Schultz v. Progressive Health, Life, and Dis. Ben.

• Decision Date: 19 March 2007
• Docket Number: No. 1:04CV719.,1:04CV719.
• Citation: 481 F.Supp.2d 594
• Parties: Kim B. SCHULTZ Plaintiff v. The PROGRESSIVE HEALTH, LIFE, AND DISABILITY BENEFITS PLAN, et al. Defendants
• Court: U.S. District Court — Southern District of Mississippi

Page 594

481 F.Supp.2d 594

Kim B. SCHULTZ Plaintiff v. The PROGRESSIVE HEALTH, LIFE, AND DISABILITY BENEFITS PLAN, et al. Defendants

No. 1:04CV719.

United States District Court, S.D. Mississippi, Southern Division.

March 19, 2007.

Roland F. Samson, III, Samson & Powers, PLLC, Gulfport, MS, for Plaintiff.

Roy H. Liddell, Wells, Marble & Hurst, Jackson, MS, Robert J. Barefield, Jr., for Defendants.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION TO DISMISS AMENDED COUNTERCLAIM

GUIROLA, District Judge.

THE MATTER BEFORE THE COURT is the Plaintiffs Motion to. Dismiss Amended Counterclaim [51]. Defendant/Counter-Claimant Aetna Life Insurance Company ("Aetna") has filed its response and Plaintiff/Counter-Defendant Kim B. Schultz ("Schultz") has replied. After due consideration of the submissions and the relevant law, it is the Court's opinion that it has subject matter jurisdiction of Aetna's counterclaim. Thus, Schultz's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) will be denied.

DISCUSSION

Schultz filed a complaint in 2004 seeking, among other things, reinstatement of long-term disability benefits she alleges were wrongfully denied by the Defendant and a determination regarding her rights to future benefits under a disability plan governed by the ERISA (the "Plan"). In response, Defendant Aetna filed an answer, affirmative defenses and counterclaim. By its counterclaim, Aetna sought recovery from Schultz, under ERISA § 502(a)(3), of disability benefits which it alleges were overpaid wider the terms of the Plan. Schultz filed a motion to dismiss Aetna's counterclaim, which was granted by Memorandum Opinion and Order filed April 24, 2006. The Court found that Aetna's allegations satisfied two of the three factors necessary under Fifth Circuit precedent for the Court's exercise of subject matter jurisdiction, but because Aetna's counterclaim contained no allegation satisfying the third factor — that it was seeking specifically identifiable funds — the Court granted Aetna an opportunity to amend its counterclaim in order to show that the remedy it was seeking was equitable rather than legal in nature. See Cooperative Benefit Administrators, Inc. v. Ogden, 367 F.3d 323 (5th Cir.2004). Aetna amended its counterclaim, and Schultz now seeks dismissal pursuant to FED. R. CIV. P. 12(b)(1)"

Shortly after the Court entered its Memorandum Opinion and Order, the U.S. Supreme Court issued an opinion which, in the Court's opinion, alters the analysis of subject matter jurisdiction in this case. In Sereboff v. Mid Atlantic Medical Services, Inc., ___ U.S. ___, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006), the Supreme Court permitted a plaintiff to sue a plan beneficiary under § 502(a)(3) to enforce a reimbursement provision in a benefit plan on a theory of equitable restitution. Sereboff involved a claim by a plan administrator to obtain reimbursement for medical expenses that had been paid out to the plan beneficiary by a third party tortfeasor. The plan beneficiaries had placed the disputed portion of the funds into a trust account pending the outcome of the litigation. Id. at 1873. The important factors in the Supreme Court's decision were that the funds had been specifically identified (via the third party recovery provision of the plan itself); the funds were still in the defendant's possession; and it was undisputed that the plaintiff was entitled to them under the plan's terms. Sereboff, 126 S.Ct. at 1874. The court observed that the restitution action at issue involved "a constructive trust or equitable lien on a specifically identified fund." Id. Sereboff reiterated the rule that a suit to recover a specific, identifiable asset in the possession of a defendant would constitute a valid equitable restitution claim, and that therefore such a claim would be permissible under ERISA § 502(a)(3). Id.

Schultz argues that she does not have a specific identifiable asset which can be recovered by Aetna because she spent all of the overpaid funds, and therefore the funds are no longer in her possession or control. In Sereboff, the court rejected a similar argument: that the relief sought by the plan was not equitable because the plan could not trace its property or monetary interest to particular funds or assets held by the beneficiaries. The court held that strict tracing rules do not...