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Central States, Southeast & Southwest Areas Health & Welfare Fund v. Gerber Life Insurance Co.

United States Court of Appeals, Second Circuit

November 14, 2014

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, an Employee Welfare Benefit Fund, ARTHUR H. BUNTE, a Trustee thereof, in his representative capacity, Plaintiffs-Appellants,
v.
GERBER LIFE INSURANCE COMPANY, ADMINISTRATIVE CONCEPTS, INC., Defendants-Appellees

Argued: June 18, 2014.

Appeal from the United States District Court for the Southern District of New York. No. 13 Civ. 2994 -- Nelson S. Romá n Judge.

Appeal from a judgment of the United States District Court for the Southern District of New York (Romá n, J.). The Court held that plaintiffs-appellants' claims were legal and not for " appropriate equitable relief" under § 502(a)(3) of the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1132(a)(3). We agree that the claims are legal claims and accordingly AFFIRM the judgment of the district court.

TIMOTHY C. REUTER, (Emily E. Gleason, on the brief), Central States Funds, Rosemont, Illinois, for Plaintiffs-Appellants.

RAYMOND KRESGE, Cozen O'Connor, Philadelphia, Pennsylvania (Alicia G. Curran, Cozen O'Connor, Dallas, Texas, Melissa Brill, Cozen O'Connor, New York, New York, on the brief), for Defendants-Appellees.

Before: CALABRESI, B.D. PARKER, and LYNCH, Circuit Judges.

OPINION

Page 151

Barrington D. Parker, Circuit Judge :

In this appeal from a judgment of the United States District Court for the Southern District of New York (Romá n, Judge ) we consider whether plaintiffs-appellants' claims are ones for " appropriate equitable relief" under § 502(a)(3) of the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1132(a)(3), or whether the claims are for legal relief which is not available under that section. We conclude that the claims are ones for legal relief and thus affirm the judgment of the district court. See Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-10, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002).

BACKGROUND

Central States, Southeast and Southwest Areas Health and Welfare Fund is an ERISA employee welfare benefit plan that provides health insurance to participating Teamsters and their dependents. Gerber Life Insurance Company issued accident insurance policies that covered, among other things, scholastic sports-related injuries. Administrative Concepts, Inc. is the claims processor for the Gerber policies.

The claims at issue arose from injuries suffered by several students during scholastic athletic activities. The students were insured by Central States as dependents of plan participants, and were also directly insured by separate accident policies written by Gerber. The central controversy in this litigation is which of the two policies afforded primary and which afforded secondary coverage for the injuries.

Page 152

The Central States policy contained a Coordination of Benefits formula intended to determine how its benefits would interact with other insurance coverage. Under that formula, if a covered person is insured by Central States indirectly as a dependent, but is insured directly by another policy (such as the Gerber policy), the Central States policy provides secondary coverage and the other policy provides primary coverage.

The Gerber policy, on the other hand, purportedly provided coverage only in excess of whatever was paid by other medical insurance coverage. The relevant portion of the policy stated:

The Company will pay Reasonable Expenses that are not recoverable from any Other Plan. The Company will determine the amount of benefits provided by Other Plans without reference to any coordination of benefits; non duplication of benefits, or similar provisions. . . . This Blanket Student Accident Insurance is secondary to all other policies.

Joint App'x at 167.

Although Central States considered its coverage to be secondary, it nevertheless paid the injured students' claims as an accommodation to them and their families in order to avoid delays and undue administrative burdens to beneficiaries who undisputedly were entitled to have their claims covered by medical insurance. After it paid the claims, Central States sought reimbursement from Gerber, whom it considered the primary insurance provider. Gerber refused to pay, taking the position that under its coordination of benefits provision, its policies provided only excess, secondary coverage. Central States then brought this lawsuit to recover the amounts it had paid on the claims.

Central States' complaint alleged various claims for declaratory judgment and injunctive relief pursuant to federal common law and ERISA § 502(a)(3). Claims I and II sought to establish Gerber's obligation to pay future and past claims. Claim III sought restitution, and Claim IV sought the imposition of an equitable lien and a constructive trust to secure reimbursement for the claims Central States had paid.

Gerber moved pursuant to Rule 12(b)(6) to dismiss the complaint on the grounds that, notwithstanding the equitable labels placed on the claims, Central States was actually seeking legal relief that was not available under § 502(a)(3). Gerber also contended that ERISA preempted Gerber's federal common law claims.

The district court granted Gerber's motion. The court reasoned that Central States' claims were not equitable in nature and that the relief sought was, therefore, unavailable under ERISA. The court entered judgment and Central States appealed. See Cent. States, Se. & Sw. Area Health & Welfare Fund v. Gerber Life Ins. Co., 984 F.Supp.2d 246 (S.D.N.Y. 2013). We review de novo a district court's dismissal of a complaint for failure to state a claim, taking the plausible factual allegations of the complaint ...


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