ERISA Paybacks

JOEL SEREBOFF, ET UX., PETITIONERS v. MID ATLANTIC MEDICAL SERVICES, INC. a case decided by the United States Supreme Court on May 15, 2006, seeks to answer the question?

Can a fiduciary under the Employee Retirement IncomeSecurity Act of 1974 (ERISA) sue a beneficiary for reimbursement of medical expenses paid by the ERISA plan, when the beneficiary has recovered for their injuries from a third party.

The Court answers the question this way:

Mid Atlantic’s action in the District Court properly sought”equitable relief ” under §502(a)(3); the judgment of the Fourth Circuit is affirmed in relevant part.

When asked about the equitable considerations of the make whole doctrine, the Court in its footnote found:

2 The Sereboffs argue that, even if the relief Mid Atlantic sought was “equitable” under §502(a)(3), it was not “appropriate” under that provision in that it contravened principles like the make-whole doctrine. Neither the District Court nor the Court of Appeals considered the argument that Mid Atlantic’s claim was not “appropriate” apart from the contention that it was not “equitable,” and from our examination of the record it does not appear that the Sereboffs raised this distinct assertion below. We decline to consider it for the first time here.

It appears that an ERISA plan will be reimbursed in equity versus law according to the Court. It is still unclear to me how this affects issues of parties not being made whole as well as the imposition of prorata share of fees and costs. Equity means fairness. If a person is wholly compensated for a loss, it is only fair to reimburse those who pay the bills; if they are not wholly compensated, shouldn’t everyone share in the cost, not just the injured person. I believe this answer will come another day.