Unum Life Ins. Co. of America v. Long

Decision Date16 October 2002
Docket NumberNo. 3-02-CV-0031-BD.,3-02-CV-0031-BD.
PartiesUNUM LIFE INSURANCE COMPANY OF AMERICA Plaintiff, v. Evelyn B. LONG Defendant.
CourtU.S. District Court — Northern District of Texas

Doug K. Butler, Bill E. Davidoff, Figari Davenport & Graves, Dallas, TX, for Plaintiff.

Evelyn B. Long, Mesquite, TX, Pro se.

MEMORANDUM OPINION AND ORDER

KAPLAN, United States Magistrate Judge.

Plaintiff UNUM Life Insurance Company of America ("UNUM") has filed a motion for summary judgment in this ERISA case to recover the overpayment of disability benefits. For the reasons stated herein, the motion is granted.

I.

Evelyn Long was a participant in an employee welfare benefit plan maintained by her employer, Texas Oncology, P.A. One of the benefits offered to participants of the plan was a long-term disability insurance policy issued by UNUM. (Plf. Compl. at 2, ¶ 5; Plf.App. at 2, ¶ 2). Under this policy, a disabled employee is entitled to receive 60% of her basic monthly earnings, less "other income benefits," but in no event less than $100.00 per month. (Plf.App. at 9, ¶2). The term "other income benefits" is defined by the policy to include "[t]he amount of disability or retirement benefits under the United States Social Security Act." (Id. at 21, ¶5). The policy allows UNUM to estimate the monthly social security benefit and deduct it from the monthly disability benefit, unless the insured "promises to repay [UNUM] any overpayment caused by an award [of social security benefits]." (Id. at 22).

On March 8, 1999, Long filed a claim for disability benefits due to a back injury sustained in October 1998. (Id. at 34-46). UNUM approved the claim and agreed to pay Long 60% of her basic monthly earnings, or $769.00 per month, effective January 22, 1999. (Id. at 48-49).1 Before receiving her first payment, Long signed a repayment agreement. This agreement provides, in pertinent part:

Please pay me a monthly benefit with no reduction for estimated Social Security benefits until Social Security makes a decision. This will result in an overpayment by UNUM. I will supply UNUM with a copy of the Social Security decision and repay any overpayment in full within 30 days from receipt of the Social Security award check. Additionally, if Social Security makes an award, UNUM will reduce my monthly policy benefit by the amount of Social Security benefits I (and my spouse and family, if applicable) receive according to the policy provisions ...

I have already applied for Social Security benefits. A copy of Social Security's receipt of application is attached.

I AGREE TO REIMBURSE UNUM IMMEDIATELY IN FULL FOR THE AMOUNT OF ANY OVERPAYMENT REGARDLESS OF OPTION CHOSEN.

(Id. at 50) (emphasis in original).

From January 22, 1999 through August 21, 2000, Long received a total of $14,611.00 in disability benefits from UNUM. (Id. at 4, ¶ 9). She also began collecting $1,001.00 in monthly social security benefits in February 1999. (Id. at 5, ¶ 11 & 52). Because her monthly social security benefit was more than her monthly disability benefit, Long was only entitled to receive the minimum payment of $100.00 per month under the UNUM policy. By letter dated September 12, 2000, UNUM notified Long that her receipt of social security benefits had resulted in an overpayment of disability benefits and demanded reimbursement in the amount of $12,510.30. (Id. at 53). Long ignored this demand. Thereafter, UNUM stopped making payments under the policy and sued Long in federal district court for breach of the repayment agreement and unjust enrichment. (Id. at 6, ¶¶ 14-16; Plf. Compl. at 5, ¶¶ 8 & 9).

UNUM now moves for summary judgment. By order dated August 26, 2002, the court sua sponte questioned whether it had subject matter jurisdiction over this action in light of the Supreme Court's decision in Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002). The parties have been given an opportunity to brief the issues and this matter is ripe for determination.2 The court will address the jurisdictional issue first.

II.

UNUM contends that federal jurisdiction is proper under the ERISA statute, 29 U.S.C. § 1132(e)(1), and the statute conferring jurisdiction over cases arising under federal law, 28 U.S.C. § 1331. (Plf. Compl. at 2, ¶ 3). The court will analyze jurisdiction under these statutes with respect to the claims alleged by UNUM in its complaint.

A.

Federal courts have exclusive jurisdiction of most civil actions brought by participants, beneficiaries, or fiduciaries to recover benefits, obtain equitable relief, or redress violations of the ERISA laws. 29 U.S.C. § 1132(e)(1).3 UNUM, who qualifies as a fiduciary because it has the authority to accept or reject claims filed by ERISA plan participants, brings this action to recover overpayments allegedly made to Long by virtue of her receipt of social security benefits. According to UNUM, such an action is authorized by section 502(a)(3) of ERISA, which provides, in pertinent part:

A civil action may be brought —

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 violation or (ii) to enforce any provisions of this subchapter or the terms of the plan[.]

Id. § 1132(a)(3). UNUM does not seek to enjoin any act or practice which violates ERISA. Instead, it characterizes the nature of its claims against Long as "other appropriate equitable relief."

In Great-West, the Supreme Court had occasion to determine whether an action to recover the overpayment of benefits under the reimbursement provision of an insurance policy qualified as "equitable relief" under section 502(a)(3) of ERISA. The beneficiary in that case, Janette Knudson, sustained serious injuries and incurred significant medical expenses as a result of an automobile accident. Her insurance company, Great-West, paid more than $330,000.00 in medical expenses under the terms of a "stop-loss" agreement with the plan. The agreement contained a reimbursement provision which gave the plan "`the right to recover from the [beneficiary] any payment for benefits' paid by the Plan that the beneficiary is entitled to recover from a third party." Great-West, 122 S.Ct. at 711. After these benefits were paid, Knudson filed a tort action against Hyundai Motor Company and others in state court. The case settled for $650,000.00, but only $13,828.70 was allocated to satisfy Great-West's reimbursement claim. Id. Great-West then filed suit in federal district court under section 502(a)(3) of ERISA to enforce the reimbursement provision of the plan and recover all monies advanced to Knudson. The Supreme Court held that such a claim did not qualify as an action "to obtain other appropriate equitable relief" under the ERISA statute. Id. at 711. See also Mertens v. Hewitt Associates, 508 U.S. 248, 256, 113 S.Ct. 2063, 2069, 124 L.Ed.2d 161 (1993) (the term "equitable relief" in section 502(a)(3) refers to "those categories of relief that were typically available in equity") (emphasis in original). Instead:

[P]etitioners seek, in essence, to impose personal liability on respondents for a contractual obligation to pay money — relief that was not typically available in equity. "A claim for money due and owing under a contract is `quintessentially' an action at law." (Citation omitted). "Almost invariably ... suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for `money damages,' as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty." (Citation omitted). And "[m]oney damages are, of course, the classic from of legal relief." (Citation omitted).

Id. at 712-13 (emphasis in original). See also Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 445 (5th Cir.2002) (holding that Great-West precludes declaratory judgment action by administrator of ERISA plan against beneficiary to enforce terms of reimbursement provision).

In its letter brief, UNUM tacitly concedes that Great-West "forecloses [its] right to assert a private cause of action directly under ERISA for reimbursement of the overpayment to Long[.]" (Ltr. Br. at 2) (emphasis in original). However, UNUM maintains it still is entitled to pursue a claim for unjust enrichment under federal common law.

B.

Federal district courts also have jurisdiction "of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. UNUM argues that jurisdiction is proper under this statute because federal common law allows a claim for unjust enrichment or restitution to recover overpayments made to an ERISA plan beneficiary.

The Fifth Circuit has recognized that a federal common law right of restitution is available under ERISA to recover the overpayment of benefits. In Jamail, Inc. v. Carpenters District Council of Houston Pension & Welfare Trusts, 954 F.2d 299 (5th Cir.1992), the court explained:

Both the legislative history and the case law pursuant to ERISA validate our application of federal common law to ERISA. The legislative history explains that due to the broad preemption provisions, "a body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans." (Citation omitted). The case law pertaining to ERISA also supports the application of common law to the statute. We have recently said: "Congress intended that federal courts should create federal common law when adjudicating disputes regarding ERISA." (Citation omitted).

Id. at 303, citing Rodrigue v. Western & Southern Life Insurance Co., 948 F.2d 969, 971 (5th Cir.1991). The creation of such a remedy furthers the goals of ERISA by...

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