the Plan for $9,870 in benefits it has paid to her. The district court dismissed the claim; it held that it did not have subject matter jurisdiction, or, in the alternative, that the Colorado River doctrine¹ counseled that it should decline to exercise jurisdiction. For the reasons set forth in the following opinion, we reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

I BACKGROUND

While she was a participant in the Plan, Ms. Gauf was injured in an automobile accident; her vehicle collided with another vehicle. Ms. Gauf received medical treatment for her injuries. The Plan reimbursed Ms. Gauf $9,870.68 for this treatment. Ms. Gauf later brought a tort action in state court against the two people involved in the accident. Although she received a $104,000 verdict, she was able to collect only $36,000, the entire amount paid by the insurers of the defendants in the state case. After entry of the verdict, and in the same state court proceeding, Ms. Gauf filed a motion to adjudicate and allocate liens held by 13 medical creditors and an insurance creditor. Although Ms. Gauf did not name the Plan or the Committee as defendants to the motion, she listed the Plan as claiming $9,870.68 as subrogation for medical payments.

In the present action, the Committee seeks an order compelling Ms. Gauf to reimburse the $9,870.68 paid to her as benefits under the Plan.² The Committee bases its claim on a Plan provision. That provision states:

Right to Reduction and Reimbursement (Subrogation).

The Plan has the right to (1) reduce or deny benefits otherwise payable by the Plan and (2) receive (subrogate) 100% of the benefits previously paid by the Plan to the extent of any and all of the following payments:

--Any judgment, settlement, or any payment, made or to be made by a person considered responsible for the condition giving rise to the medical expense or by their insurers.

--Any auto or recreational vehicle insurance coverages or benefits, including, but not limited to, uninsured motorist coverage.

--Business and homeowners medical liability insurance coverage or payments.

--Attorney's fees.

R.1, Ex.A at D16.

II DISCUSSION

The Committee submits that we have subject matter jurisdiction pursuant to the federal question jurisdiction statute, 28 U.S.C. sec. 1331, and ERISA sec. 502(a)(3), 29 U.S.C. sec. 1132(a)(3). ERISA sec. 502(a) provides:

A civil action may be brought--. . .

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.

29 U.S.C. sec. 1132(a)(3). The federal courts possess exclusive jurisdiction over suits brought pursuant to this section. See 29 U.S.C. sec. 1132(e).

A. Subject Matter Jurisdiction Pursuant to ERISA sec. 502(a)(3)

The Administrative Committee contends that, under the plain wording of ERISA sec. 502(a)(3), we have jurisdiction because this suit is "[a] civil action . . . brought--. . . (3) by a . . . fiduciary (A) to enjoin any act or practice which violates . . . the terms of the plan, or (B) to obtain other appropriate equitable relief . . . to enforce . . . the terms of the plan." 29 U.S.C. sec. 1132(a)(3).

The question we must answer, therefore, is whether the complaint in this case falls within the terms of ERISA sec. 502(a)(3). In resolving this issue, we must make two inquiries: 1-- whether the Committee is a fiduciary under sec. 503(a)(3); 2--whether the Committee is seeking equitable, rather than legal, relief.

1.

We first address whether the Committee is a fiduciary for purposes of ERISA sec. 502(a)(3). 29 U.S.C. sec. 1002(21)(A) defines "fiduciary":

[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under section 1105(c)(1)(B) of this title.

29 U.S.C. sec. 1002(21)(A). The Plan states that it "expressly gives the Plan Administrator or [its] designee(s) discretionary authority to resolve all questions concerning the administration, interpretation, or application of the Plan." R.1, Ex.A at Q2. It is clear, therefore, that the Administrative Committee is a fiduciary within the meaning of ERISA sec. 502(a)(3).

2.

We next turn to the question whether the Administrative Committee is seeking equitable relief. In its brief in this court, the Committee argues that it is essentially seeking restitution under the Plan. Ms. Gauf responds that what the Committee is actually seeking is $9,870.68 in damages for Ms. Gauf's alleged violation of the terms of the Plan. Such claims for damages are in essence legal claims, she argues.

The plain wording of sec. 502(a)(3) makes clear that, if the Committee is seeking legal relief, we do not have jurisdiction. See Mertens v. Hewitt Assocs., 508 U.S. 248, 255-62 (1993). Although the pertinent parts of the complaint employ a variety of terms to express the relief requested, we believe that a fair reading of the document in its totality makes clear that the Committee is seeking an equitable remedy against Ms. Gauf to ensure her compliance with the terms of the Plan. For example, the complaint requests "specific performance and enforcement" of the contract and an "order enjoining Defendant from continuing to violate the terms of the plan."

As the parties note, other circuits have addressed similar situations. The Ninth Circuit has held that the substance of a medical plan's reimbursement claim was for money damages, even though it was phrased in terms of enforcing the terms of the plan. See FMC Med. Plan v. Owens, 122 F.3d 1258, 1261-62 (9th Cir. 1997). That court consequently concluded that sec. 502(a)(3) does not grant federal courts jurisdiction over such claims. However, the Eleventh and the Eighth Circuits have taken a different view. In Blue Cross &amp Blue Shield of Alabama v. Sanders, 138 F.3d 1347 (11th Cir. 1998), the Eleventh Circuit rejected the FMC Medical holding as "an unduly narrow reading" of Supreme Court precedent. Id. at 1353 n.5. Rather, held the Eleventh Circuit, federal courts have jurisdiction over a medical plan's suit for specific performance of a reimbursement clause because specific performance is a form of equitable relief. See id.; see also Southern Council of Indus. Workers v. Ford, 83 F.3d 966, 969 (8th Cir. 1996).

We believe that the approach of the Eleventh and Eighth Circuits is in harmony with our own case law. Our circuit consistently has held that a complaint purporting to state a claim for equitable relief under a reimbursement clause in a benefits contract is an equitable claim for purposes of ERISA sec. 502(a)(3). See Harris Trust & Sav. Bank v. Provident Life & Accident Ins. Co., 57 F.3d 608, 615 (7th Cir. 1995); Central States, Southeast & Southwest Areas Health & Welfare Fund v. Neurobehavioral Assocs., 53 F.3d 172, 173-74 (7th Cir. 1995); see also Health Cost Controls v. Skinner, 44 F.3d 535 (7th Cir. 1995) (remanding case to district court to allow plaintiff to clarify that it was seeking restitution rather than money damages). We see no reason to depart from the course already charted by these cases. Accordingly, we hold that the complaint states a claim for equitable relief.

3.

We do not believe that this case is controlled by our decisions in Blackburn v. Sundstrand Corp., 115 F.3d 493 (7th Cir. 1997), and a similar case relied upon by Ms. Gauf, Speciale v. Seybold, 147 F.3d 612 (7th Cir. 1998). In Blackburn, an injured driver settled a negligence claim with the driver of the car at fault. The injured driver's lawyers, under the Illinois common fund doctrine, claimed a right to the settlement proceeds. The injured driver's welfare plan, which had paid the injured driver for the injury, also claimed a right to the settlement proceeds under a reimbursement provision in the insurance plan. The injured driver filed a motion in the state court which oversaw the settlement, asking that court to decide who should receive the settlement proceeds. The welfare plan then removed the case to federal district court. This court held that removal was improper because the district court did not have subject matter jurisdiction over the claim. It reasoned that the injured driver's initial claim, which was a tort suit, did not arise under federal law. Additionally, the court noted that "[t]he fundamental claim [of the motion]--that the Blackburns should be credited, for purposes of their duty to reimburse [the welfare plan], with sums paid to the attorney whose work produced the...