Amicus Curiae Brief — Montanile v. Bd. of Trs. of the Nat'l Elevator Indus. Health Benefit Plan, 135 S. Ct. 1700 (2015) (No. 14-723)

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No. 14-723

IN THE

Supreme Court of the United States

ROBERT MONTANILE,

Petitioner,

BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR

INDUSTRY HEALTH BENEFIT PLAN,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF AMICUS CURIAE OF THE NATIONAL

COORDINATING COMMITTEE FOR

MULTIEMPLOYER PLANS IN SUPPORT

OF RESPONDENT

JOHN M. McINTIRE *

JENNIFER R. SIMON

O'DONOGHUE & O'DONOGHUE LLP

4748 Wisconsin Avenue, N.W.

Washington, DC 20016

jmcintire@odonoghuelaw.com

(202) 362-0041

Counsel for the National Coordinating

Committee for Multiemployer Plans

* Counsel of Record

Peake DeLancey Printers. LLC - (301) 341-4600 - Cheverly MD

—S-

TABLE OF CONTENTS

IT IS CRUCIAL THAT MULTIEMPLOYER

FUNDS RETAIN THE RIGHT OF REIM-

BURSEMENT FOR BENEFITS THAT

THEY HAVE ADVANCED TO PARTICI-

PANTS AND BENEFICIARIES ...................

Subrogation and Reimbursement Pro-

visions in Multiemployer Plans Protect

all Plan Participants and Beneficiaries

The Decision Below Protects Benefi-

ciaries’ Ability to Obtain Immediate

Medical Benefits when Injuries are

Caused by Third Parties. .......................

Preserving a Meaningful Equitable

Remedy In the Face of Dissipation is

Necessary in Many Subrogation and

Reimbursement Cases and in Other

Types of Plan Recoveries as Well. .......

BENEFIT PLANS DO NOT HAVE ALTER-

NATIVE UNIFORM OR ADEQUATE

REMEDIES TO RECOVER MONEY IN

I ai ccibiasiensnnintniiciinensnievnsninhinavennsccintaanininins

TABLE OF CONTENTS—Continued

Il. THERE ARE NO “COMPETING GOALS”

UNDER ERISA THAT WOULD BE

SERVED BY REVERSING THE DECISION

OF THE LOWER COURT. ..........:ssssssssesesseees

CEE narsssnssnsssivnnsinanscossaiatitcuiinsiaiaiinamaaal

Page

TABLE OF AUTHORITIES

CASES

AC Houston Lumber Company Employee

Health Plan v. Berg, 407 F. App’x 208

ENE

Administrative Committee of Wal-Mart

Stores, Inc. Associates’ Health and

Welfare Plan v. Shank, 500 F.3d 834

(Sth Cir, 2007) .....cccccccccssccccsssesesecessecesenseseeeen

AirTran Airways, Inc. v. Elem,

767 F.3d 1192 (11th Cir. 2014) ....... ee.

Alessi v. Raybestos-Manhattan, Inc.,

Barnes v. Alexander, 232 U.S. 117 (1914).......

Bilyeu v. Morgan Stanley Long Term

Disability Plan, 683 F.3d 1083

cca

Black & Decker Disability Plan v. Nord,

I init eneressnmneitiptesemenenes

Board of Trustees of the National Elevator

Industry Health Benefit Plan v. Montanile,

593 F. App’x 903 (11th Cir. 2014) ......0.......

Board of Trustees of the National Elevator

Industry Health Benefit Plan v. Moore,

— F.3d —, No. 14-4048, 2015 WL 5010985

NS ee

Cagle v. Bruner,

112 F.3d 1510 (11th Cir. 1997)...

TABLE OF AUTHORITIES—Continued

Page

Central States, Southeast and Southwest

Areas Health and Welfare Fund v. Lewis,

745 F.3d 283 (7th Cir. 2014) .00.......cccccccceeneesees 28

CIGNA Corp. v. Amara, 563 U.S. 421 (2011).. 16

Conkright v. Frommert, 559 U.S. 506 (2010).. 30, 31

Copeland Oaks v. Haupt,

209 F:3d 811 (6th Cir. 2000) 2.0.0.0... cccecceceseeeees 18

Curtiss-Wright Corp. v. Schoonejongen,

I i a 5, 16, 17

Cutting v. Jerome Foods, Inc.,

993 F.2d 1293 (7th Cir. 1993) ..............cccccesee. 31, 32

Ellis v. Metropolitan Life Insurance Co.,

126 F.3d 228 (4th Cir. 1997) ..........cccccseseeesseees 19

FMC Corp. v. Holliday, 498 U.S. 52 (1990)..... 26

Fort Halifax Packing Co. v. Coyne,

I 26

Great-West Life & Annuity Insurance Co.

v. Knudson, 534 U.S. 204 (2002) .................. 3

Hamilton v. Air Jamaica, Ltd.,

945 F.2d 74 (3d Cir. 1991)............c.c.csccocessereres 17

Harris v. Harvard Pilgrim Health Care, Inc.,

208 F.3d 274 (1st Cir. 2000)... ccceeseeeeeseees ll

Hotel Employees and Restaurant Employees

International Union Welfare Fund v.

Gentner, 50 F.3d 719 (9th Cir. 19995) ............. 28

TABLE OF AUTHORITIES—Continued

Page

Ingersoll-Rand Co. v. McClendon,

ee TED ssitisnicnaialnnnnnaannonsieniiinns 26

Kennedy v. Plan Administrator for DuPont

Savings and Investment Plan,

Se I latina tererinmaiensimataieititea 5

Kress v. Food Employers Labor Relations

Association, 391 F.3d 563 (4th Cir. 2004).....18, 19, 31

Kroop v. Rivlin, Case 04 Civ. 1401, 2004

WL 2181110 (S.D.N.Y. Sept. 27, 2004)........... 23

Longaberger Co. v. Kolt,

586 F.3d 459 (6th Cir. 2009) .0.......ccccecceeceeseeees 29

Massachusetts Mutual Life Insurance Co.

v. Russell, 473 U.S. 134 (1985) 0000... 5, 24, 30

Mertens v. Hewitt Associates,

4 Ee 4, 30

Metropolitan Life Insurance Co. v.

Massachusetts, 471 U.S. 724 (1993).............. 17

New York State Conference of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co..,

er cniiciciniiensistemsintnneinnniniimenn 26

Paris v. Iron Workers Trust Fund,

211 F.3d 1265 (4th Cir. 2000)... eee 11

Sereboff v. Mid Atlantic Medical Services,

| Eee passim

Shaw v. Delta Air Lines, Inc.,

ene 17

TABLE OF AUTHORITIES—Continued

Page

Shields v. Local 705, International

Brotherhood of Teamsters Pension

Plan, 188 F.3d 895 (7th Cir. 1999).......... 24

Treasurer, Trustees of Drury Indus., Inc.

Health Care Pian and Trust v. Goding,

692 F.3d 888 (8th Cir. 2012) «2.0.0.0... eesceeeeeeeee 22, 28, 29

US Airways, Inc. v. McCutchen,

ee ee Se Se ntiinieinstnsintterenicnienennden passim

Varity Corp. v. Howe, 516 U.S. 489 (1996) ..... 11, 30, 31

Zurich American Insurance Co. v. O'Hara,

604 F.3d 1232 (11th Cir. 2010) ...........c.cccccsesens ll

STATUTES

Consolidated Omnibus Budget Reconciliation

Act of 1985 (COBRA), Pub. L. No. 99-272,

Se ET ccnictinnetiintenicemeemimimennaiens 14

Child Support Performance and Incentive

Act of 1998, Pub. L. No. 105-200, 112 Stat.

Employee Retirement Income Security

Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq.:

29 U.S.C. § LOO1(a)(1) oecccseecccsesssesssceresnsseenceees 2

29 U.S.C. § 1001(a)(B) «..ccccccveocccescssessenssseesee 2

29 U.S.C. § 1001(€)(2) erecccssccscessssessssensesecseeeee 2

29 U.S.C. § 1104(a)(1)(A) -ecccseccscsscsssesessnsnseee 12, 16

29 U.S.C. § 1132(a)(B) eoeeceessscoseeseesssensssssseseeen passim

vii

TABLE OF AUTHORITIES—Continued

ZO US.C. § LISBON Z) ...2.0ccerecsccrerccecerssrvesseceees

SP es © Bi paserensevesssesemanseensensescenecsecenscsezes

Family and Medical Leave Act of 1993 (FMLA),

Pub. L. No. 103-3, 107 Stat. 6 (1993)..............

Health Insurance Portability and

Accountability Act of 1996 (HIPAA),

Pub. L. No. 104-191, 110 Stat. 1936................

Mental Health Parity Act of 1996 (MHPA),

Pub. L. No. 104-204, tit. VII, 110 Stat. 2944

Mental Health Parity and Addiction Equity

Act of 2008 (MHPAEA), Pub. L. No. 110-343,

tit. V.B, 122 Stat. 3881 (2008) 2... cesses

Newborns’ and Mothers’ Health Protection

Act of 1996 (NMHPA), Pub. L. No. 104-204,

tit. VI, 110 Stat. 2935 (1996) 2.02... .cececeeeeesees

Patient Protection and Affordable Care Act

(PPACA) Pub L. 111-148, 124 Stat. 119

Women’s Health and Cancer Rights Act,

Pub. L. No. 105-277, tit. IX, 112 Stat.

TT di caiciaied ibiianienietaieasiraniasibnnitnite

REGULATIONS

Standards for Privacy of Individually

Identifiable Health Information, 65 Fed.

Reg. 82,462 (Dec. 28, 2000) (codified at

45 C.FR. pts 160 and 164) ........cccccccesseneeeneees

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES

Brief for the United States as Amicus Curiae

Supporting Respondent, Sereboff v. Mid

Atlantic Medical Services, Inc.,

547 U.S. 356 (2006) (No. 05-260), 2006

National Elevator Industry Health Benefit

Plan, 2013 Form 5500 Annual Return/

Report of Employee Benefit Plan (filed

with the Dep't of Labor on Oct. 9, 2014),

available at bain /ferere eteat 0. go

U.S. Department of Justice, Bureau of Justice

Statistics, NCJ 233094, Punitive Damage

Awards in State Courts, 2005 (Mar. 2011),

available Poe oe

Vaccines for Children Program: CDC

Vaccine Price List, Centers for Disease

Control & Prevention, available at

Page

In THE

Supreme Court of the United States

No. 14-723

ROBERT MONTANILE,

Petitioner,

BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR

INDUSTRY HEALTH BENEFIT PLAN,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF AMICUS CURIAE OF THE NATIONAL

COORDINATING COMMITTEE FOR

MULTIEMPLOYER PLANS IN SUPPORT

OF RESPONDENT

The National Coordinating Committee for Multiem-

ployer Plans (“NCCMP”) is a nonprofit, tax exempt or-

ganization that has participated for over thirty years in

the development of employee benefits legislation and

regulations promulgated to implement the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29

U.S.C. § 1001 et seg., and other laws affecting multiem-

ployer plans.' The NCCMP’s primary purposes are to

! Pursuant to Rule 37.6 of the Rules of this Court, the under-

signed hereby state that no counse! for Petitioner or Respondent

assure an environment in which multiemployer plans

can continue their vital role in providing medical, pen-

sion, and other benefits to working men and women,

and to participate in the development of sound em-

ployee benefits legislation, regulations, and policy.

The NCCMP is the only national organization devoted

exclusively to protecting the interests of multiemployer

plans by advocating on behalf of these plans in Con-

gress, in the courts, and in the regulatory process. Mul-

tiemployer plans provide benefits to tens of millions of

American workers. Hundreds of multiemployer plans

and related organizations, with a nationwide participant

base, are affiliated with the NCCMP. Affiliated plans are

active in every segment of the multiemployer plan uni-

verse, including the airline, building and construction,

entertainment, food production, distribution and retail

sales, health care, hospitality, mining, maritime, indus-

trial fabrication, service, textile, and trucking industries.

Congress has recognized that the continued well-being

and security of employees, retirees, and their depend-

ents are directly impacted by multiemployer plans and

that interference with the maintenance and growth of

such plans is contrary to the national public interest.

See 29 U.S.C. § 1001(a)(1), (3), (c)(2).

Because of the broad range of experience of the

NCCMP’s constituent organizations, the NCCMP be-

lieves it is uniquely qualified to state the position of the

trustees of multiemployer plans and to offer special in-

sight into the impact this case will have on the efficient

administration of these plans. Moreover, while the

authored any part of this brief. Moreover, no person or entity

other than the NCCMP made a monetary contribution to the

preparation or submission of this brief.

NCCMP participated as amicus in both Sereboff v. Mid

Atlantic Medical Services, Inc., 547 U.S. 356 (2006), and

US Airways, Inc. v. McCutchen, 133 §. Ct. 1537 (2013),

the instant case is of special importance to the NCCMP

because it involves a petitioner's effort to limit the

scope of relief available to a fiduciary under § 502(a)(3)

of ERISA, 29 U.S.C. § 1132(a)(3), where that fiduciary

happens to be the board of trustees of a multiemployer

plan.

The NCCMP and its constituent groups have a strong

interest in supporting the decision below to ensure that

multiemployer plans continue to have an effective, ef-

ficient, and uniform equitable remedy available to them

in the federal courts to recover amounts due to the

plans. More specifically, the NCCMP and its constituent

groups have a strong interest in preserving the en-

forceability and effectiveness of self-funded multiem-

ployer plans’ subrogation and right of reimbursement

provisions under § 502(a)(3) of ERISA, in accordance

with the Court’s decisions in Sereboff and McCutchen.

Both Petitioner and Respondent have filed blanket con-

sent to the filing of amicus curiae briefs in support of ei-

ther party or of neither party.

INTRODUCTION

The decision below concerns the scope of § 502(a)(3)

of ERISA, 29 U.S.C. § 1132(a)(3), which authorizes a

civil action by ERISA plan fiduciaries “to enjoin any act

or practice which violates. the terms of the plan, or

. to obtain other appropriate relief to enforce the

terms of the plan.” To proceed under § 502(a)(3), plans

must seek only “those categories of relief that were typ-

ically available in equity.” Great-West Life & Annuity

Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002) (quoting

Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993)).

Thus, an ERISA plan may seek recovery under

§ 502(a)(3) for its share of payments received from a

responsible tortfeasor only if the plan's claim for relief

is equitable.

In Sereboff this Court held that an ERISA plan could

enforce its equitable claim to a portion of payments

received from a third party when the terms of the

plan create an equitable lien by agreement. The Court

first determined that the nature of the relief sought was

equitable because it sought a specific portion (the cost

of the medical benefits it advanced) of specifically iden-

tified funds (the Sereboffs’ settlement with the third

party tortfeasor). 547 U.S. at 363-64. This Court

then determined that the plan’s reimbursement

provision created an equitable lien by agreement, which

forms a basis for appropriate “equitable relief”

enforceable under § 502(a)(3) and Supreme Court

precedent. /d. at 369. Relying on “the familiar rule

of equity that a contract to convey a specific object

even before it is acquired will make the contractor

a trustee as soon as he gets title to the thing,” Mid

Atlantic could “follow a portion of the recovery into the

Sereboffs’ hands as soon as the settlement fund was

identified.” Jd. at 364 (internal quotations omitted)

(quoting Barnes v. Alexander, 232 U.S. 117, 121, 123

(1914)).

In McCutchen, the Court reinforced Sereboffs treat-

ment of equitable liens by agreement. Rejecting the

ERISA plan participant's attempt to assert equitable de-

fenses to defeat the plan's reimbursement provision, the

Court explained that a lien by agreement “as its name

announces — both arises from and serves to carry out a

contract's provisions” and that “enforcing the lien

means holding the parties to their mutual promises.”

133 S. Ct. at 1546 (internal citations omitted). “Con-

versely, it means declining to apply rules—even if they

would be ‘equitable’ in a contract's absence—at odds

with the parties’ expressed commitments. _. In those

circumstances, hewing to the parties’ exchange yields

‘appropriate’ as well as ‘equitable’ relief.” /d. at 1546-

47.

Sereboff and McCutchen are based on principles fun-

damental to ERISA and long recognized by this Court:

attention to the terms of written plan documents and

enforcement of those terms. See, e.g., Kennedy v. Plan

Adm’r for DuPont Sav. & Inv. Plan, 555 U.S. 285, 300

(2009) (section 502 claims “stand|] or fall[] by the terms

of the plan”); Curtiss-Wright Corp. v. Schoonejongen,

514 U.S. 73, 83 (1995) (ERISA’s statutory scheme is

“built around reliance on the face of written plan docu-

ments”); Mass. Mut. Life Ins. Co. v. Russell, 473 U.S.

134, 148 (1985) (ERISA’s principal function is “to pro-

tect contractually defined benefits”).

Accordingly, the majority of courts to consider the

issue have held the parties to their bargain and enforced

equitable liens by agreement, rejecting various attempts

by participants and beneficiaries to evade their obliga-

tions. In McCutchen, for example, the Court held that

an ERISA plan may recover medical expenses paid on

behalf of a participant because of a third party's actions

if the participant later recovers money from the third

party, even if the participant's recovery did not make

him whole. See McCutchen, 133 S. Ct. at 1547-48. And

the majority of circuit courts to consider the dissipation

issue this case presents have held, consistent with the

decision below, that an ERISA plan may enforce its

claim to a portion of payments received by a third party

even when the participant has spent those funds. See

AirTran Airways, Inc. v. Elem, 767 F.3d 1192, 1198-99

(11th Cir. 2014) (collecting cases).

The case currently before the Court represents the

latest attempt by a plan participant or beneficiary to

avoid the agreement to which he or she is bound. Mon-

tanile contends that the Plan’s right to enforce its

valid equitable lien by agreement can be destroyed

by his subsequent dissipation of settlement proceeds

subject to the Plan's equitable lien. If adopted by this

Court, Montanile’s position would make an ERISA

plan’s reimbursement and subrogation provision

unenforceable—effectively nullifying the provision—

whenever a beneficiary dissipates the money he or

she recovers from a tortfeasor, or would other-

wise place significant administrative burdens on an

ERISA plan whenever it seeks to enforce an equitable

lien.

This disregard for plan terms would be devastating

to multiemployer plans. Trustees of such plans heavily

rely on ERISA’s guarantee that plan terms will be en-

forced as written. Multiemployer plans are not profit-

making entities. They are products of the collective

bargaining process, and they serve as vehicles for pro-

viding health and retirement benefits for working men

and women and their families. Often, the participants

in multiemployer plans work in industries character-

ized by physically demanding work, such as construc-

tion and related trades and crafts, which lead to more

medical claims than workers in other industries. The

plans’ survival is conditioned upon parties’ ability to ne-

{

gotiate agreements that meet the wage and benefit re-

quirements of workers while enabling their employers

to remain profitable. This allows the employers in-

volved to provide both jobs and the medical benefits

that are the focus of this case.

Multiemployer plans are run by joint boards of

trustees appointed by participating employers and

labor organizations. Trustees are, therefore, acutely

aware of the limited ways in which plans can keep up

with ever-increasing health care costs: employers

can contribute more money towards the plans, which

may make the cost of their products or services less

competitive in the market; employees can either

assume a larger percentage of their health care costs

through increased employee contribution rates or

take cuts in pay to offset higher employer contribution

rates; or plans may be forced to make cuts in benefits.

These plans contain subrogation and reimburse-

ment provisions to avoid double recovery by a

single beneficiary at the expense of all other partici

pants and beneficiaries. In a very real sense, when

a participant refuses to honor these terms of the plan

he deprives the remaining participants and bene-

ficiaries of the medical benefits to which they are

entitled.

Although Sereboff and McCutchen provide a narrow

equitable right to reimbursement, they at least pro-

vide fiduciaries with access to the relief necessary to

enforce plan terms by allowing plans to impose

equitable liens by agreement. Petitioner's position, if

upheld, will undermine that modest achievement by

allowing a beneficiary to spend the recovery to which

the plan is entitled, and then refuse to honor his

obligation to reimburse his benefit plan. The NCCMP

submits this brief to urge the Court to affirm the deci-

sion below and leave to multiemployer plans the nar-

row, but critically important, equitable remedy under

§ 502(a)(3) of ERISA that is the equitable lien by agree-

ment.

SUMMARY OF THE ARGUMENT

The Court of Appeals properly held that the National

Elevator Industry Health Benefit Plan’s claim under

§ 502(a)(3) of ERISA was permissible because it sought

to enforce the terms of its plan through an equitable

lien by agreement, which is enforceable even if the

specifically identified funds are dissipated. Therefore,

the lower court’s decision should be affirmed. A multi-

employer plan must be able to enforce its terms and

obtain payments that rightfully belong to the plan.

Otherwise, a single beneficiary’s double recovery

comes at the expense of all other plan participants

and beneficiaries. The lower court's decision also

has the effect of protecting valuable medical benefits

provided to beneficiaries, which will be lost if plans

do not retain an effective method to assert their

equitable reimbursement rights. The narrow equitable

remedy asserted by the National Elevator Industry

Health Benefit Plan is crucial for benefit plans to

recover overpayments in a wide range of contexts,

and plans lack other effective remedies at the state

and federal levels. Finally, the decision below is

consistent with Congress's objectives in enacting

ERISA to enforce plan terms, protect contractually de-

fined benefits for all participants and beneficiaries, and

preserve a uniform system for administering benefit

plans.

ARGUMENT

LIT IS CRUCIAL THAT MULTIEMPLOYER

FUNDS RETAIN THE RIGHT OF REIM-

BURSEMENT FOR BENEFITS THAT THEY

HAVE ADVANCED TO PARTICIPANTS AND

BENEFICIARIES.

The outcome of this case will turn on whether ERISA

plans’ equitable liens by agreement may be enforced

when the funds subject to such liens have been dissi-

pated. The NCCMP agrees with and finds persuasive

Respondent's analysis of the principles of equity and its

conclusion that an ERISA plan’s right to enforce a lien

by agreement cannot be defeated by dissipation. In ad-

dition, there are numerous reasons — both practical and

policy-oriented — that compel the NCCMP to advocate

for this conclusion, which is necessary for the sound

administration of the plans that the NCCMP represents

and their continued ability to provide benefits under all

circumstances.

A. Subrogation and Reimbursement Provisions

in Multiemployer Plans Protect all Plan

Participants and Beneficiaries.

Petitioner and its amici urge this Court to place the in-

terests of an individual participant above the written

plan document. This cannot be done without harming

all other plan participants.

Participants and beneficiaries in self-funded plans of

all types are directly impacted by the unenforceability

of their plans’ reimbursement and subrogation provi-

sions. The United States, as amicus in Sereboff, and Pe-

titioner's amicus American Association for Justice

acknowledge that “an employer who self-insures di-

rectly reduces its costs by recovering those costs from

a third-party.” Brief for the United States as Amicus Cu-

riae Supporting Respondent, Sereboff v. Mid Atl. Med.

Servs., Inc., 547 U.S. 356 (2006) (No. 05-260), 2006 WL

460876, at *26 n.10; see also Br. for Am. Ass’n for Justice

as Amicus Curiae at 17 (for self-insured plans, reim-

bursements “will [] go directly into plan assets to re-

duce the fund’s costs”). Without these recoveries and

reimbursements, plans’ increased costs must be borne

by all other participants and beneficiaries.

The Eighth Circuit clearly described the conse-

quences of failing to enforce subrogation and reim-

bursement plan provisions in Administrative Com-

mittee of Wal-Mart Stores, Inc. Associates’ Health &

Welfare Plan v. Shank, 500 F.3d 834 (8th Cir. 2007). In

that case, the plan paid $469,216 in medical bills on be-

half of a beneficiary, covering all of her medical ex-

penses following an automobile accident. /d. at 835.

When the beneficiary recovered $700,000 from the re-

sponsible tortfeasor, the plan asserted a lien by agree-

ment of $469,216. See id. at 835-36. The beneficiary, who

had placed the recovery in a special needs trust, argued

that the plan's lien was not equitable and thus could not

be enforced under § 502(a)(3). See id. at 836. In up-

holding the plan's right to enforce its reimbursement pro-

vision, the Eighth Circuit recognized that the interests of

one participant cannot override the written plan docu-

ment without harming all other plan participants.

We acknowledge the difficulty of Shank’s personal

situation, but we believe the purposes of ERISA are

best served by enforcing the Plan as written. Shank

would benefit if we denied the Comumittee its night

to full reimbursement, but all other plan members

would bear the cost in the form of higher premi-

ums. Reimbursement and subrogation provisions

are crucial to the financial viability of self-funded

ERISA plans, and, as a fiduciary, the Committee

must “preserve assets to satisfy future, as well as

present claims,” and must “take impartial account

of the interests of all beneficiaries.” Varity Corp.

v. Howe, 516 U.S. 489, 514 (1996).

Shank, 500 F.3d at 838; see also Zurich Am. Ins. Co. v.

O'Hara, 604 F.3d 1232, 1237 (11th Cir. 2010); Paris v.

Iron Workers Trust Fund, 211 F.3d 1265 (table) *3 (4th

Cir. 2000); Harris v. Harvard Pilgrim Health Care,

Inc., 208 F.3d 274, 280-81 (1st Cir. 2000).

The facts presented in this case illustrate the effects

of a double recovery on a single beneficiary at the ex-

pense of all other participants and beneficiaries in a

plan. Petitioner recovered $500,000 from the responsi-

ble tortfeasor and the National Elevator Industry Health

Benefit Plan (“Plan”) claimed an equitable right to a

share of that recovery in the amount of $121,044.02—

the amount the Plan had already paid for Petitioner's

medical expenses caused by the accident. Neither Pe-

titioner nor its amici dispute that for the period of time

that Mr. Montanile held the settlement funds, the Plan

had an equitable lien on the portion of those funds it

had advanced to Mr. Montanile. Nor do Petitioner or

amici dispute that during this time, he held property

that belonged to the Plan. Under the Plan's Declaration

of Trust and under ERISA itself, plan assets are to be

used solely for providing covered services to the Plan's

participants and beneficiaries. See Appellant’s Appen-

dix Vol. I at 146, Board of Trustees of the Nat Elevator

Indus. Health Benefit Plan v. Montanile, 593 F. App’x

903 (11th Cir. 2014) (No. 14-11678) (Restated Agree-

ment and Declaration of Trust of the National Eleva-

tor Industry Welfare Plan Art. IJ, Par. 3); ERISA

§ 404(a)(1)(A). A-single Plan participant should not be

able to divert these funds for his exclusive use.

Petitioner notes that the fund subject to the Plan's lien

was used to support Mr. Montanile’s daughter and to

maintain their home. Pet’r. Br. at 5. Petitioner also notes

that the Plan has approximately $1 billion in assets

Sand more than 500 participating employers. Pet’r. Br. at

4n.1. While one may be sympathetic to Mr. Montanile’s

plight, it should also be noted that the Plan provides

health benefits to over 31,000 active participants and re-

tirees, plus tens of thousands of their dependents. The

Plan paid well over $470 million in total benefit payments

in 2013, the most recent year for which its tax filing is

available.”

If the Plan were able to enforce its equitable right to

reimbursement from the settlement proceeds, it could

use that recovery to provide significant benefits to other

participants and beneficiaries. For example, the Center

2 National Elevator Industry Health Benefit Plan, 2013 Form

5500 Annual ReturrYReport of Employee Benefit Plan at pt. 11(5),

Sched. H pt. I(2\(e)(4) (filed with the Dep't of Labor on Oct. 9,

2014), available at https:/Awww.efast.dol.gov/portal/app/login?ex-

ecution=els!. While the NCCMP represents the interests of large

health funds like the Plan, it also represents the interests of plans

that may have as little as $2 million in plan assets. If the judgment

below is not affirmed, a small, seemingly well-funded multiem-

ployer health benefit plan that has been providing benefits to a

few hundred employees and dependents for decades could be

rendered insolvent by one participant's successful effort to evade

that plan’s equitable lien by agreement by dissipating the fund sub-

ject to the lien.

for Disease Control estimates that $121,044.02 would

cover the cost of all required immunizations for 115

children from birth up to age eighteen. See Vaccines

for Children Program: CDC Vaccine Price List, Ctrs.

for Dueme Contaet & FUOvERIEER, queries at

vaccine sanagamentiorice Hel (last updated Aug. 3

2015). Other multiemployer plans that are constituent

members of NCCMP estimate that $121,044.02 would

allow them to cover any of the following: annual pre-

scription costs for thirteen cancer patients; seventy

hearing aids; one month's prescription costs for 388 re-

tirees and their eligible family members; over 1,700

speech therapy sessions; or pre-implantation treatment,

entire hospital admission, and surgeon's transplant

charges for one kidney transplant patient.

The disregard for plan terms urged by Petitioner

would be particularly devastating to multiemployer

plans’ ability to provide these benefits. The reason

that subrogation and reimbursement provisions

serve such an important role in multiemployer plan

design is in large part due to the manner in which

these plans are funded. Multiemployer plans are

established and funded through the collective bargain

ing process—once every three years or more the bar-

gaining parties sit down to determine how much money

will be directed to a self-funded multiemployer health

plan over the duration of a collective bargaining

agreement. With their sources of funding established

through the collective bargaining process, self-funded

multiemployer plans typically cannot raise employee

premiums to offset increased costs of plan administra-

tion.

While funding through the collective bargaining

process places limits on the assets available to self-

funded multiemployer health plans, federal regulation

of group health plans over the past thirty years has

placed an increasing number of mandates on the rights

and benefits these plans must provide. Beginning in

1986, when Congress first required plans to provide

continuation coverage to employees and beneficiaries

in the event of termination or other qualifying events,

Congress, the Department of Labor, the Internal Rev-

enue Service, and the Department of Health and Human

Services have steadily increased the number of man-

dated benefits required of self-funded health plans.

ERISA, as amended through 2009, now requires plans to

provide continuation coverage to employees on quali-

fied family or medical leave, to honor qualified medical

child support orders, to provide reconstructive surgery

following a covered mastectomy, to limit restrictions on

benefits for preexisting conditions, to eliminate limits

on hospital length of stays connected with childbirth,

and to establish parity between mental health and sub-

stance abuse benefits and medical benefits.’ And the

3 See Consolidated Omnibus Budget Reconciliation Act of 1985

(COBRA), Pub. L. No. 99-272, 100 Stat. 82 (1986); Family and Med-

ical Leave Act of 1993 (FMLA), Pub. L. No. 103-3, 107 Stat. 6

(1993); Child Support Performance and Incentive Act of 1998,

Pub. L. No. 105-200, 112 Stat. 645 (1998); Women's Health and Can-

cer Rights Act, Pub. L. No. 105-277, tit. IX, 112 Stat. 2681-436

(1998); Health Insurance Portability and Accountability Act of

1996 (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936; Standards for

Privacy of Individually Identifiable Health Information, 65 Fed.

Reg. 82,462 (Dec. 28, 2000) (codified at 45 C.F.R. pts 160 and 164);

Newborns’ and Mothers’ Health Protection Act of 1996 (NMHPA),

Pub. L. No. 104-204, tit. VI, 110 Stat. 2935 (1996); Mental Health

Parity Act of 1996 (MHPA), Pub. L. No. 104-204, tit. VII, 110 Stat.

impact of the foregoing requirements pales in compar-

ison to that of the Patient Protection and Affordable

Care Act (“ACA”). Pub. L. No. 111-148, 124 Stat. 119

(2010). Among other things, the ACA requires group

health plans (including self-funded health plans) to

eliminate lifetime and annual benefit limits for essen-

tial benefits, to provide dependent coverage for adult

children up to age 26, to eliminate cost-sharing for pre-

ventive services and immunizations, to limit rescissions

in eligibility to cases of fraud and intentional misrepre-

sentation, to eliminate any pre-existing condition ex-

clusions, and to eliminate waiting periods in excess of

90 days.

More than ever, trustees of multiemployer health

plans must wrestle with escalating health care costs, in-

cluding the costs of complying with new, expensive

ACA minimum coverage requirements, at a time when

many of those sectors of the economy where employ-

ees and their dependents are most likely to receive

healthcare benefits through multiemployer plans are ei-

ther in decline or are still recovering from the nation’s

worst recession since the Great Depression. With rising

costs and few options for increasing funding, multiem-

ployer plans must be able to rely on the enforceability

of the subrogation and reimbursement provisions writ-

ten into plan documents.‘

2944 (1996); Mental Health Parity and Addiction Equity Act of

2008 (MHPAEA), Pub. L. No. 110-343, tit. V.B, 122 Stat. 3881

(2008). This is not an exhaustive list, but it does include the more

burdensome changes in the law since ERISA's enactment.

‘ Petitioner's suggestions that the summary plan description

(“SPD”), which contains the reimbursement and subrogation pro-

vision in this case, does not constitute a “plan document” and

Preserving the link between effective enforcement of

reimbursement and subrogation provisions and preser-

vation of plan assets for present and future claims is

critical to the self-funded multiemployer plans that are

among the NCCMP’s constituents. Such plans must

ensure that contributions paid in accordance with

the terms of collective bargaining agreements are suffi-

cient to cover the costs of providing benefits. Although

the vigorous efforts of trustees of such plans to enforce

reimbursement and subrogation provisions may ap-

pear harsh when viewed from the perspective of a

severely injured participant or beneficiary, in fact, the

trustees are fulfilling their fiduciary duty to ensure that

the plan may continue to provide benefits to all partic-

ipants and beneficiaries. See ERISA § 404(a)(1)(A), (“a

fiduciary shall discharge his duties with respect to a

plan solely in the interest of participants and benefici-

aries. . and for the exclusive purpose of. providing

benefits to participants and their beneficiaries; and de-

fraying reasonable expenses of administering the

plan.”).

does not set forth the terms of the plan must be rejected. Pet'r Br.

at 7n.6, 811, 40 n.22. First, Petitioner expressly waived that ar-

gument before this Court. Jd. at 13 n.8. Second, this Court has

recognized that enforceable plan terms may be found in more

than one document, see Curtiss-Wright Corp., 514 U.S. at 83, and

that an SPD may be enforceable under Section 502 of ERISA if it

does not conflict with terms specified in other, governing plan doc-

uments, see CIGNA Corp. v. Amara, 563 U.S. 421 (2011). Finally,

at least three circuits have reviewed the same SPD at issue here

and have recognized that it functions as the controlling ERISA

plan in the absence of a separate plan document. See Bad. of Ts.

of the Nat! Elevator Indus. Health Ben. Plan v. Moore, — F.3d —,

No, 14-4048, 2015 WL 5010985, at *4-6 (6th Cir. Aug. 25, 2015)

(collecting cases).

B. The Decision Below Protects Beneficiaries’

Ability to Obtain Immediate Medical

Benefits when Injuries are Caused by Third

Parties.

Self-funded multiemployer benefit plans are not obli-

gated by any law to pay medical benefits when a par-

ticipant or beneficiary is injured by a third party. The

result of the position advanced by Petitioners, for the

Court to sharply constrict benefit plans’ ability to en-

force equitable claims over a portion of compensation

received by tort victims, is that beneficiaries will be left

with no medical coverage when they need it most, after

an unexpected accident caused by a tortfeasor.

Although ERISA establishes a comprehensive regu-

latory scheme for benefit plans in general, it does not

mandate any minimum substantive content for welfare

benefit plans in particular. See, e.g., Shaw v. Delta Air

Lines, Inc., 463 U.S. 85, 91 (1983); Hamilton v. Air

Jam., Ltd., 945 F.2d 74, 78 (3d Cir. 1991). As a result,

employers “have large leeway to design disability and

other welfare plans as they see fit.” Black & Decker

Disability Plan v. Nord, 538 U.S. 822, 833 (2003). In

Metropolitan Life Insurance Company v. Massachu-

setts, the Court held that ERISA “does not regulate the

substantive content of welfare-benefit plans.” 471 U.S.

724, 732 (1985). ERISA generally leaves it to plan spon-

sors “to adopt, modify, or terminate welfare plans.”

Curtiss-Wright Corp., 514 U.S. at 78; see Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 511 (1981).

The vast majority of multiemployer plans affiliated

with the NCCMP have not agreed to pay medical bene-

fits for injuries caused by third parties. The written

plans commonly provide that benefits are not payable

if a sickness or injury is the responsibility of a third

party. However, recognizing that beneficiaries need to

pay for extraordinary medical expenses in the event of

unexpected illness or injury, plans allow for the ad-

vancement of benefits. That advance, however, is com-

monly conditioned on the beneficiary's promise to

honor the benefit plan’s equitable right to a portion of

compensation if and when the beneficiary obtains a re-

covery from the responsible third party. See, e.g., Kress

v. Food Emp’rs Labor Relations Ass'n, 391 F.3d 563,

565 (4th Cir. 2004) (involving plan’s refusal to pay ben-

efits for injuries from auto accident when beneficiary

refused to acknowledge equitable reimbursement

right); Copeland Oaks v. Haupt, 209 F.3d 811, 812 (6th

Cir. 2000) (same); Cagle v. Bruner, 112 F.3d 1510, 1513

(11th Cir. 1997) (same).

The terms of a typical plan of benefits are illustrated

by the plan considered by the Fourth Circuit in Kress:

Waiting for a third party to pay for these injuries

may be difficult. Recovery from a third party can

take a long time (you may have to go to court), and

your creditors will not wait patiently. Because of

this, as a service to you, the Fund will pay your (or

your eligible dependent’s) expenses based on the

understanding that you are required to reimburse

the Fund in full from any recovery you or your eli-

gible dependent may receive, no matter how it is

characterized. This process is called “subrogation.”

.... The Fund extends benefits to you and your de-

pendents only as a service to you. The Fund must

be reimbursed if you obtain any recovery from an-

other person or entity's insurance coverage.

391 F.3d at 566. Thus, far from having contracted to

bear the risk associated with the costs of injuries

caused by third parties, benefit plans typically expressly

disavow any obligation to pay benefits under those cir-

cumstances.

However, recognizing the difficult circumstances pre-

sented to beneficiaries, benefit plans typically agree to

advance medical costs to tide over a beneficiary in dif-

ficult times, but only if the beneficiary promises to re-

imburse the benefit plan later. As emphasized by the

Fourth Circuit, these plan provisions

broadened rather than narrowed the options of

Fund participants. Nothing required [the benefici-

ary] to accept the subrogation option; he was free

to reject it and commence litigation at once, with

no obligations whatever to the Fund. But if he did

accept the Fund's offer, and then recovered in tort,

it was not wrongful for the Fund to seek to recoup

this expenditure to provide for future participants

who may find themselves in similarly straitened cir-

cumstances. The Fund “must serve the best inter-

ests of all Plan beneficiaries, not just the best

interest of one potential beneficiary.”

Id. at 570-71 (footnote omitted) (citing Ellis v. Metro.

Life Ins. Co., 126 F.3d 228, 234 (4th Cir. 1997)). It is the

voluntary nature of these advanced payments that

clearly establishes the need for an equitable remedy of

reimbursement as opposed to the legal remedy of a

breach of contract.°

5 Petitioner's amicus, the American Association for Justice,

argues that subrogation and reimbursement provisions constitute

“illusive’ coverage unfair to beneficiaries, and that restricting

benefit plans’ ability to enforce such provisions is appropriate

If the Court restricts benefit plans’ ability to obtain

equitable liens by agreement under these circum

stances, as argued by Petitioner, the result will not be a

greater recovery by beneficiaries in personal injury law-

suits. Instead, benefit plans will respond by simply not

advancing these payments in the first place, leaving

beneficiaries to deal with medical bills, creditors, and

delays on their own through the uncertain and lengthy

process of personal injury lawsuits. This cannot be

good public policy.

Reducing benefit plans’ equitable remedies, as urged

by Petitioner, will create hardship for beneficiaries in

another form as well. Currently, as described above,

plans typically advance benefits to beneficiaries in their

times of need, based on a promise to reimburse in the

event that a future recovery is obtained. In some cases,

at a point in time far in the future, the beneficiary may

eventually recover a payment from the tortfeasor and

be required to reimburse the plan. However, far more

commonly, the beneficiary decides not to pursue an ac-

tion against the responsible tortfeasor, or, based on the

uncertainties and expense of litigation, agrees to a set-

tlement for less than full compensation. In these com-

mon scenarios, the beneficiary will retain the benefit of

having had medical expenses paid on his or her behalf

because beneficiaries are merely receiving the benefits to which

they are contractually entitled in the first place. Br. for Am. Ass'n

for Justice as Amicus Curiae at 28. Thus, according to Amicus, be-

cause participants “have paid for” coverage, there is no policy jus-

tification to require beneficiaries to reimburse medical plans out

of tort recoveries from third parties. Jd. As detailed by the plan

language quoted above, this argument ignores that many benefit

plans do not, in fact, contract to bear the risk to pay medical ben-

efits when injuries or sicknesses are caused by a third party.

without having to engage in legal action and without

any obligation to reimburse the plan (beyond any

amount recovered). This benefit will be lost to benefi-

ciaries if plans stop advancing benefits in exchange for

the right to an equitable claim of reimbursement.

C. Preserving a Meaningful Equitable Remedy

in the Face of Dissipation is Necessary in

Many Subrogation and Reimbursement

Cases and in Other Types of Plan Recover-

ies as Well.

Petitioner claims that dissipation’s destruction of a

plan's equitable lien by agreement will occur in only a

small fraction of cases where recoupment of benefits

is sought — those “truly exceptional cases” where “the

participant uses the settlement funds to purchase serv-

ices (e.g., childcare) or consumable goods (e.g., food)

from a bona fide purchaser for value.” Pet’r Br. at 44-45.

Petitioner contrasts such a situation with scenarios in

which it claims funds can be traced and recouped by

the plan, such as where a participant uses funds to ob-

tain an asset, gives the funds to another person, or uses

the funds to obtain goods or services from another per-

son with notice of the lien. Pet’r Br. at 44.

The NCCMP disagrees that dissipation cases like Mr.

Montanile’s are “truly exceptional.” If a participant

could claim that a plan’s equitable lien is destroyed to

the extent that the participant paid his or her bills or

purchased groceries after taking possession of settle-

ment funds or other funds subject to an equitable lien

by agreement, practically all participants who receive

such funds would be able to void those liens to the

detriment of their plans and their fellow participants.

In a situation like Montanile, where a participant is in-

jured, it is even more likely that he or she will be able

to claim dissipation of funds shortly after they are

received because the participant most likely would

have been unable to work while injured and may have

accrued significant financial obligations during that

time.°

Moreover, dissipation and destruction of plans’ equi-

table liens by agreement will affect not only health and

welfare plans but also all other types of plans, including

pension plans. Petitioner and its amici acknowledge

this fact. See Pet’r Br. at 21; Br. for AARP as Amicus

Curiae at 3; Br. for Am. Ass'n for Justice as Amicus Cu-

riae at 1. Indeed, AARP’s entire amicus brief is devoted

to the issue of overpayments in the pension plan con-

text.

Overpayments from pension plans may result from a

number of factual scenarios. For example, plans, which

rely on participants and beneficiaries to alert them to

life changes that affect benefits, may continue to make

erroneous automatic benefit payments even though a

participant has died if the plan is not alerted in a timely

manner of the death. Benefits may also be obtained

through fraud or as the result of miscalculations or ac-

§ Petitioner claims to have found “no evidence of a ‘dissipation

explosion” in the jurisdictions that have adopted his position.

Pet'r Br. at 42 n.23. This observation ignores the fact that such

evidence would not be readily apparent since plans would be un-

likely to bring claims against participants who have claimed dis-

sipation in light of the Eighth and Ninth Circuits’ decisions in

Treasurer, Trs. of Drury Indus., Inc. Health Care Plan & Tr. v.

Goding, 692 F.3d 888 (8th Cir. 2012), and Bilyeu v. Morgan Stan-

ley Long Term Disability Plan, 683 F.3d 1083 (9th Cir. 2012).

cidental payment of a benefit to the wrong person. In

all of these scenarios - some of which may not be dis-

covered for some time — the plan must be able to en-

force its terms to recover overpayments, whether or not

the recipient has spent the overpaid funds on goods or

services.

Kroop v. Rivlin, Case 04 Civ. 1401, 2004 WL 2181110

(S.D.N.Y. Sept. 27, 2004), illustrates the consequences

of adopting Petitioner's position. In Kroop, the court

found that a pension plan had no right to recoupment

where a pensioner’s son misrepresented that his father

was alive for eight years while cashing his father's pen-

sion checks. The court ruled that, because the

pensioner’s son had spent the proceeds of the checks

he had fraudulently cashed and no longer had posses-

sion of those funds, under Great-West, the plan's

recoupment efforts were legal and not equitable

and, therefore, relief was unavailable under ERISA.

Id. at *2. Since Sereboff, Courts of Appeals have

avoided the result of Kroop by holding that a plan's

equitable lien by agreement attaches when funds

are received and that subsequent dissipation is irrele

vant. See Elem, 767 F.3d at 1198-99 (collecting cases).

If these cases are overruled and Petitioner's posi-

tion prevails, plans will have no right to recover

funds paid to ineligible parties simply because the re-

cipient of the funds spent them on normal costs of daily

life.’

” Kroop also illustrates the limits of Petitioner's assertion that

a plan can recover amounts due to it from a beneficiary by simply

deducting those amounts from that beneficiary's future plan pay-

ments. See Pet’r Br. at 21-22. In Kroop, or any other case where

Plan terms, especially in the pension context, are of

paramount importance in promoting ERISA's principal

goal of “protect[ing] contractually defined benefits.”

Mass. Mut. Life Ins. Co., 473 U.S. at 148. In its amicus

brief, AARP advocates for the interests of the few over-

paid pension plan participants, but all plan participants

suffer when plans do not have a full complement of

tools to recoup overpayments.

In the context of a defined benefit pension plan—a

plan that consists of a general pool of assets and gives

each eligible participant the right to a certain level of

accrued benefits, usually a fixed periodic payment com-

mencing at normal retirement age-the plan must ensure

that benefits are fully funded according to complex ac-

tuarial calculations. If terms are effectively added to

the plan, as they would be if certain participants were

allowed to keep erroneously paid benefits over and

above their entitlement under the plan, the actuarial

soundness of the plan may be jeopardized to the detri-

ment of all participants. See Shields v. Local 705, Int'l

Bhd. of Teamsters Pension Pian, 188 F.3d 895, 905 (7th

Cir. 1999) (Posner, C.J., concurring) (“If terms are

added. that appear nowhere in the plan documents

upon which the actuarial calculations are based, that

the actuaries who designed the funding mechanism in

the plan did not know about. ‘the plan may turn out

to be seriously underfunded. _ [T]he actuarial impli-

benefits are paid by the plan under circumstances where no enti-

tlement to benefits existed, it would be impossible for the plan to

recover them by offsetting future benefits. Of course, in health

care cases, by definition, there is no possibility for a plan to off-

set future benefits because health benefits are paid only as needed

for specified medical purposes.

cations are graver the more workers are involved. And

it is particularly clear in a case .. . in which the defined-

benefit plan is a multiemployer plan.” (internal citations

omitted)).

Similarly, in a defined contribution plan, contribu-

tions are paid into the plan and, upon retirement, each

participant is entitled to the funds in his or her account.

Under this plan design, an overpayment to one partici

pant means that a participant who is paid more than the

amount he or she has earned under the terms of the

plan has been overpaid at the direct expense of another

participant. The very narrow remedy of an equitable

lien permitted by the court below is vital to benefit

plans in any context in which recovery of plan assets is

necessary.

Il. BENEFIT PLANS DO NOT HAVE ALTER-

NATIVE UNIFORM OR ADEQUATE REME-

DIES TO RECOVER MONEY IN EQUITY.

Petitioner and its amici suggest that benefit plans re-

ally do not need an equitable remedy under § 502(a)(3)

of ERISA when the disputed funds have been spent be-

cause they have other adequate options to obtain the

funds before they are dissipated. They argue that plans

can largely protect their rights to reimbursement by in-

tervening in state court lawsuits or by relying on par-

ticipants’ tort attorneys’ ethical obligations to hold the

funds until the ERISA plan has an opportunity to act.

See Pet’r Br. at 42-43; Br. for United States as Amicus

Curiae at 29-31; Br. for Am. Ass'n for Justice as Amicus

Curiae at 24-26. These arguments should be rejected.

As an initial matter, the Petitioner's suggestion that

benefit plans should intervene in state court lawsuits

ignores the fact that the vast majority of state court tort

actions end in settlement. See U.S. Dep't of Justice,

Bureau of Justice Statistics, NCJ 233094, Punitive

Damage Awards in State Courts, 2005 at 2 tbl.2 (Mar.

2011), available at http://bis.gov/content/pub/pdf/

pdasc05.pdf. Therefore, there will usually not be a

state court lawsuit in which to intervene in the first

place.

Petitioner's suggestion that benefit plans have ade-

quate remedies in various state court jurisdictions also

contravenes Congress's explicit purpose to obtain uni-

formity for benefit plans when it enacted ERISA. The

purpose of the Act was to provide plans a uniform set

of administrative procedures, rather than making them

comply with a different set of procedures for process-

ing claims and disbursing benefits in each state. See

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987);

N.Y. State Conference of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co., 514 U.S. 645, 656-57 (1995)

(quoting Ingersoll-Rand Co. v. McClendon, 498 U.S.

133, 142 (1990)). When applying this Congressional pur-

pose to subrogation and reimbursement provisions in

particular, this Court held that the “[a}pplication of dif-

fering state subrogation laws to plans would therefore

frustrate plan administrators’ continuing obligation to

calculate uniform benefit levels nationwide.” FMC

Corp. v. Holliday, 498 U.S. 52, 60 (1990); see also ERISA

§ 514, 29 U.S.C. § 1144 (establishing the preemption of

state laws that relate to ERISA benefit plans).

Intervention in state court tort lawsuits does not pres-

ent a uniform set of procedures to address benefit

plans’ equitable rights of reimbursement and subroga-

tion. If a beneficiary's tort action is pending, and as-

suming that the benefit plan is even aware of the law-

suit, benefit plans will be required to become experts

in the intricacies of each state's tort recovery laws.

They also will be required to monitor each jurisdiction's

peculiar court rules and to hire local attorneys to pro-

tect the plans’ interests. In addition, these state court

actions will be located in any jurisdiction in which a

benefit plan's beneficiary might travel or reside. As

such, the need to defend the benefit plan's interests in

far-flung jurisdictions will increase the plan's adminis-

trative expenses. In creating a federal remedy exactly

for these situations, Congress was careful to craft a pro-

vision that allows benefit plans to sue in a convenient

forum to preserve plan assets. See ERISA § 502(e)(2),

29 U.S.C. § 1132(e)(2) (providing an action may be

brought in the district where the plan is administered).

The result of losing a uniform equitable remedy in the

federal courts will be increased administrative costs to

these benefit plans and a concomitant reduction in ben-

efits for the plans’ participants and beneficiaries.

Petitioner next suggests that ERISA plans may rely

on attorney rules of professional conduct, which cau-

tion personal injury attorneys not to disburse third

party recoveries when the funds are subject to dispute,

to protect benefit funds from dissipation. See Pet’r Br.

at 42. Attorney ethical obligations, however, cannot

substitute for enforcement of a plan's recovery rights.

First, ERISA plans may not be aware of a recovery and

thus will be unable to notify the beneficiary’s counsel

that a portion of the recovery belongs to the plan. Sec-

ond, like tort actions, professional rules of responsibil-

ity vary from state to state, and multiemployer ERISA

plans can ill-afford to divert scarce resources to be-

coming expert in the professional obligations of each

state’s personal injury plaintiffs’ bar. Moreover, even if

a plan took action against the attorney for ethical vio-

lations, it would not be made whole. Discipline of

lawyers for violations of their ethical obligations typi-

cally takes the form of admonition, censure, suspension

of practice, or disbarment, not recoupment of funds

owed to the plan.

Finally, even if a plan could show that a beneficiary’s

personal injury attorney improperly disbursed a plan’s

share of recovery from a tortfeasor, the plan has no

cause of action (aside from § 502(a)(3)) against the at-

torney unless the attorney is a party to the subrogation

agreement. See Goding, 692 F.3d at 894-95 (finding no

implied contract between attorney and plan to honor

plan’s subrogation agreement unless the attorney signs

the agreement); AC Hows. Lumber Co. Emp. Health

Plan v. Berg, 407 F. App’x 208, 209 (9th Cir. 2010)

(same); Hotel Emps. & Rest. Emps. Int'l Union Wel-

fare Fund v. Gentner, 50 F.3d 719, 720-21 (9th Cir. 1995)

(same).

The Circuit split on the issue presently before the

Court clearly illustrates that beneficiaries who have re-

ceived payments from the responsible tortfeasors and

their attorneys often do not act in good faith with re-

gard to their obligations. In no fewer than four cases re-

garding dissipation of settlement proceeds—not

including the decision below—the beneficiaries and

their attorneys worked together to defeat plans’ equi-

table rights by dissipating or disbursing assets. See

Elem, 767 F.3d at 1195 (beneficiary and her attorney

“conspired to hide and disburse settlement funds she

received” to avoid reimbursing welfare plan); Cent.

States, S.E. and S.W. Areas Health & Welfare Fund v.

Lewis, 745 F.3d 283, 284-85 (7th Cir. 2014) (beneficiary's

attorney refused to release any settlement proceeds to

welfare plan, even after court order to do so, resulting

in contempt finding); Goding, 692 F.3d at 892 (benefi-

ciary’s personal injury attorney twice acknowledged

plan's reimbursement provisions, but disbursed all pro-

ceeds within a month after settlement); Longaberger

Co. v. Kolt, 586 F.3d 459, 462 (6th Cir. 2009) (although

plan had advanced beneficiary over $113,000 in med-

ical fees and beneficiary's personal injury attorney

knew of plan’s reimbursement provision, attorney

disbursed all but $1,000 in settlement funds). See

also Moore, 2015 WL 5010985 at *2 (describing the

lengths to which a beneficiary's attorney sought to shut

out the plan from any and all rights to settlement pro-

ceeds). In these situations, which unfortunately occur

more frequently than the Petitioner believes, a uniform

equitable remedy is required to enforce the terms of the

plan.

Ill. THERE ARE NO “COMPETING GOALS”

UNDER ERISA THAT WOULD BE SERVED

BY REVERSING THE DECISION OF THE

LOWER COURT.

Petitioner and its amici assert that further reducing

plans’ equitable remedies under § 502(a)(3) would

properly provide “balance between the competing goals

of ERISA.” Pet’r Br. at 16, 18, 21-22; see also United Pol-

icyholders Br. as Amicus Curiae at 16-17. But there are

no poiicy goals in the statute that would reach the result

sought by Petitioner: allowing one participant to violate

the terms of the plan to create a windfall for himself at

the expense of all other participants and beneficiaries in

the plan.* To the contrary, ERISA fiduciaries, such as

the trustees of multiemployer plans, have a “duty to all

beneficiaries to preserve limited plan assets” and “pre-

vent... windfalls for particular employees.” Conkright

v. Frommert, 559 U.S. 506, 520 (2010). In fact, allowing

multiemployer plans to enforce equitable liens by agree-

ment set forth in plan terms honors the fundamental

goals of ERISA: to protect contractually defined bene-

fits for ad/ participants and beneficiaries, see Mass. Mut.

Life Ins. Co., 473 U.S. at 142, to enable plans to be ad-

ministered according to a uniform regime, see

Conkright, 559 U.S. at 517, and to preserve assets to sat-

isfy future, as well as present claims, see Varity, 516

US. at 614.

Far from advancing any of the interests identified by

the Court, the Petitioner's proposed nule cuts against all

of them. Petitioner's rule advances the interests of sin-

gle plan participants over all others and thereby threat-

ens plans’ ability to provide benefits for all participants

and beneficiaries. See Mass. Mut. Life Ins. Co., 473 US.

8 Petitioner cites Mertens for balancing ERISA’s “competing

goals” to benefit employees on the one hand, and contain pension

costs on the other. Pet’r. Br. at 18, 22 (citing Mertens, 508 U.S. at

263). However, the Court's discussion of containing pension costs

in Mertens had to do with the possibility that these costs would in

crease if pension plans’ non-fiduciary service providers were li

able for all direct and consequential damages suffered by the plan

See Mertens at 262-63. Here, as explained at Section II, supra, the

costs of plan administration will increase if plans are required to

make herculean efforts to recover funds that they are now able to

recover through equitable liens by agreement. Therefore, if any-

thing, the Court's observations about ERISA's competing goals

and its recognition of the nexus between the costs of plan ad-

ministration and plans’ ability to provide benefits in Mertens sup-

port the Respondent's position and not Petitioner's.

at 142. Moreover, by allowing a broad loophole for par-

ticipants subject to equitable liens by agreement who

are able to claim dissipation, Petitioner's rule destroys

uniform enforcement of plans’ reimbursement provi-

sions. See Conkright, 559 U.S. at 517. Finally, Peti-

tioner’s position threatens the ability of plans to satisfy

future claims by creating an avenue for participants to

keep funds to which they lost entitlement or were never

entitled to have. See Varity, 516 U.S. at 514.

At its core, the Petitioner and its amicis’ objections

to benefit plans’ equitable reimbursement remedies are

based on a perception that such a remedy is harsh and

unfair. This overlooks the “commonplace economic

calculus” present in every personal injury lawsuit.

Kress, 391 F.3d at 570. According to the Fourth Circuit:

Attorneys considering taking a case on contin-

gency commonly factor the likelihood of success

and the magnitude of recovery into their decision.

“Many tort claims involve considerable risk and in-

sufficient reward. Attorneys, however, carefully

screen these claims and reject a large portion, in-

cluding most denominated as high risk.”.. Ifthe

participant and his attorney conclude that private

litigation will not produce a sufficient recovery to

make the litigation worthwhile, they need not bring

the case.

Id. (internal citation omitted.) Thus, harsh results are

not caused by benefit plans enforcing a right to reim-

bursement and subrogation. Instead the “unfairness”

is often an inherent part of the litigation process that

has been described, in this context, as being “like a lot-

tery ticket.” Cutting v. Jerome Foods, Inc., 993 F.2d

1293, 1298 (7th Cir. 1993). In fact, far from creating

hardships, the availability of subrogation and reim-

bursement serves to shift the risk of an uncertain re-

covery onto the benefit plan and away from the

beneficiary. See id. at 1297. This is because, by ad-

vancing medical benefits to a beneficiary in anticipa-

tion of a possible equitable claim to proceeds obtained

in the future, the “lottery ticket” of uncertain payment

for medical expenses is transferred from the benefici-

ary to the benefit plan. /d. at 1298. Where the tortfea-

sor subsequently gives the beneficiary money to cover

expenses the plan has already paid, preserving a lim-

ited equitable remedy under § 502(a)(3) is the only out-

come consistent with ERISA’s text and purpose.

CONCLUSION

For the foregoing reasons, the NCCMP respectfully

urges the Court to affirm the decision of the Court of

Appeals.

Respectfully submitted,

JOHN M. MCINTIRE *

JENNIFER R. SIMON

O’DONOGHUE & O’DONOGHUE LLP

4748 Wisconsin Avenue, N.W.

Washington, DC 20016

jmcintire@odonoghuelaw.com

(202) 362-0041

Counsel for the National Coordinating

Committee for Multiemployer Plans

* Counsel of Record

OCTOBER 2015

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.