MARCIA MORALES HOWARD, District Judge.
Kemper Auto & Home, the personal lines property and casualty insurance business of the Kemper Insurance Companies, an affiliate of Lumbermens Mutual Casualty Company (Lumbermens), hired Patricia Epolito on February 7, 1977. See Prudential's Motion, Ex 1: Administrative Record (A.R.) at 179-81; 347, 492, 574. As an employee, Epolito was eligible for and enrolled in a pension plan named the Kemper Retirement Plan. See Affidavit of Patricia Epolito
Thereafter, Epolito enrolled in an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1381, and funded through an insurance policy issued by Prudential. Unitrin, Inc. is the Plan's Contract Holder and "all full-time non-commissioned employees of Kemper Auto and Home Insurance Company" constitute the Covered Class. A.R. at 4. On February 3, 2003, Epolito stopped working due to health complications caused by Graves' Disease. Id. at 76, 347. She filed a claim for long term disability (LTD) benefits under the Plan and was initially approved to receive benefits in the amount of $3,891.87 per month, effective August 2, 2003. Id. at 62. Near the end of December 2003, Epolito decided to begin withdrawing her pension benefits from the Kemper Retirement Plan as well. See Epolito Affidavit ¶ 22.
On July 26, 2005, Prudential advised Epolito that her LTD benefits would be terminated as of August 1, 2005, because she no longer met the definition of "Total Disability" under the Plan.
On remand, Prudential determined that under the terms of the Plan it was entitled to offset the amount of Epolito's LTD benefits by the amount she was receiving in pension and SSD benefits.
Id. at 28. As such, Prudential instructed Epolito to fully reimburse Prudential in the amount of $87,849.79 to account for the pension and SSD benefits that Prudential had not previously offset. See id. at 471. Due to this "gross overpayment," Prudential applied the net retroactive LTD benefit award due Epolito, pursuant to Epolito I, to the overpayment. Id. at 487. Prudential also began applying Epolito's net monthly LTD benefit payments to the balance of the overpayment, such that Epolito's benefit statements reflected a $0 benefit. Id. at 487, 581, 582.
In response to Prudential's offset calculations, Epolito conceded that her LTD benefits must be offset by her SSD benefits, but argued that applying an offset due to her pension benefits was improper because her pension benefits were from a former employer. Id. at 573. The Plan states that "Prudential will not deduct from your gross disability payment income you receive from ... a retirement plan from another Employer." Id. at 19. Thus, based on this provision, Epolito contended that her pension benefits were not deductible. Id. at 573. Although Epolito pursued an administrative appeal on that basis, see id. at 568-76, 580, Prudential upheld its determination that her pension was being paid by her "Employer," not another Employer, and thus, an offset for the pension benefits was appropriate under the Plan. See id. at 496-501. In its administrative appeal decision, Prudential explained:
See A.R. at 500-01. To challenge this determination, Epolito filed the instant Complaint (Doc. No. 1) on April 13, 2009. See generally Complaint. Thereafter, Prudential brought a counterclaim for restitution seeking to recover the overpaid LTD benefits, resulting from Epolito's unaccounted for receipt of SSD and pension benefits. See Defendant The Prudential Insurance Company of America's Answer, Affirmative Defenses and Counterclaim to Plaintiff's Complaint (Doc. No. 9; Answer) at 10-15 (Counterclaim).
In Epolito's Motion, Epolito argues that Prudential improperly applied an offset to her LTD benefits based on her receipt of the pension benefits. Epolito argues that she is receiving the pension benefits from her former employer, Kemper Insurance Companies, not her current employer Kemper Independence/Unitrin. Epolito's Motion at 11. Because the Plan does not allow for the offset of pension benefits
In Prudential's Response, Prudential maintains that its determination that Unitrin's purchase of the Kemper Auto & Home Group from Kemper Insurance Companies "does not change who [Epolito] was employed by for purposes of coverage under the [Plan]" is reasonable. See Prudential's Response at 4. Prudential argues that the definition of Employer under the Plan includes any division, subsidiary, or affiliate of Unitrin, and thus Kemper Auto & Home, as a division and subsidiary of Unitrin, is encompassed by this definition. In support of its decision, Prudential asserts that after Unitrin's purchase of Kemper Auto & Home, Kemper Auto & Home's corporate headquarters did not change, its president did not change, and it continued to operate as "Kemper Auto and Home." See Prudential's Response at 5-6. In addition, Prudential argues that Epolito has waived, or should be estopped from making, the argument that she receives her pension benefit from a former employer. Id. at 6-8. Prudential maintains that Epolito represented herself to be an employee of Kemper Auto & Home for over 25 years and that Epolito's employer represented to Prudential that it hired Epolito on February 7, 1977. See id. at 6-7. Additionally, Prudential cites to the employment history submitted by Epolito to Prudential where she did not indicate "a change of employer in January 2003 or at any other time since 1983." Id. at 7. Finally, Prudential argues that the reasonableness of its decision is not undermined by any "purported conflict of interest" because Epolito failed to "present any argument or point to any evidence as to the actual impact of the purported conflict of interest on the claim determination." See id. at 9.
Under Rule 56(c), Federal Rules of Civil Procedure (Rule(s)), summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Rule 56(c). However, "`[i]n an ERISA benefit denial case ... in a very real sense, the district court sits more as an appellate tribunal than as a trial court. It does not take evidence, but rather, evaluates the reasonableness of an administrative determination in light of the record compiled before the plan fiduciary.'" Curran v. Kemper Nat'l Servs., Inc., No. 04-14097, 2005 WL 894840, at *7 (11th Cir. Mar. 16, 2005)
Crume, 417 F.Supp.2d at 1273 (alterations added). Thus, the Court will review this case using the modified Rule 56 standard set forth in Curran and Crume. See Curran, 2005 WL 894840, at *7, Crume, 417 F.Supp.2d at 1272-73; see also Ganceres v. Cingular Wireless Health & Welfare Benefits Plan for Non-Bargained Emps., No. 3:04-cv-199-J-32HTS, 2006 WL 2644919, at *6-7 (M.D.Fla. Sept. 14, 2006).
Under 29 U.S.C. § 1132(a)(1)(B), a person may bring a civil action "to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). Although ERISA does not provide a standard of review for actions challenging benefit determinations, see Paramore v. Delta Air Lines, Inc., 129 F.3d 1446, 1449 (11th Cir.1997), the Supreme Court established a framework for a proper analysis in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In Firestone, the Supreme Court held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." See Firestone, 489 U.S. at 115, 109 S.Ct. 948. Following the Supreme Court's holding in Firestone, the Eleventh Circuit set forth "a six-step process `for use in judicially reviewing virtually all ERISA-plan benefit denials,'" referred to as the Williams methodology:
White v. Coca-Cola Co., 542 F.3d 848, 853-54 (11th Cir.2008) (quoting Williams v. BellSouth Telecomm., Inc., 373 F.3d 1132, 1137-38 (11th Cir.2004)).
However, in Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008) the Supreme Court "implicitly overule[d] [Eleventh Circuit] precedent to the extent it require[d] district courts to review benefit determinations by a conflicted administrator under the heightened standard." Doyle v. Liberty Life Assurance Co. of Boston, 542 F.3d 1352, 1360 (11th Cir.2008); see also White, 542 F.3d at 854. In Glenn, the Supreme Court addressed how a court should consider a plan administrator's conflict of interest when reviewing a discretionary benefit determination. See Glenn, 128 S.Ct. at 2350. The Court instructed that the presence of a conflict of interest does not require "a change in the standard of review, say, from deferential to de novo review." Id. Indeed, the Court stated that it did not "believe it necessary or desirable for courts to create special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict." Id. at 2351. Instead, the Court explained that "conflicts are but one factor among many that a reviewing judge must take into account." Id.
In light of the Glenn decision, the Eleventh Circuit held, in Doyle, that "the existence of a conflict of interest should merely be a factor for the district court to take into account when determining whether an administrator's decision was arbitrary and capricious." Doyle, 542 F.3d at 1360. Additionally, "while the reviewing court must take into account an administrative conflict when determining whether an administrator's decision was arbitrary and capricious, the burden remains on the plaintiff to show the decision was arbitrary; it is not the defendant's burden to prove its decision was not tainted by self-interest." Id. Thus, following Glenn and Doyle, the Williams methodology remains intact, except for the sixth step. See Capone v. Aetna Life Ins. Co., 592 F.3d 1189, 1196 (11th Cir.2010). Accordingly, this Court will apply the modified Williams methodology in its review of Prudential's interpretation of the LTD Plan.
At the outset, the Court notes that it is Epolito's burden to establish her entitlement to the contractual benefits she seeks. Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1040 (11th Cir.1998) (per curiam). The first step of the Williams methodology requires the Court to determine whether Prudential's interpretation of the LTD Plan is de novo wrong. "A decision is `wrong' if, after de novo review, `the court disagrees with the administrator's decision.'" Capone, 592 F.3d at 1196 (quoting Williams, 373 F.3d at 1138). The Eleventh Circuit instructs that "[w]hen ERISA governs, federal substantive law developed in this area of contract law controls." Hauser v. Life Gen. Sec. Ins. Co., 56 F.3d 1330, 1333 (11th Cir.1995). However, ERISA provides no principles of contract interpretation or construction. See Dixon v. Life Ins. Co. of N. Am., 389 F.3d 1179, 1183 (11th Cir.2004) (acknowledging that "[a]lthough comprehensive in many respects, ERISA is silent on matters of contract interpretation"); First Capital Life Ins. Co. v. AAA Commc'ns, Inc., 906 F.Supp. 1546, 1557 (N.D.Ga.1995). Yet, the Court is not left without guidance because "[c]ourts have the authority `to develop a body of federal common law to govern issues in ERISA actions not covered
In creating this "body of common law, federal courts may look to state law as a model because of the states' greater experience in interpreting insurance contracts and resolving coverage disputes." Horton, 141 F.3d at 1041. When deciding whether to adopt a certain rule as part of the federal common law, the "court[] must examine whether the rule, if adopted, would further ERISA's scheme and goals." Id.; see also Dixon, 389 F.3d at 1183. The two central goals of ERISA are "protection of the interests of employees and their beneficiaries in employee benefit plans and . . . uniformity in the administration of employee benefit plans." Horton, 141 F.3d at 1041 (citations omitted). In addition, the court will not construe a particular principle as part of the federal common law when doing so would: "`1) conflict with the statutory provisions of ERISA; 2) discourage employers from implementing plans governed by ERISA; or 3) threaten to override the explicit terms of an established ERISA benefit plan.'" First Capital Life Ins. Co., 906 F.Supp. at 1557 (quoting Phoenix Mut. Life Ins. Co. v. Adams, 30 F.3d 554, 563 n. 21 (4th Cir.1994)).
In light of the foregoing, the Court considers what rules of construction should be applied to interpret the plan at issue. In Dahl-Eimers v. Mutual of Omaha Life Insurance Co., 986 F.2d 1379 (11th Cir. 1993) the court set forth several rules of construction developed under Florida law for interpreting insurance contracts. See Dahl-Eimers, 986 F.2d at 1381-82. The rules are as follows: (1) "first . . . assess the natural or plain meaning of the policy language"; (2) "construe an insurance contract in its entirety, striving to give every provision meaning and effect"; (3) "[a]n insurance contract is ambiguous if it is susceptible to two or more reasonable interpretations that can fairly be made"; (4) an "[a]mbiguity . . . may arise from silence"; (5) a court should not "rewrite contracts or add meaning to create an ambiguity"; and (6) an ambiguity is not necessarily present because the contract requires interpretation or fails to define a term. Id. at 1381-82. In addition, in Miller v. Principal Mutual Life Insurance Co., 791 F.Supp. 858 (M.D.Fla.1992) the court indicated that "[w]hen there is but one logical interpretation of a phrase, `ambiguities will not be inserted, by using twisted and strained reasoning, into contracts where no such ambiguities exist.'" Miller, 791 F.Supp. at 861 (quoting Smith v. Horace Mann Ins. Co., 713 F.2d 674, 676 (11th Cir.1983)).
The undersigned finds that these principles should be applied in this case to interpret the Plan. These rules are consistent with and would further the goals of ERISA, especially in establishing uniformity of administration. Moreover, application of these principles would not conflict with any statutory provision of ERISA, discourage implementation of the Plan, or override an explicit term of the Plan. Indeed, courts have already recognized the application of these rules in ERISA cases. See Potter v. Liberty Life Assurance Co. of Bos., 132 Fed.Appx. 253, 258 (11th Cir. 2005) (finding that the administrator's decision was correct when it interpreted certain terms in the contract by considering the entire contract); Rapp v. Found. Health, No. 97-7065-CIV, 1999 WL 1457224, at *4-5 (S.D.Fla. Aug. 26, 1999) (applying the construction principles recognized in Dahl-Eimers); Vickers v. Guardian Life Ins. Co. of Am., 204 F.Supp.2d 1326, 1332 (M.D.Fla.2002) (citing Dahl-Eimers and finding that the language in a plan is ambiguous when it "is
In addition to the foregoing rules, the Court will also apply the doctrine of contra proferentem, if appropriate, because the Eleventh Circuit has recognized that this doctrine is part of the federal common law in ERISA cases. See White, 542 F.3d at 855; Jones, 370 F.3d at 1070; Florence Nightingale Nursing Serv., Inc. v. Blue Cross/Blue Shield of Ala., 41 F.3d 1476, 1481 (11th Cir.1995); Lee v. Blue Cross/Blue Shield of Ala., 10 F.3d 1547, 1551 (11th Cir.1994). This doctrine directs that any ambiguity in an ERISA plan is to be construed against the drafter. See, e.g., Lee, 10 F.3d at 1551. Thus, if both the plaintiff and the administrator propose reasonable interpretations of the plan, which result in an ambiguity, then, pursuant to the doctrine of contra proferentem, the plan will be construed against the administrator and the administrator's interpretation will be deemed to be de novo wrong. See id.; Florence Nightingale Nursing Serv., Inc., 41 F.3d at 1481; Vickers, 204 F.Supp.2d at 1330; Mattive v. Healthsource of Savannah, Inc., 893 F.Supp. 1559, 1567 (S.D.Ga.1995).
Epolito contends that Kemper Auto & Home, when it was a part of Kemper Insurance Companies, and an affiliate of Lumbermens, was a different "Employer" than the Kemper Auto & Home that is now covered under the Plan. As such, Epolito contends that a pension benefit accrued while Kemper Auto & Home was owned by Lumbermens is not a benefit under her "Employer's" retirement plan, because her "Employer" is the Kemper Auto & Home that is now owned by Unitrin, Inc. The Plan defines Epolito's "Employer" as the Contract Holder, i.e., Unitrin, "and includes any division, subsidiary, or affiliate who is reported to Prudential in writing for inclusion under the Group Contract, provided that Prudential has approved such request." See A.R. at 34, 1. Thus, the plain meaning of "Employer" encompasses Unitrin and certain of its affiliates, not any entity that previously owned the assets of one of the affiliates. Cf. Bedinghaus v. Modern Graphic Arts, 15 F.3d 1027, 1029-30 (11th Cir.1994) (finding that the term "company" refers to the owner and its affiliates, and not to an entity that purchases the assets of an affiliate); Ulmer v. Harsco Corp., 884 F.2d 98, 103 (3d Cir.1989) (finding a district court's attempt to distinguish between an "entity" and the managers who control it unconvincing) ("At the conceptual level, from the standpoint of an employee, the owners define the nature of the "entity" employees work for.").
This interpretation does not conflict with the other provisions of the Plan, nor would it render any of the other provisions meaningless. Moreover, the distinction between Unitrin's Kemper Auto and Home and the Kemper Auto and Home that was affiliated with Lumbermens is supported by the facts of the case. After the purchase, Unitrin sent Epolito a letter offering her employment with Unitrin's Kemper Auto and Home. In addition, Epolito was required to sign a release authorizing Unitrin to access her employment records from Kemper Auto and Home. Significantly, Unitrin is not responsible for the pension obligation, instead, the Pension Benefit
The parties do not dispute that Prudential had discretionary authority to interpret the provisions of the LTD Plan. See Epolito's Motion at 14-15; Prudential's Motion at 8; A.R. at 43. Additionally, in Epolito I, the Court determined that Prudential "had a conflict of interest, as defined by the Eleventh Circuit, because it was responsible for paying claims, as well as deciding them." Epolito I, 523 F.Supp.2d at 1332. In Glenn, the Supreme Court confirmed that where "a plan administrator both evaluates claims for benefits and pays benefits claims" the administrator is acting under a "conflict of interest" that must be weighed as a factor in determining whether there has been an abuse of discretion. See Glenn, 128 S.Ct. at 2348-50. Thus, the Court must now review Prudential's "wrong" interpretation of the Plan under the arbitrary and capricious standard, taking into account its conflict of interest.
In determining whether a plan administrator's decision is arbitrary and capricious, the Court is limited to deciding whether Prudential's interpretation of the Plan was made rationally and in good faith. Cagle, 112 F.3d at 1518; Blank v. Bethlehem Steel Corp., 926 F.2d 1090, 1093 (11th Cir.1991). "Factors relevant to that determination include: (1) the uniformity of [Prudential's] construction; (2) the reasonableness of its interpretation; and (3) possible concerns with the way unexpected costs may affect the future financial health of [Prudential]." Cagle, 112 F.3d at 1518. Other factors may also be relevant, such as "the internal consistency of a plan, the relevant regulations formulated by administrative agencies, and the factual background of the determination, including any inferences of bad faith." Id. at 1518 n. 6. Finally, because Prudential operates under a conflict of interest, the Court must consider this conflict as a factor in its determination. Doyle, 542 F.3d at 1360. After consideration of all the relevant factors, the Court concludes that Prudential's interpretation was not arbitrary and capricious.
Most persuasive among the factors in this case is that of the uniformity of Prudential's interpretation of the Plan language. A review of the record in this case, reveals that Prudential has consistently interpreted Epolito's "Employer" to be Kemper Auto & Home itself, regardless of what parent company owned that division. In approving Epolito's initial eligibility for LTD benefits, Prudential found that Epolito was "employed as a Manager with Kemper Auto & Home Insurance Company since February 7, 1977." A.R. at 67. Because of this finding, Prudential did not analyze whether Epolito's disability should be excluded from coverage as a pre-existing condition. Id. at 66-68. Indeed, had Prudential applied Epolito's interpretation of "Employer" at that time, it is unclear whether Epolito would have been eligible for coverage under the terms of the Plan at all. The Plan states that "the date you are eligible for coverage is the later of: the plan's program date; and the day after you complete your employment waiting period." A.R. at 8. The "employment waiting period" is defined as "the first of the month following date of hire." Id. at 4. The Plan's program date is January 1, 2003, and pursuant to Epolito's definition of Employer, her date of hire was also January 1, 2003. Id. at 4; Epolito
Moreover, Prudential's interpretation of the term "Employer" is reasonable given Epolito's own representations regarding the entity that constituted her "Employer." The Employment History Form instructed Epolito to "describe each job worked within the past 15 years" and to list different jobs with the same employer separately. See A.R. at 179. Epolito stated that she worked for Kemper Auto and Home from June 2002 to February 2003 as a "Customer Service Billing Mgr." Id. Therefore, Epolito's own version of her Employment History does not reflect a change of employer or new employment on January 1, 2003. Id. From April 2002 to June 2002 Epolito again listed her employer as Kemper Auto and Home and stated that she "handled transition for operations dept [sic] due to sale of company," id. at 179-80, and from June 1983 to April 2002 she stated that she worked as a "Regional Operations Mgr." for an employer named "Kemper Insurance/Kemper A & H." Id. at 180. Accordingly, her self-reported employment history reflects her understanding that her "Employer" was consistently Kemper Auto and Home. Additionally, Epolito's employer also submitted statements that are in keeping with Prudential's interpretation of the term "Employer." Id. at 347. On the Employer Statement Form, a representative of Epolito's employer listed the Employer's name as "Kemper Auto and Home" and stated that Epolito was hired by the employer on February 7, 1977. Id. Given that the Employment History and the Employer Statement Forms demonstrate that both Epolito and her employer understood her "Employer" to be Kemper Auto and Home, regardless of its parent company, the Court does not view Prudential's consistent interpretation of that term to be unreasonable.
The parties do not present any information or argument pertaining to any "concerns about unexpected costs and [Prudential's] future financial stability." See Cagle, 112 F.3d at 1519; see generally Epolito's Motion and Prudential's Response. As such, this factor does not weigh one way or the other in the Court's determination. Significantly, although it is Epolito's burden to show that Prudential's determination was arbitrary and capricious, she has presented no evidence that Prudential's decision was made in bad faith, or that its interpretation of the term "Employer" would be inconsistent with any other provision in the Plan. As such, review of these factors does not persuade the Court that Prudential's decision was arbitrary and capricious.
Finally, the Court must consider "whether [Prudential's] conflict of interest tainted its decision, thereby rendering its otherwise reasonable decision unreasonable." Doyle, 542 F.3d at 1360. As explained above, "the burden remains on the plaintiff to show the decision was arbitrary;
In Prudential's Motion, Prudential seeks summary judgment on its counterclaim for restitution. Prudential argues that pursuant to 29 U.S.C. § 1132(a)(3) it is entitled to restitution and recovery of the portion of the LTD benefits Epolito received from August 2, 2003, until August 31, 2005, that exceeded the amount to which she was entitled. See Prudential's Motion at 10-13. In Epolito's Response, Epolito argues that Prudential can not recover the "alleged overpayment" because it "has not offered any proof that Epolito remains in possession of the funds it allegedly seeks to lien" and thus, Prudential can not make a claim for equitable relief because it has not shown that the funds are actually in the possession of the person being sued. See Epolito's Response at 5-8. In addition, Epolito maintains that with respect to her SSD benefits, 42 U.S.C. § 407 bars Prudential from imposing any type of equitable assignment or constructive trust over the social security payments she has received or will be receiving in the future. Id. at 8. Epolito adds that even social security monies held in an unsegregated bank account are protected by § 407(a), thereby preventing Prudential's recovery of these monies. Id. at 10-11. In its Reply, Prudential argues that because it is asserting an equitable lien by agreement, it is not required to trace the particular funds at issue. See Prudential's Reply at 3-4. Thus, Prudential maintains that it can recover the overpayment even if the funds are no longer in Epolito's possession. Id. Lastly, Prudential contends that 42 U.S.C. § 407(a) is not applicable to this action because it is not seeking a lien on Epolito's SSD benefits, but rather on the overpaid LTD benefits. Id. at 4-5.
Pursuant to Rule 56(c), summary judgment is appropriate if "the pleadings, depositions,
The party seeking summary judgment bears the initial burden of demonstrating to the court, by reference to the record, that there are no genuine issues of material fact to be determined at trial. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). Substantive law determines the materiality of facts, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Rule 56 permits the moving party to discharge this burden with or without supporting affidavits. See Rule 56(a), (b).
"When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir.1995) (per curiam) (internal citation and quotations omitted). In addition, the dispute must have a "real basis in the record" in order to constitute a genuine dispute of fact. Pace v. Capobianco, 283 F.3d 1275, 1278 (11th Cir.2002) (quoting Mize, 93 F.3d at 742) (internal quotations omitted). Thus, "mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion." Ellis v. England, 432 F.3d 1321, 1327 (11th Cir.2005). Nevertheless, in determining whether summary judgment is appropriate, a court "must view all evidence and make all reasonable inferences in favor of the party opposing summary judgment." Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir.1995) (citing Dibrell Bros. Int'l, S.A. v. Banca Nazionale Del Lavoro, 38 F.3d 1571, 1578 (11th Cir.1994) (per curiam)).
A fiduciary may bring a civil action under ERISA "(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3). The parties do not dispute that Prudential is a fiduciary and that it is seeking to enforce the terms of the LTD Plan. Nevertheless, Epolito contends that Prudential's claim for restitution is not "appropriate equitable relief" under the statute because it has not shown that Epolito "is in possession of any specific funds or that any funds previously received have not been spent." See Epolito's Response at 7. In response, Prudential argues that it is seeking an "equitable lien by agreement" and thus strict tracing rules do not apply. As such, Prudential contends that because it can identify a particular share (the amount of benefits Epolito received above what she was entitled to), of a specifically identified fund (the LTD benefits paid to Epolito), it is entitled to summary judgment on its claim for restitution.
The term "equitable relief" in § 1132(a)(3) includes "those categories of relief that were typically available in equity
The Supreme Court again addressed the relationship between restitution and equity in Sereboff v. Mid Atlantic Medical Servs., Inc., 547 U.S. 356, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006). In Sereboff, an ERISA plan paid medical benefits to the Sereboffs who were injured in a car accident. Sereboff, 547 U.S. at 360, 126 S.Ct. 1869. After the Sereboffs settled a tort suit arising out of the car accident, their insurer sought reimbursement, pursuant to the benefit plan, for the medical expenses it had paid on their behalf. When the Sereboffs refused, the insurer filed suit under ERISA and, by stipulation, the parties agreed to preserve in an investment account a portion of the settlement proceeds equal to the amount the insurer had paid in medical benefits until the lawsuit was resolved. Id. Upon review, the Supreme Court first examined the nature of the relief sought by the insurer. In doing so, the Court distinguished the facts of Sereboff from Knudson on the basis that the
Id. at 362-63, 126 S.Ct. 1869 (first and second alteration added). As such, the Court concluded that the insurer's claim "does not falter because of the nature of the recovery it seeks." Id. at 363, 126 S.Ct. 1869. Next, the Court considered whether the basis of the insurer's claim
In light of the foregoing authority, Prudential contends that its claim is also based on an "equitable lien by agreement" entitling it to relief under Sereboff. Significantly, Prudential argues that under Sereboff, "strict tracing rules" do not apply to equitable liens by agreement, and therefore, it is not required to "trace" the overpaid LTD benefits to a particular fund or asset in Epolito's possession. See Prudential's Motion at 12-13; Prudential's Reply at 3-4. Indeed, relying on language in Sereboff stating that an insurer is not required to "`trace the asset into its products or substitutes,' or `trace [its] money or property to some particular funds or assets,'" see Sereboff, 547 U.S. at 364-65, 126 S.Ct. 1869, Prudential argues that it is entitled to relief even without establishing that the funds it seeks are still in Epolito's possession. See Prudential's Reply at 4. Although the Eleventh Circuit has not yet addressed this issue, a number of other courts have interpreted Sereboff in a manner consistent with Prudential's contention. See Cusson v. Liberty Life Assurance Co. of Boston, 592 F.3d 215, 231 (1st Cir.2010) (affirming a district court's granting of summary judgment on an insurer's counterclaim for recovery of overpaid benefits even though the insurer had not identified "a specific account in which the funds [were] kept or proven that they [were] still in [the beneficiary's] possession" (alterations added)); Gutta v. Standard Select Trust Ins. Plans, 530 F.3d 614, 621 (7th Cir.2008) ("[The insurer] may bring its counterclaim under 29 U.S.C. § 1132(a)(3) even if the benefits it paid [the insured] are not specifically traceable to [the insured's] current assets because of commingling or dissipation." (alterations added)); Gilchrest v. Unum Life Ins. Co. of Am., 255 Fed.Appx. 38, 44-45 (6th Cir. 2007) (unpublished) (finding that "[the insured's] undisputed averment that the overpayments have been dissipated would seem to be of no avail," because Sereboff "clarified that to establish an equitable lien by agreement, strict tracing of funds is not required and the fund need not have been in existence when the contract was executed" (alteration added)); see also DeBenedictis v. Hartford Life & Accident Ins. Co., 701 F.Supp.2d 1113, 1134 (D.Ariz.2010) ("The fact that plaintiff commingled the LTD benefits he was overpaid with his other assets does not defeat defendant's counterclaim."). However, upon review of Sereboff and the related Eleventh Circuit precedent, this Court is not convinced that Sereboff's holding eliminates the requirement that the insurer identify an intact, identifiable res, in the possession of the insured, on which it seeks to impose the equitable lien.
Reviewed in context, this Court does not read Sereboff's holding with respect to tracing as broadly as the authorities cited above. Prudential is correct insofar as the Supreme Court did find that "strict tracing rules" do not apply to equitable liens by agreement. Sereboff, 547 U.S. at 364, 126 S.Ct. 1869. However, the Sereboff Court was not considering tracing in the context of the imposition of an equitable lien over a fund that may have been dissipated since its identification. See Sereboff, 547 U.S. at 360-63, 126 S.Ct. 1869. The Court discussed tracing in response to the insured's argument that the insurer's "suit would not have satisfied the conditions for `equitable restitution' at common law, particularly the `strict tracing rules' that allegedly accompanied this form of relief." Id. at 364, 126 S.Ct. 1869. Because the funds
Moreover, the Supreme Court in Knudson instructed that "where `the property [sought to be recovered] or its proceeds have been dissipated so that no product remains, [the plaintiff's] claim is only that of a general creditor,' and the plaintiff `cannot enforce a constructive trust of or an equitable lien upon other property of
It is undisputed that Prudential paid LTD benefits to Epolito for the period spanning from August 2, 2003 through August 31, 2005. Because Epolito received a retroactive award of SSD benefits covering that period, and because Prudential did not offset Epolito's pension benefits during that time, Epolito received LTD benefits in excess of the amount to which she was entitled. Moreover, the terms of the Plan and the Reimbursement Agreement authorize Prudential to recover any such overpayments. However, Prudential has not submitted any evidence that those overpaid benefits still remain in Epolito's possession such that the Court could impose an equitable lien on those particular funds.
The Court notes that the parties have requested reasonable attorneys' fees and costs related to this action in their respective Motions. See Epolito's Motion at 16; Prudential's Motion at 18-19. In an ERISA action "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). However, the Court will not rule upon these requests unless and until the parties file an appropriate motion, in accordance with Rule 54(d)(2), after the entry of final judgment in this action. Any such motion should include a discussion of the five factors set forth in Freeman v. Continental Ins. Co., 996 F.2d 1116, 1119 (11th Cir.1993) for determining the appropriateness of awarding attorneys' fees in an ERISA action.
In light of the foregoing it is