States v. Health Special Risk, Inc.

• Decision Date: 23 June 2014
• Docket Number: No. 13–10705.,13–10705.
• Parties: CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, an Employee Welfare Benefit Plan, by Arthur H. BUNTE, Jr., a Trustee thereof, in his representative capacity, Plaintiff–Appellant, v. HEALTH SPECIAL RISK, INCORPORATED; Markel Insurance Company; Federal Insurance Company; Ace American Insurance Company, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

756 F.3d 356

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, an Employee Welfare Benefit Plan, by Arthur H. BUNTE, Jr., a Trustee thereof, in his representative capacity, Plaintiff–Appellant,

v.HEALTH SPECIAL RISK, INCORPORATED; Markel Insurance Company; Federal Insurance Company; Ace American Insurance Company, Defendants–Appellees.

No. 13–10705.

United States Court of Appeals,Fifth Circuit.

June 23, 2014.

Francis J. Carey (argued), Supervisory Attorney, Rosemont, IL, Roger Earl Albright, Law Offices of Roger Albright, Dallas, TX, for Plaintiff–Appellant.

Alicia Grace Curran, Esq., Cozen O'Connor, P.C., Dallas, TX, Raymond A. Kresge (argued), Cozen O'Connor, P.C., Philadelphia, PA, for Defendants–Appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before BARKSDALE, CLEMENT, and OWEN, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

In this insurance coverage dispute, Plaintiff—a large ERISA provider—seeks a declaration that Defendants—three independent, non-ERISA insurance providers—are bound by the terms of the ERISA plan and primarily liable for injuries sustained by individuals covered by the parties. The district court granted Defendants' motion to dismiss for failing to seek equitable relief under ERISA § 502(a)(3). We affirm.

Facts and Proceedings

Plaintiff Central States, Southeast and Southwest Areas Health and Welfare Fund (“Central States”) is a large ERISA Plan, providing health and welfare benefits to members of the Teamsters Union and their families. Eleven individuals insured by Central States (the “insureds”) were injured while participating in various activities. In addition to having insurance from Central States, all eleven members were also covered by insurance policies from either Markel Insurance Company, Federal Insurance Company, or Ace American Insurance Company—none of which are an ERISA plan. Defendant Health Special Risk, Inc. (“HRS”) is the third-party administrator for each of the independent insurance companies (collectively with HRS, “Defendants”) and is responsible for administering the claims under their various policies.

The underlying dispute is whether Central States or the Insurer Defendants are primarily responsible for the medical bills that resulted from their insureds' injuries. At the time of their injury, the insureds were covered both as dependents of Central States plan members and by Defendants. Central States paid the claims directly to the medical care providers and sought reimbursement from the Defendants,who refused payment on the grounds that their policies only provided “excess accidental injury coverage,” making them only secondarily liable once the injureds' primary coverage was exhausted. Central States claims that the Insurer Defendants provide overlapping coverage, and are therefore the primary providers under their coordination of benefits (“COB”) provision of its ERISA Plan.

A. First Complaint

Central States' original complaint sought (1) declaratory judgment that the Defendants were liable to reimburse Central States for the medical expenses they had paid to their injured members, (2) restitution under ERISA ¹ for those same expenses, and (3) an equitable lien / constructive trust under ERISA § 502(a)(3) against the Defendants' funds to recoup those expenses. Defendants moved to dismiss Central States' complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on the grounds that Central States failed to allege equitable relief as required by ERISA § 502(a)(3). Section 502(a)(3) provides:

(a) Persons empowered to bring a civil action

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. § 1132.

The district court granted Defendants' motion, but allowed Central States to amend their complaint.

B. Amended Complaint

Central States' amended complaint contained the original three counts—with minor alterations—plus three additional counts: (1) declaratory judgment to declare liability and enjoin Defendants from violating the provisions of the COB; (2) subrogation rights against Insurer Defendants to allow Central States to sue in their stead; and (3) unjust enrichment under federal common law. All six counts—while phrased in terms of equitable relief—requested monetary payment from the Defendants. Upon another 12(b)(6) motion by Insurer Defendants, the district court dismissed five of Central States' claims for failing to seek equitable relief under ERISA § 502(a)(3). Central States' remaining state law subrogation claim initially survived, but was dismissed following Defendants' motion for reconsideration on the grounds that it was conflict preempted by ERISA § 514(a)'s civil enforcement scheme.²

C. Appeal

Central States essentially raises three issues on appeal. First, Central States asks this court to find that § 502(a)(3) allows the type of equitable relief requested in the amended complaint. Second, Central States requests that this court recognize a federal common law cause of actionfor unjust enrichment to fill the gap in ERISA's statutory scheme. Finally, Central States argues that it successfully stated a claim for declaratory judgment—without a request for money—under § 502 and is entitled to a determination of liability. Because these claims all lack merit, we affirm.

Standard of Review

Dismissal for failure to state a claim is reviewed de novo, applying the standard used to review a dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Hart v. Hairston, 343 F.3d 762, 763–64 (5th Cir.2003). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and citation omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations and footnote omitted).

Discussion

I. Central States failed to state a claim for equitable relief as required by ERISA § 502(a)(3).

Central States seeks to bind Defendants—with whom it has no contractual or business relationship—to its ERISA Plan's COB provisions, which provide that Defendants are primarily responsible for paying the insureds' medical bills. As quoted supra, the statutory authority for this civil action is found in ERISA § 502(a)(3), which provides that:

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. § 1132.

As the Plan fiduciary, Central States is entitled to bring an action to “enforce ... the terms of the plan.” Id. However, the text of ERISA makes it clear that the relief sought must be “appropriate equitable relief,” not legal relief. Ever since its decision in Mertens v. Hewitt Associates, 508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), the Supreme Court has repeatedly defined “appropriate equitable relief” as “those categories of relief that were typically available in equity.” Id. at 255, 256, 113 S.Ct. 2063; see also Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 361, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006). Equitable relief is contrasted with “legal relief,” which constitutes claims seeking “nothing other than compensatory damages.” Mertens, 508 U.S. at 255, 113 S.Ct. 2063. The classic form of purely legal relief is money damages. Id.

To comply with the requirements of § 502(a)(3), the six counts of Central States' amended complaint are framed as equitable relief. Despite this, each count actually requests monetary damages:

Count 1, Declaratory Judgment (Unpaid and Future Expenses): requesting this court “declare the liability of the Defendants to pay, unpaid and future medical expenses” and “declare that the COB provisions of Central States Plan may and should be enforced against the Defendants, by requiring the Defendants pay any unpaid present and future covered medical expenses”;

Count 2, Declaratory Judgment: requesting an “injunction requiring the Defendants to pay covered medical expenses”;

Count 3, Restitution of Payments Made: requesting “an order of equitable relief requiring them to make restitution to Central States”;

Count 4, Equitable Lien / Constructive Trust: requesting “[g]rant equitable relief ... in the form of an equitable lien and imposition of a constructive trust ... [and] to enforce Central States' equitable liens in the identifiable” amounts claimed owed by each Insurer Defendant;

Count 5, Subrogation: requesting “an order of equitable relief, in the form of money compensation”;

Count 6, Unjust Enrichment, Federal Common Law: requesting “[g]rant of money judgment.”

Simply framing a claim as equitable relief is insufficient to escape a determination that the relief sought is legal. Great–West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210–11, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (“an injunction to compel the payment of money past due under a contract, or specific performance of a past due monetary obligation, was not typically available in equity.”); Amschwand v. Spherion Corp., 505 F.3d 342, 348 n. 7 (5th Cir.2007) (“attempts to recharacterize a desired § 502(a)(3) remedy as a...