Opinion
Case No. 97-C-7066
1999.
MEMORANDUM OPINION AND ORDER
Plaintiff Joseph Bobak ("Bobak") filed a complaint against Defendant Federal Express Corporation ("FedEx") alleging disability discrimination pursuant to Title I of the Americans with Disabilities Act and Title I of the Civil Rights Act of 1991. Bobak requested compensatory as well as punitive damages in relief. FedEx along with Federal Express Corporation Long Term Disability Plan ("FedEx Plan") filed a counterclaim seeking reimbursement of alleged overpayments of benefits as equitable relief under the Employee Retirement Income Security Act ("ERISA"). See 29 U.S.C. § 1132(a)(3)(b)(ii). In the alternative, FedEx and FedEx Plan assert a federal common-law claim of unjust enrichment to the extent of the allegedly duplicative disability benefits Bobak received from Social Security. FedEx and FedEx Plan seek restitution as a remedy for each claim. FedEx and FedEx Plan move for summary judgment on their counterclaim pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, the court grants defendants' motion for summary judgment.
Background
Counter-Defendant Bobak was employed by FedEx from June 30, 1986 through February 28, 1996. (FedEx's 12(M) ¶ 2). FedEx provides eligible employees disability benefits pursuant to the Federal Express Corporation Long Term Disability Plan ("the Plan"). (FedEx's Ex. B). FedEx is the Administrator of the Plan. (FedEx's Mem. Supp. Mot. Summ. J., n. 1; Hopkins Aff.). Bobak was diagnosed with multiple sclerosis in January 1993, (Compl. ¶ 10), and began receiving long term disability benefits under the Plan on July 10, 1993. (FedEx's 12(M) ¶ 3; Hopkins Aff. ¶ 1).
Bobak applied for Social Security benefits while he continued to receive benefits under the Plan. (Bobak's Answer to FedEx's Counterclaim, ¶ 5; Hopkins Aff. ¶ 2). He contends that FedEx forced him to seek disability benefits from the Social Security office. (Bobak's Answer to Fedex Counterclaim, ¶ 5.) Social Security awarded Bobak retroactive benefits as of October 1, 1994. (FedEx's 12(M) ¶ 6; FedEx's Ex. F). According to the terms of the Plan, if Bobak received any primary benefits because of disability under the Federal Social Security Act, his benefits under the Plan were to be reduced by the amount of his Social Security benefits. (The Plan, § 3.6(a)(7)). In a letter dated May 5, 1995, a Social Security Representative notified Bobak of his entitlement to retroactive benefits, adding that because Bobak "may owe all or some of this check to [his] long-term disability insurance carrier . . . [he should] not spend this money until [he has] received word from [his] insurance company that it is okay to do so." (FedEx.'s Ex. F).
After becoming aware of Bobak's receipt of the concurrent Social Security disability payments, FedEx notified Bobak, in a letter dated August 1995, that he was obligated to repay the Plan to the extent of the overpayments. (FedEx's 12(M) ¶ 7). Overpayments are defined by the Plan as, "benefits paid in excess of the amount to which a Covered Employee is entitled under this Plan . . ." (The Plan, § 5.4). To date, Bobak has not repaid the Plan. (FedEx's 12(M) ¶ 8; Bobak's Answer to Counterclaim, ¶ 13).
On October 9, 1997, Bobak filed a Complaint alleging unlawful termination of his employment based on disability under Title I of the Americans With Disabilities Act as well as Title I of the Civil Rights Act of 1991. (Compl., p. 1). In it's Answer to Bobak's Complaint, FedEx, along with FedEx Plan, filed a counterclaim. In the counterclaim, FedEx and FedEx Plan allege that pursuant to ERISA, 29 U.S.C. § 1132(a)(3)(B)(ii), they are entitled to equitable relief in the form of repayment of the Plan to the extent of Bobak's concurrent Social Security benefits. On December 24, 1997, FedEx filed a motion for default judgment on the counterclaim. The Honorable James B. Zagel denied the motion. FedEx and FedEx Plan now move this court to grant summary judgment on their counterclaim.
Analysis
Counter-Plaintiffs FedEx and FedEx Plan move the court to enter summary judgment on their behalf under Rule 56 of the Federal Rules of Civil Procedure. The court will render summary judgment only if the factual record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Bratton v. Roadway Package Sys., Inc., 77 F.3d 168, 173 (7th Cir. 1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In ruling on a motion for summary judgment, the court views the facts in the light most favorable to the nonmoving party. Bratton, 77 F.3d at 171 (citation omitted); Sullivan, 78 F.3d at 325 (citation omitted).
On a motion for summary judgment, the moving party "bears the initial burden of showing that no genuine issue of material fact exists." Hudson Ins. Co. v. City of Chicago Heights, 477 U.S. 317, 323 (1986)). Then the burden shifts to the nonmoving party, which "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); accord, NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir. 1995) (citations omitted), cert. denied, 115 S. Ct. 2249 (1995). The nonmoving party may not rest upon the allegations or denials of his pleadings, but must set forth specific facts, by affidavit or other evidence, showing that there is a genuine issue for trial.See id.
These burdens are reflected in Rule 12 of the Local General Rules for the Northern District of Illinois. Waldridge v. American Hoechst Corp., 24 F.3d 918, 921-22 (7th Cir. 1994). Under Rule 12 (m)(3), the moving party must submit a statement of material facts in the form of short numbered paragraphs supported by specific references to the factual record. Under Rule 12(n)(3), the nonmoving party must submit a response to each such paragraph, including (in the case of disagreement) specific references to the factual record. If the nonmoving party fails to disagree with a fact in the moving party's 12(m) statement, the court will deem that fact admitted. See Local Rule 12(n)(3). Similarly, if the nonmoving party disagrees with a fact in the moving party's statement but fails to support its disagreement with a specific reference to the factual record, the court may deem that fact admitted as well. Fed.R.Civ.P. 56(e); Flaherty v. Gas Research Institute, 31 F.3d 451, 453 (7th Cir. 1994) (citations omitted). The Seventh Circuit Court of Appeals has "repeatedly upheld the strict enforcement of these rules." Waldridge, 24 F.3d at 922;e.g., Knoblauch v. DEF Express Corp., 86 F.3d 684, 690 (7th Cir. 1996).
I. The Counterclaim
A. ERISA
In their counterclaim, FedEx and FedEx Plan assert an ERISA claim against Bobak, asking him to return benefits received from Social Security that he also received under the Plan. FedEx and FedEx Plan request a judgment against Bobak in the amount of $9,770, the full amount of Social Security disability benefits Bobak received concurrently with his Plan benefits. Bobak argues that 1) defendants are not fiduciaries under ERISA and 2) that defendants' counterclaim cannot be brought independently; and 3) defendants have provided no evidence sufficient to show that Bobak received an overpayment. The court disagrees.
FedEx and FedEx Plan amended their request for $10, 142 in repayment to $9,770 in their Reply in Support of their Motion for Summary Judgment. FedEx and FedEx Plan recalculated the amount of the overpayment by subtracting the $372.00 in Federal taxes which were deducted directly out of Bobak's Social Security benefits. (Lamar Aff ¶¶ 3-6).
The FedEx Plan is governed by the provisions of ERISA. Employee Retirement Income Security Act of 1974, § 1 et seq., 29 U.S.C. § 1001 et seq. Bobak admits that he was advised of his coverage under the Plan. (Bobak's Answer at ¶ 4). To bring a claim under ERISA, as FedEx and FedEx Plan have, each must be a fiduciary. The provision at issue, 29 U.S.C. § 1132(a)(3)(B)(ii), authorizes an ERISA plan fiduciary to bring "other appropriate equitable relief . . . to enforce . . . the terms of the plan." See 29 U.S.C. § 1132(a)(3)(B)(ii). Both FedEx and FedEx Plan qualify as fiduciaries. Under ERISA, a plan fiduciary is one who "exercises discretionary authority or discretionary control respecting management of such plan or . . . respecting management or disposition of its assets," or "has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). FedEx, as the administrator of the Plan, exercises sole discretionary authority and responsibility for the Plan, and appoints third-party administrators to process claims. (Hopkins Aff.; FedEx's Mem. Supp. Mot. Summ. J., p. 4, n. 1). Pursuant to § 502(a)(3) of ERISA, a plan fiduciary may bring a civil action to enforce the terms of a plan. 29 U.S.C. § 502(a)(3). As such, FedEx and FedEx Plan are fiduciaries and are authorized bring the instant counterclaim.
Bobak next argues that FedEx's counterclaim cannot be presented on a motion for summary judgment independently of the claims he raised in his complaint. (Mem. Opp. Mot. Summ. J. at p. 2). This argument fails since under ERISA, a civil action may be brought by a fiduciary (a) to enjoin any act or practice which violates any provision of [subchapter (a)] 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 [subchapter (a)] or the terms of the plan. 29 U.S.C. § 1132(a)(3). Thus, FedEx and FedEx Plan may properly move for summary judgment on their counterclaim, which seeks under ERISA to obtain equitable relief to redress violations of the Plan.
Bobak also maintains that the evidence presented by counterplaintiffs fails to resolve the genuine issues of material fact that exist surrounding the issue of whether FedEx is entitled to reimbursement. The court, however, finds the evidence more than sufficient. The court must first consider whether the Plan requires reimbursement. To determine whether action is warranted under § 1132, courts look to the plain language of ERISA-regulated plans. In assessing a plan's enforceability "[f]ederal courts construe the terms of an ERISA-regulated plan under federal common law rules of contract interpretation, giving unambiguous language its plain and ordinary meaning." Health Costs Controls v. Rogers, 909 F. Supp. 537, 541 (7th Cir. 1994) citing,Meredith v. Allstell, Inc., 11 F.3d 1354, 1358 (7th Cir. 1993).
The court, thus, turns to the language of the FedEx Plan itself. The Plan states, in pertinent part:
Section 3.6. Reduction of Disability Benefit or Other Income:
(a) Other Disability Income or Benefits. The amount determined under Section 3.2 or Section 3.3(c), if applicable, with respect to a Disabled Covered Employee . . . shall be reduced by the sum of the following benefits to which such Employee is entitled to receive with respect to the same period and condition of Disability for which a Disability Benefit is payable under this Plan even though the Disabled Covered Employee . . . shall have refused or failed to apply for such benefits within the time, or in the manner required . . .: (4)the amount of any disability income benefits under any compulsory benefit act or law; . . . (7) any primary benefits payable to the Disabled Covered Employee because of disability under the Federal Social Security Act, but excluding any cost of living increases which occur after the initial payment of such benefits.
Section 5.4 Overpayment of Claims.
If benefits are paid in excess of the amount to which a Covered Employee is entitled under this Plan, it shall be the obligation and responsibility of such Employee to repay to the Plan the amount of the overpayment. If the overpayment is not repaid within a reasonable time, the Administrator shall withhold from any future benefit payments and may withhold from any future compensation payments payable to such Employee in order to recover such overpayment." The Plan, §§ 3.6(a)(4), 3.6(7), 5.4.
The above provisions explicitly entitle FedEx and FedEx Plan to offset Bobak's benefits under the Plan by the amount of any funds he received from Social Security for the same time period and condition of disability. Since FedEx did not become aware of the duplicate benefits until Bobak's eligibility under the Plan became defective, the offset was not taken out of his income. This however does not impact their ability to collect reimbursement. The payments Bobak received overall, rendered for the same period and condition of disability, exceed the amount to which he was entitled to recover under § 3.6 of the Plan. Under § 5.4 of the Plan, these duplicate benefits constitute an overpayment.
As discussed above, the provisions of the Plan clearly require reimbursement in the event an employee received duplicate benefits by Social Security. See The Plan, §§ 3.6(a)(4), 3.6(7), 5.4. Bobak was aware of the terms of the Plan. He admits that he "was advised that he would be covered under the Long Term Disability Plan of Federal Express." (Bobak's Answer to Counterclaim at ¶ 3). No question remains as to whether Bobak knew he would be obligated to repay the Plan for any duplicative benefits. Therefore if Bobak did receive an overpayment, he is required to reimburse FedEx and FedEx Plan.
Just as in Unisys Medical Plan v. Timm, no genuine issue remains as to whether Bobak received an overpayment and now owes the Plan a reimbursement. See Unisys Medical Plan v. Timm, 98 F.3d 971, 973 (7th Cir. 1996). In Unisys, the Seventh Circuit affirmed the district court decision to grant summary judgment in an ERISA reimbursement action. See Unisys Medical Plan v. Timm, 98 F.3d 971, 973 (7th Cir. 1996). In that case, Gary Timm was injured in an accident and received coverage under an ERISA employee welfare benefit plan for his medical bills. See Id. at 972. The Unisys Medical Plan made the payments for Timm's medical expenses pursuant to the plan. Timm subsequently received payment as a settlement of his personal injury claim. Id. at 972. Unisys sought reimbursement of the duplicate benefits pursuant to the plan and Timm refused to pay. Unisys brought suit seeking reimbursement under ERISA. Unisys moved for summary judgment, and the district court granted the motion. See Unisys, 98 F.3d at 973. The Seventh Circuit court rejected Timm's waiver defense and affirmed the district court decision.
In this case, as in Unisys, there is no genuine dispute of fact as to the terms of the Plan itself. See Unysis, 98 F.3d at 973. The Plan subscriber agrees to repay to the Plan the amount of any overpayment. (See The Plan at § 5.4). Bobak, like Timm, drew benefits from his ERISA plan as an employee and Plan subscriber. (See Bobak's Answer to Counterclaim at ¶ 3). Bobak received ten payments of $970 in retroactive benefits from Social Security. (FedEx's Ex. D, p. 1-3). FedEx had already paid Bobak disability benefits for that period under the Plan. (FedEx's Ex. C.) Federal Express, as did Unisys, requested that Bobak reimburse the Plan to the extent of the duplicate benefits. (FedEx's Ex. F at p. 2). Bobak, like Timm, has refused to reimburse the Plan. (FedEx's 12(M) ¶ 8; Bobak's Answer to Counterclaim, ¶ 13). Thus, as in Timm, the Plan obligates Bobak to refund any duplicate benefits he received.
Bobak argues that FedEx and FedEx Plan failed to set out an accounting sufficient to prove Bobak received an overpayment. He is wrong. Viewed together, several FedEx and FedEx Plan's exhibits suggest that Bobak was overpaid. (See FedEx's Exs. A, D, F). Charles Hopkins' affidavit expressly states that Bobak was overpaid. (Ex. A, Hopkins Aff. ¶ 4.) In his affidavit, Thomas Lamar corrects the overpayment amount, but again states that Bobak did receive an overpayment and attaches a detailed summary of amounts FedEx Plan paid to Bobak versus amounts it was obligated to pay. (Ex. D, Lamar Aff., Att.) In addition, Bobak's social security representative warned him not to spend the money he would receive from Social Security before he heard from FedEx. The representative stated, "you may owe some of this check to your long-term disability insurance carrier." (Ex. F, Doherty ltr.)
In contrast, Bobak presents no affidavits or any other factual materials in support of his opposition to summary judgment. On a motion for summary judgment, "the nonmovant may not rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e) accord NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir. 1995) (citations omitted) cert. denied, 115 S.Ct. 2249 (1995). Bobak fails to identify a single piece of evidence in support of his claims. He merely cites to his complaint. (See Bobak's 12(M); Bobak's Mem. Supp. Opp'n Mot. Summ. J.) As such, the court finds that Bobak did receive an overpayment.
In another attempt to escape liability, Bobak contends that he should not be held liable for reimbursement since he was "forced to apply for Social Security for total disability when he was told by [FedEx] that his payment for total disability and medical coverage was coming to an end." (Mem. Supp. Opp'n Mot. Summ. J. at p. 2.) Bobak fails to cite any evidence in support of this assertion as is required under Rule 56. See Fed.R.Civ.P. 56(e); NFLC, 45 F.3d at 234. Without such support, the court need not even consider this argument. Assuming however, that Bobak is arguing that he was led to believe FedEx was not going to pay him disability benefits and that there was support for such an argument, it would not provide Bobak a valid defense.
The dispositive issue in this case is whether Bobak received benefits from Social Security as well as duplicative benefits under the Plan. Courts have recognized a defense of waiver where the insured can show that the Plan abandoned its claim to reimbursement. See Unisys Medical Plan v. Timm, 98 F.3d 971, 974 (7th Cir. 1996) citing United States v. Olano, 507 U.S. 725, 733; 113 S.Ct. 1770, 1777; 123 L.Ed.2d 508 (1993). Unless Bobak can show a genuine issue as to whether defendants "intentionally relinquished its right to reimbursement," Bobak remains obligated to return the overpayment. See Id. (holding that to prevail on waiver defense theory, plaintiff must show that defendant intentionally relinquished its known right to reimbursement). Bobak has presented no evidence to support such a finding. In fact, the evidence before the court suggests that defendants have been actively pursuing reimbursement since August 9, 1995. (FedEx. Ex. F, Claims Analyst ltr.) Proof of the Plan's repeated attempts to obtain reimbursement are fatal to any waiver and estoppel defenses asserted. Id.
Having already determined that: (1) defendants may seek enforcement of the Plan under ERISA, (2) that the FedEx Plan does require reimbursement when a beneficiary receives an overpayment and (3) that Bobak did indeed receive an overpayment, the only remaining issue is whether restitution is a proper remedy.
Section 1132(a)(3)(B) of ERISA allows a fiduciary to initiate an action seeking enforcement of a repayment provision and "appropriate equitable relief." It is well-established that restitution is an appropriate form of equitable relief under ERISA. See Harris Trust v. Provident, 57 F.2d at 615 citingMertens v. Hewitt Assoc., 508 U.S. 248, 113 S.Ct. 2063, 2069, 124 L.Ed.2d 161 (1993) ("appropriate equitable relief under § 1132 includes "categories of relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages)"); Health Cost Controls v. Skinner, 44 F.2d 535, 538 n. 4, 5, and 7 (7th Cir. 1995) ("although [plan administrator] clearly cannot recover compensatory damages under [§ 1132(a)(3)], if it successfully makes out a claim for restitution . . . it may be entitled to monetary relief"); UIU Severance Pay Trust Fund v. Local Union No. 18-U, 998 F.2d 509, 512-13 (7th Cir. 1993) (ERISA permits claim for restitution); Allport v. Griffis, No. 96 C 8454, 1997 WL 797647 *10 (N.D. Ill. Dec. 17, 1997) ("if there was a duplicative payment of benefits (as defined by [the plan]) this is an appropriate case for restitution).
In order to succeed on a claim for restitution, FedEx and FedEx Plan must show that: (1) it had a reasonable expectation of payment; (2) Bobak should reasonably have expected to pay, or (3) society's reasonable expectations of person and property would be defeated by nonpayment. C. Kaufman, Corbin on Contracts § 19A, at 50 (Supp. 1989). FedEx and FedEx Plan have clearly made the requisite showing. Even Bobak admits that he has a duty to repay the Plan. "He now realizes that he had to pay back to the Plan the payments they made to him when he was covered by Federal's plan. However, he has used the payment made by the Social Security plan for his personal ongoing expenses." (Bobak's Answer to FedEx Counterclaim, ¶ 11.) Here, Bobak admits that he owes counter-plaintiffs under the Plan and his excuse for not paying falls far short of a valid defense.
While the court recognizes that reimbursing the Plan may cause Bobak financial hardship, to rule otherwise would offend basic notions of fairness. By allowing Bobak to keep the check, other disabled FedEx employees would lose out on benefits. Further, in the current climate of limited economic resources, to allow conduct like Bobak's to go unchecked might ultimately drain public resources needed to fund Social Security and boost the already rising costs of private insurance. The plain language of the Plan requires the beneficiary to reimburse the Plan fiduciary in the event of overpayment. Neither by words nor by actions did FedEx and FedEx Plan intentionally relinquish their right to reimbursement. Therefore, the court must give effect to the unambiguous terms of the ERISA plan and grant summary judgment in favor of counter-plaintiffs.
B. Unjust Enrichment
Since the court has concluded that Bobak must repay defendants under ERISA, it need not reach counter-plaintiffs' alternative request for damages under a common law claim of unjust enrichment. However, assuming, arguendo, that FedEx and FedEx Plan failed to state a claim under the requirements of ERISA, FedEx and FedEx Plan have established a right to recovery under a federal common-law theory of unjust enrichment.
The Seventh Circuit recognized a federal common law claim of unjust enrichment in Harris Trust and Savings Bank v. Provident Life and Accident Insurance Co., 57 F.3d 608, 614 (7th Cir. 1995). In Harris Trust, the Seventh Circuit held that an employer stated a viable claim for reimbursement to its plan under either ERISA or a federal common law theory of unjust enrichment. See Id. Other courts have also recognized unjust enrichment as an appropriate alternate remedy to an ERISA claim. See Pople v. Cox, 1993 WL 469915 *5 (N.D.Ill. Nov. 12, 1993); Trustmark Life Ins. Co. v. The University of Chicago Hospitals, 1995 WL 75367 * (N.D.Ill. Feb. 22, 1995).
Unjust enrichment and restitution are essentially two names for the same equitable remedy. See Trustmark Life, 1995 WL 75367 *5. Each requires the party who takes in error to "restore [money or property] to its rightful owner." Black's Law Dictionary 1313, 1535 (6th ed. 1990). As discussed above, FedEx and FedEx Plan have established the elements of a claim for restitution and, thus, for unjust enrichment. Therefore summary judgment would be proper on these alternate grounds as well.
Conclusion
For the reasons set forth above, the court grants counter-plaintiffs' motion for summary judgment. The court holds that Federal Express Corporation, as Administrator for Federal Express Corporation Long Term Disability Plan and Federal Express Corporation Long Term Disability Plan are entitled to recover $9,770 from Joseph Bobak and orders that judgment be entered in favor of counter-plaintiffs against the counter-defendant in the amount of $9,770.