On appeal, Montanile argues that the district court erred in finding that the Board could impose an equitable lien on the settlement funds because the funds had been spent or dissipated. As both parties recognize in their supplemental briefs, Montanile’s argument is now foreclosed by our recent holding in AirTran Airways, Inc. v. Elem, 767 F.3d 1192 (11th Cir. 2014).
This Court held in AirTran that, pursuant to § 1132(a)(3)(B), an equitable lien immediately attached to settlement funds where a plan provision’s unambiguous terms gave the plan a first-priority claim to all payments made by a third party. Id. at 1198. The AirTran court held that the settlement funds were “specifically identifiable,” and a plan participant’s dissipation of the funds thus “could not destroy the lien that attached before” the dissipation. Id. (emphasis in original). This holding binds our decision here. Accordingly, the Board can impose an equitable lien on Montanile’s settlement, even if dissipated, if his health benefit Plan gave the Plan a first-priority claim to the settlement payments Montanile received.
Bd. of Trs. of the Nat’l Elevator Indus. Health Benefit Plan v. Montanile, 2014 U.S. App. LEXIS 22438 (11th Cir. Fla. Nov. 25, 2014)
The U.S. Supreme Court granted certiorari granted in Montanile v. Bd. of Trs. Neihbp, 2015 U.S. LEXIS 2305 (U.S., Mar. 30, 2015) to settle a relatively simple question. To put the question in context, the controversy can be summed up in a nutshell this way:
- ERISA permits suits by fiduciaries for equitable relief.
- The Supreme Court has been coy in telling us what equitable relief means, referring back to the days of the “divided bench” when equity and law claims were heard by separate courts.
- In 2002, the Court added some detail to the contours of permissible equitable relief – it said that a plan fiduciary’s claim for equitable relief would fail if the defendant was not in possession of the disputed funds. (Knudson)
- In 2006, the Court elaborated further by saying that a plan fiduciary’s claim for equitable relief would not fail just because it could not trace a money trail to the disputed funds. (Sereboff)
- The point in #4 did not alter or reverse the point in #3. In other words, that the plan fiduciary did not have to trace its claims to funds in the defendant’s possession does not mean that the defendant does not have to have the disputed funds in possession. (The majority of circuits, including the 11th in the Montanile case, do not accept this proposition.)
So, now the Court will apparently return to address once again the scope of equitable relief under ERISA Section 502(a)(3).
Possession of Funds Unnecessary
The First, Third, Sixth, and Seventh Circuits deny my point #5 and do not require the defendant to have possession of the disputed funds.
Gutta v. Standard Select Trust Ins. Plans, 530 F.3d 614 (7th Cir. 2008)
Longaberger Co. v. Kolt, 586 F.3d 459 (6th Cir. 2009),
Cusson v. Liberty Life Assurance Co., 592 F.3d 215 (1st Cir. 2010)
Funk v. CIGNA Grp. Ins., 648 F.3d 182 (3d Cir. 2011).
Possession of Funds Necessary
The Eight and Ninth Circuits held to the contrary.
Treasurer, Trustees of Drury Industries, Inc. Health Care Plan & Trust v. Goding, 692 F.3d 888 (2012), cert. denied, 133 S. Ct. 1644 (2013).
Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d 1083 (9th Cir. 2012), cert. denied, 133 S.Ct. 1242 (2013)
Note: The petitioner and respondent briefs can be read here: http://www.scotusblog.com/case-files/cases/montanile-v-board-of-trustees-of-the-national-elevator-industry-health-benefit-plan/