TrusteesNatl Elevator Industry v. Bernard McLaughlin , 590 F. App'x 154 ( 2014 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 14-1308
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BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR
INDUSTRY HEALTH BENEFIT PLAN
v.
BERNARD MCLAUGHLIN,
Appellant
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civ. No. 3-12-cv-04322)
District Judge: Honorable Anne E. Thompson
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Submitted Under Third Circuit LAR 34.1(a)
September 9, 2014
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Before: RENDELL, GREENAWAY, JR. and BARRY, Circuit Judges
(Filed: October 1, 2014)
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OPINION
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BARRY, Circuit Judge
Appellant Bernard McLaughlin appeals the order of the District Court granting
summary judgment in favor of the Board of Trustees of the National Elevator Industry
Health Benefit Plan (the “Board”) on the Board’s claim for reimbursement of money paid
by the National Elevator Industry Health Benefit Plan (the “Plan”) toward McLaughlin’s
medical expenses. We will affirm.
I.
The facts of this case are undisputed. In broad summary, McLaughlin is a
participant in the Plan, a self-funded, ERISA-governed, multi-employer employee
welfare benefit plan of which the Board is a fiduciary. In January 2009, McLaughlin was
injured in an ATV (“all-terrain vehicle”) accident, and the Plan thereafter paid
approximately $47,590.24 in medical benefits on his behalf. McLaughlin filed personal
injury claims against a third party, and, in December 2011, that case settled.
The Plan language1 provides as follows:
The Plan has a right to first reimbursement out of any recovery.
Acceptance of benefits from the Plan for an injury or illness by a covered
person, without any further action by the Plan and/or the covered person,
constitutes an agreement that any amounts recovered from another party by
award, judgment, settlement or otherwise, and regardless of how the
proceeds are characterized, will promptly be applied first to reimburse the
Plan in full for benefits advanced by the Plan due to the injury or
illness . . . .
(App. at 21.) The Plan also provides that it “reserves the right to make all decisions with
respect to its rights of subrogation and recovery,” and that it “has the right to treat any
1
The parties cite to language in the Summary Plan Description as the language of the
Plan. As the Supreme Court has recognized, statements in a summary plan description
“provide communications with beneficiaries about the plan, but . . . do not themselves
constitute the terms of the plan.” Cigna Corp. v. Amara, 131 S. Ct. 1866, 1878 (2011).
Because the parties have consistently treated this language as if it came from the Plan,
however, we may do so as well. US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1543
n.1 (2013) (“Because everyone in this case has treated the language from the summary
description as though it came from the plan, we do so as well.”).
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benefits provided as an advance and to deduct such amounts from future benefits to
which the covered person or an immediate covered family member may otherwise be
entitled until the amount due the Plan has been satisfied.” (Id. at 22.)
Following unsuccessful attempts to collect reimbursement from McLaughlin, the
Plan filed this action in July 2012 pursuant to ERISA § 502(a)(3), 29 U.S.C.
§ 1132(a)(3). McLaughlin filed a counterclaim, alleging that after the tort claims settled,
the Plan unlawfully refused to pay medical expenses for himself and his family unrelated
to the ATV accident. The parties filed cross motions for summary judgment, and, on
January 24, 2014, the District Court granted summary judgment to the Board. The Court
concluded that the Board successfully established that the language of the Plan gave rise
to an “equitable lien by agreement,” recognized by the Supreme Court as an equitable
remedy under ERISA § 502(a)(3) in Sereboff v. Mid Atl. Med. Servs, Inc., 547 U.S. 356
(2006). The Court also held that New Jersey’s Collateral Source Statute (the “NJCSS”),
N.J. Stat. Ann. § 2A:15-97, which McLaughlin argued prohibited him from recovering
medical expenses from the third party, was pre-empted by ERISA and that, in any event,
the language of the Plan controlled. The Court rejected, as well, McLaughlin’s
affirmative defense of laches and found McLaughlin’s argument that he had no duty to
reimburse the plan to be “unpersuasive.” (App. at 7 n.3.)
McLaughlin now appeals, arguing that the District Court erred in concluding that
the Plan had an equitable lien against his tort recovery because there was no nexus
between the funds received by him (which excluded compensation for medical expenses)
and the funds expended by the Plan (which were solely for medical expenses).
3
McLaughlin also argues that the Court erred in concluding that the NJCSS was pre-
empted by ERISA and in rejecting his other arguments.
II.
The District Court had jurisdiction pursuant to 29 U.S.C. § 1132(e)(1), and we
have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review of a district
court’s decision granting summary judgment. Funk v. Cigna Gr. Ins., 648 F.3d 182, 190
(3d Cir. 2011). Summary judgment is appropriate where the movant “shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
III.
ERISA § 502(a)(3) provides that a fiduciary may bring a civil action: “to
obtain . . . equitable relief . . . to enforce . . . the terms of the plan.” 29 U.S.C.
§ 1132(a)(3). In Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356, 363
(2006), the Supreme Court held that an ERISA fiduciary may sue a beneficiary for
reimbursement of medical expenses, pursuant to the terms of the ERISA plan, where the
fiduciary seeks recovery “through a constructive trust or equitable lien on a specifically
identified fund,” not from the beneficiary’s general assets. In Sereboff, an ERISA plan
paid medical expenses to two beneficiaries following an automobile accident, and then
sought reimbursement from the beneficiaries after they received a tort settlement related
to the accident. Id. at 360. The ERISA plan language provided that when a beneficiary
was “sick or injured as a result of the act or omission of another person or party” and
received benefits from the plan, the beneficiary was required to reimburse the plan for
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those benefits from “[a]ll recoveries from a third party (whether by lawsuit, settlement, or
otherwise).” Id. at 359 (internal quotation marks omitted). While the beneficiaries in
Sereboff argued that the plan’s claim was not equitable and thus not cognizable under
ERISA, the Court held that the language of the plan gave rise to an “equitable lien by
agreement” permitting the plan to obtain reimbursement from the beneficiaries’ tort
settlement. Id. at 364-65.
In US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1546 (2013), the Court made
clear that an “equitable lien by agreement . . . both arises from and serves to carry out a
contract’s provisions.” In McCutchen, as in Sereboff, an ERISA plan beneficiary
received a tort settlement related to an injury, and, pursuant to the terms of the plan2, the
ERISA plan sought reimbursement for medical expenses it had paid in connection with
that injury. Id. at 1543. The beneficiary argued that “in equity,” the ERISA plan “could
recoup no more than an insured’s ‘double recovery’ – the amount the insured has
received from a third party to compensate for the same loss the insurance covered.” Id. at
1545 (emphasis added). The beneficiary argued that, pursuant to this “double recovery”
rule, a principle of unjust enrichment, the ERISA plan’s reimbursement would be limited
“to the share of [the beneficiary’s] settlements paying for medical expenses; [the
beneficiary] would keep the rest (e.g., damages for loss of future earnings or pain and
suffering), even though the plan gives [the employer] first claim on the whole third-party
2
The plan at issue in McCutchen provided that when a beneficiary’s claim arose as the
result of the “negligence, willful misconduct, or other actions of a third party,” the
beneficiary was required to reimburse the employer for amounts paid for claims “out of
any monies recovered from [the] third party . . . .” Id. at 1543.
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recovery.” Id. In other words, the beneficiary in McCutchen argued that, at equity,
because the ERISA plan only paid for medical expenses, it could only seek
reimbursement from him to the extent his settlement compensated him for medical
expenses.3 The Supreme Court rejected the beneficiary’s argument, holding that the
language of the ERISA plan governed, giving the plan first claim to his entire recovery.
Id. at 1546-48. The Court confirmed that where an equitable lien by agreement exists,
“[t]he agreement itself becomes the measure of the parties’ equities,” and held that
“enforcing the lien means holding the parties to their mutual promises,” which includes
“declining to apply rules . . . at odds with the parties’ expressed commitments.” Id. at
1546, 1548.
In this case, just as in McCutchen, the language of the Plan plainly does not limit
the Plan’s ability to recover its expenditures for medical expenses to an award for
medical expenses only, instead granting the Plan a right to reimbursement “regardless of
how the proceeds are characterized.” (See App. at 21.) While McLaughlin argues that
such a result is inconsistent with the concept of equitable restitution, at issue here is an
equitable lien by agreement, not equitable restitution. The Supreme Court’s decision in
McCutchen could not be clearer in holding that, under such circumstances, the language
of the ERISA plan governs what the plan can recover.
McLaughlin argues that he was prohibited from claiming medical expenses in his
tort action due to the NJCSS, which provides that in a civil action brought for personal
3
In McCutchen, it appears that the tort recovery included compensation for medical
expenses as well as other damages.
6
injury, where the “plaintiff receives or is entitled to receive benefits for the injuries
allegedly incurred from any other source other than a joint tortfeasor,” this must be
“disclosed to the court and the amount thereof which duplicates any benefit contained in
the award shall be deducted from any award recovered . . . .” N.J. Stat. Ann. § 2A:15-97.
We, however, are in agreement with the District Court that, regardless of the operation of
the NJCSS, the Plan’s language requiring McLaughlin to reimburse the Plan from the
proceeds of his tort settlement is clear and controlling.
While McLaughlin appears to have assumed that the NJCSS would preclude
recovery of medical expenses, given the Plan’s right to reimbursement from his recovery,
it is far from clear that the Plan’s payments on his behalf would have constituted a
“collateral source” of benefits under the NJCSS, had the issue actually been presented to
a court. In Taransky v. Sec’y of U.S. Dept. of Health & Human Servs., --- F.3d --- ,
2014 WL 3719158, at *8 (3d Cir. July 29, 2014), for example, we held that a tort plaintiff
was responsible for reimbursing Medicare from the proceeds of her tort settlement,
despite her argument that the NJCSS precluded her from recovering medical expenses
(and despite the fact that she had obtained an allocation order indicating that no portion
of her settlement was attributable to medical expenses). We held that the NJCSS did not
prevent Medicare from seeking reimbursement, as the Medicare payments, “because of
their conditional nature, [did] not constitute a collateral source of benefits under the
NJCSS.” Id. Here, the Plan’s payments on McLaughlin’s behalf were similarly
conditional, given the plain language of the Plan which contractually obligated
McLaughlin to reimburse the Plan following a personal injury settlement. Just as we held
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in Taransky that the tort plaintiff “may not rely on the NJCSS to avoid reimbursing the
Government for Medicare payments it has made on her behalf,” id., so too here,
McLaughlin cannot rely on the NJCSS to avoid reimbursing the Plan, as he was
contractually obligated to do so.4
We have carefully considered McLaughlin’s other arguments and find them to be
without merit. While McLaughlin argues that he and his attorneys were under no duty to
protect the Plan’s interests, it is clear that the plain language of the Plan contractually
obligated McLaughlin to reimburse the Plan. (See App. at 21 (“[a]cceptance of benefits
. . . constitutes an agreement that any amounts recovered from another party . . . will
promptly be applied first to reimburse the Plan . . . .”) In addition, for the same reasons
stated by the District Court, we reject McLaughlin’s affirmative defense of laches.
IV.
For the foregoing reasons, we will affirm the District Court’s order granting
summary judgment in favor of the Board.
4
Given our conclusion that the Plan’s language created an enforceable equitable lien by
agreement regardless of the operation of the NJCSS, we need not address the issue of
ERISA pre-emption, although we note that we have elsewhere held that ERISA does pre-
empt the NJCSS. See Levine v. United Healthcare Corp., 402 F.3d 156, 166 (3d Cir.
2005).
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