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Supreme Court Issues ERISA Subrogation Opinion

In a surprising bit of good news for plaintiffs, on January 20, 2016, the Supreme Court issued Montanile v. Board of Trustees of National Elevator, 577 U.S.  (2016).  In this action, the plaintiff was seriously injured by a drunk driver, which required payments from his ERISA plan of more than $120,000 for his medical expenses. The plaintiff recovered a $500,000 settlement from the tortfeasor and the ERISA plan sought reimbursement of the funds it had paid from the settlement. Most ERISA plans now contain specific language allowing the ERISA plan to seek reimbursement under a subrogation clause. The Court explained, however, that the ability of an ERISA fiduciary to recover sums paid from a third-party tortfeasor to a plaintiff under Section 502(a)(3) of ERISA is grounded in equity.  And whether the relief requested “is legal or equitable depends on the basis for [the plaintiff’s] claim and the nature of the underlying remedies sought.”

Prior precedent of the Supreme Court explained that the enforcement of a lien created by an agreement to convey a particular fund to another party—is equitable. Moreover, other precedent of the Court established that the nature of the ERISA plan’s underlying remedy, i.e., the enforcement of a lien against “specifically identifiable funds that were within [plan participant’s] possession and control” did not apply to the facts at hand.  Here, because there was no specific funds capable of identifying, the ERISA plan “fiduciary cannot bring a suit to attach the [plan] participant’s general assets under §502(a)(3) because the suit is not one for ‘appropriate equitable relief’.”   

If you or a loved one is in need of legal help and counsel, contact the long term disability attorneys at Burke Harvey, LLC for a free legal consultation.