Opinion
Case No.: 6:03-cv-1433-Orl-18DAB.
October 4, 2004
ORDER
THIS CAUSE comes before the Court upon an unopposed motion for summary judgment by Plaintiff UNUM Life Insurance Company of America ("UNUM") (Doc. 15, filed March 4, 2004) against pro se Defendant James P. O'Brien ("O'Brien") to recover the overpayment of disability benefits. For the reasons stated herein, the motion is granted.
I. BACKGROUND
This cause of action arises from O'Brien's contract with UNUM for a long-term disability insurance policy ("the policy") through O'Brien's former employer. Bomco. Inc. The policy provided that benefits due would be reduced by any award received from the Social Security Administration ("SSA"). When O'Brien became disabled, he was presented with a "Payment Option Form" that permitted him to elect for the receipt of unreduced benefits while his application to the SSA was pending. The form stated that upon receipt of SSA benefits. O'Brien would be obligated to reimburse UNUM for benefits the latter had paid him in the interim. O'Brien signed this form. The SSA notified O'Brien in August of 2002 that he was eligible for disability benefits in the amount of $1,369.00 per month, with annual cost of living adjustments. In October of 2002, UNUM demanded repayment of $37,013.70. On December 15, 2002, the SSA sent O'Brien a lump-sum of back-dated benefits in the amount of $32,772.75. O'Brien has not, despite UNUM's repeated demands, reimbursed UNUM pursuant to the policy and the Payment Option Form.
II. DISCUSSION A. Summary Judgment
A court will grant summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show 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." Fed.R.Civ.P. 56(c); see, e.g., Stachel v. City of Cape Canaveral, 51 F. Supp. 2d 1326, 1329 (M.D. Fla. 1999). Material facts are those that may affect the outcome of the case under the applicable substantive law. Disputed issues of material fact preclude the entry of summary judgment, but factual disputes that are irrelevant or unnecessary do not. Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 250 (1986).
The moving party bears the initial burden of proving that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986). In determining whether the moving party has satisfied its burden, the Court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion and resolves all reasonable doubts against the moving party. Matsushita Elec. Ind. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). The moving party may rely solely on his pleadings to satisfy its burden. Celotex, 477 U.S. at 323-24.
When the non-moving party has the burden of proof at trial, the moving party may meet its initial burden in one of two ways. It may support the motion by directing the Court's attention to affirmative evidence "that negates an essential element of the non-moving party's claim." Celotex, 477 U.S. at 331 (Brennan, J., dissenting). Alternatively, the moving party may point out to the court the "absence of evidence to support the non-moving party's case." Id. at 324; Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993).
Justice Brennan agreed with the plurality's analysis of the standard for summary judgment in Celotex. He dissented on the basis of the facts of the case.
If the moving party shows the absence of a genuine material fact that is triable, in either of these ways, and that it is entitled to judgment, the burden shifts to the non-moving party to make a sufficient showing to establish the essential elements of her case with respect to which she has the burden of proof.Celotex, 477 U.S. at 322. In contrast to the moving party, the non-moving party may not rest solely on her pleadings to satisfy this burden and escape summary judgment. Id. at 324. It must designate evidence within depositions, answers to interrogatories or admissions that indicates that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. If the evidence offered by the non-moving party is merely colorable, or is not significantly probative, the Court may grant summary judgment. Anderson, 477 U.S. at 249-50.
UNUM argues that jurisdiction is appropriate under ERISA, 28 U.S.C. § 1132, or alternatively, pursuant to a federal common law action for unjust enrichment under 28 U.S.C. § 1331. Having reviewed the record and arguments of counsel, the Court turns to the issues raised.
B. "Equitable Remedy" Under § 1132(a)(3)(B)
The first question presented in this case is whether the relief of unjust enrichment that UNUM seeks is "equitable" for the purposes of 28 U.S.C. § 1132(a)(3)(B). That section authorizes a civil action by a fiduciary "to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of . . . the terms of the plan." 28 U.S.C. § 1132(a)(3) (emphasis added). The Supreme Court has elaborated on the meaning of this provision, holding that a claim is not authorized under § 1132(a)(3)(B) unless the plaintiff is seeking relief that fits within "those categories of relief that were typically available in equity. . . ." Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993); Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002).In Knudson, the Supreme Court addressed whether § 1132(a)(3)(B) permitted the Plaintiff insurer to bring a restitution claim seeking reimbursement under a contract from a beneficiary. Knudson, 534 U.S. at 207-09. By seeking reimbursement, the Court found that the insurer sought, "in essence, to impose personal liability on respondents for a contractual obligation to pay money." Id. at 210. Thus, "a claim for money due and owing under a contract [was] quintessentially an action at law" as opposed to being in equity.Id. (citations and internal quotations omitted).
UNUM contends that the reimbursement it seeks under a theory of unjust enrichment is not addressed in Knudson and remains a viable cause of action under § 1132(a)(3) (Doc 26, at 3). This Court disagrees. The Knudson Court explained that "whether [the remedy] sought is legal or equitable depends on the basis for the plaintiff's claim and the nature of the underlying remedies sought." Id. at 213. Like the plaintiff in Knudson, the reimbursement sought by UNUM seeks, in essence, to impose personal liability for money owed under the policy, an action that the Supreme Court has categorized as being at law. Accordingly. UNUM has failed to state a permissible claim under 28 U.S.C. § 1132(a)(3).
Some courts have held that reimbursement under a contract is recoverable under the Knudson Court's interpretation of § 1132(a)(3) if the fiduciary seeks "to recover funds (1) that are identifiable, (2) that belong in good conscience to the [fiduciary], and (3) that are within the possession and control of the defendant beneficiary," as opposed to dissipated.Bombadier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough 354 F.3d 348, 356 (5th Cir. 2003) (holding that plaintiff's action for constructive trust lies in equity). See also Wal-Mart Stores, Inc. Assocs.' Health and Welfare Plan v. Varco, 338 F.3d 680, 687-88 (7th Cir. 2003). In this case, UNUM does not contend that the particular funds are identifiable or in the control of the defendant. Indeed, O'Brien asserts that the money in dispute has been dissipated, having been spent on his children and to pay off old debts.
C. Federal Common Law
Although UNUM cannot characterize its unjust enrichment claim as equitable under § 1132(a)(3)(B), UNUM contends that it may recover for its overpayments under federal common law. It is clear that UNUM's federal common law claim is within this Court's subject matter jurisdiction. The Supreme Court has not ruled, however, on whether a claim unauthorized under § 1132(a)(3) may nevertheless be authorized under the federal common law; nor has the Court of Appeals for the Eleventh Circuit. On this issue, there has been considerable debate.In Coop, Benefit Adm'rs., Inc. v. Ogden, 367 F.3d 323, 332 (5th Cir. 2004), the Fifth Circuit held that a fiduciary was not entitled to seek reimbursement from a beneficiary under a federal common law theory of unjust enrichment. The Fifth Circuit found that, by using the term "equitable," Congress intended to proscribe fiduciaries from recovering any form of money damage, including reimbursement for overpayments under theories of unjust enrichment or restitution. Id. at 335. See also Pacificare v. Martin, 34 F.3d 834, 836 (9th Cir. 1994) (dismissing fiduciary's federal common law claim of unjust enrichment that sought reimbursement under the plan after beneficiary had recovered a settlement from a third party tortfeasor).
On the other hand, in Provident Life Accident Ins. Co. v. Waller, 906 F.2d 985, 993 (4th Cir. 1990). cert. denied, 498 U.S. 982 (1990), the Fourth Circuit held, in similar circumstances to this case, that a federal common law claim of unjust enrichment was available to an insurer seeking reimbursement under a contract. In Waller, the plan administrator sought to recover benefit overpayments after the beneficiary received settlement funds from a third party tortfeasor. Id. at 986-87. In the absence of an available ERISA remedy, the Fourth Circuit determined that a federal common law action was appropriate for three reasons. First, the common law remedy would "further the contract between the parties and effectuate the clear intent of [the policy's reimbursement clause]." Id. at 993 (emphasis omitted). Second, creating such a remedy would follow the intent of ERISA, which "indicates a desire to ensure that plan funds are administered equitably and that no one party, not even plan beneficiaries should unjustly profit." Third, the common law remedy resolved a clear inequity, as the facts of the case fit an "archetypal unjust enrichment scenario." Id. Accordingly, the Fourth Circuit held that the circumstances required it to "weave into the statutory fabric of ERISA the federal common law remedy of unjust enrichment." Id. at 994.
Waller, 906 F.2d at 993 (referring to § 1103(c)(2)(A), which allows for the return of mistakenly paid contributions made by employers to multiemployer plan funds).
The Court is persuaded by the Fourth Circuit's reasoning. The Court is, however, mindful that the creation of federal common law based on a federal statute's preemption of an area is appropriate "only where the federal statute does not expressly address the issue." Nachwalter v. Christie, 805 F.2d 956, 959 (11th Cir. 1986) (citing Textile Workers Union of Am. v. Lincoln Mills of Alabama, 353 U.S. 448, 456-57 (1957)).
In this case, UNUM seeks a federal common law remedy for unjust enrichment — a remedy that is not "expressly addressed" by ERISA's remedial provisions. Thus, since ERISA in this instance "`[does] not provide an explicit remedy,'" it is appropriate to proceed under federal common law. Rego v. Westvaco Corp., 319 F.3d 140, 149 (4th Cir. 2003) (quotingWaller, 906 F.2d at 990).
As discussed in Part II.A, the Supreme Court has made clear that § 1132(a)(3)(B) does not allow actions that seek, as UNUM does, to impose personal liability for a contractual obligation to pay money. Knudson, 534 U.S. at 210. The Supreme Court has not held, however, that a federal common law remedy is unavailable to a fiduciary seeking an unjust enrichment claim.See Fick v. Metro, Life Ins. Co., 320 F. Supp. 2d 1314, 1316n. 1 (S.D. Fla. 2004).
If there were a question as to whether the federal common law remedy of unjust enrichment found in Waller remained viable post-Knudson, the Fourth Circuit answered in the affirmative by approving its Waller judgment in Rego, 319 F.3d at 149. InRego, the Fourth Circuit declined to grant a beneficiary a federal common law right for breach of fiduciary duty and negligent representation because Congress explicitly created such remedies within ERISA itself. Id. The Fourth Circuit went on, however, to distinguish its holding in Rego from its decision to create a federal common law remedy in Waller on the basis that, in Waller, "`ERISA [did] not provide an explicit remedy'" for the fiduciary. Id. (quoting Waller, 906 F.2d at 990).
Even when it is appropriate to create federal common law, courts "may use state common law as the basis of the federal common law only if the state law is consistent with the policies underlying the federal statute in question." Nachwalter, 805 F.2d at 959 (citing Lincoln Mills, 353 U.S. at 457). In this case, ERISA would be furthered by applying a common law remedy of unjust enrichment. Congress indicated "a desire to ensure that plan funds are administered equitably and that no one party, not even beneficiaries, should unjustly profit." Waller, 906 F.2d at 993. In formulating ERISA, "Congress wanted to assure that those who participate in the plans actually receive the benefits they are entitled to. . . ."Helms v. Monsanto Co., 728 F.2d 1416, 1420 (11th Cir. 1984). It is difficult to believe that Congress intended beneficiaries to be rewarded by overpayments to which they are not entitled. Such a result could lead insurers to eliminate the policy provision altogether. Those who would lose by such an outcome are, of course, persons requiring immediate disability assistance — persons who, because of the nature of their disability, cannot hold out for a delayed SSA award. Thus, the Court agrees that creation of a federal common law claim of unjust enrichment in this instance "furthers the purposes of ERISA." Waller, 906 F.2d at 993.
In this case, O'Brien received his lump-sum award from SSA three years after originally filing (Dec. 1999-Dec. 2002) (Doc 7, at ¶¶ 10, 11).
Other courts have done the same. See, e.g., Hercules Inc. v. Pages, 814 F. Supp. 79, 80-81 (M.D. Fla. 1993) (holding that fiduciary had a federal common law unjust enrichment claim to recover medical expenses that were to be reimbursed under the plan); Metro. Life Ins. Co. v. Solomon, 996 F. Supp. 1473, 1477 (M.D. Fla. 1998) (recognizing that fiduciary had a federal common law cause of action for unjust enrichment to recover a mistakenly issued check when such an action would further, not override, a provision of an ERISA plan); Fick v. Metro, Life Ins. Co., 320 F. Supp. 2d 1314, 1316n. 1 (S.D. Fla. 2004) (finding that fiduciary had a federal common law claim of unjust enrichment to recover long-term disability plan overpayments); See also Whitworth Bros. Storage Co. v. Central States, Southeast Southwest Areas Pension Fund, 794 F.2d 221 (6th Cir.), cert denied, 479 U.S. 1007 (1986) (finding no cause of action under ERISA, court provided federal common law to find cause of action for employer to recover payments mistakenly made to pension plan); Neal v. Gen. Motors Corp., 266 F. Supp. 2d 449, 456 (W.D.N.C. 2003) (granting summary judgment to plan administrator for the recovery of mistaken payment made to participant, holding that it was "appropriate to fill in the interstitial gaps of ERISA by allowing a federal common law remedy of unjust enrichment");Clisso v. Global Indus. Techs., Inc. Ret. Income Plan, 2003 WL 22736514. at *3 (W.D. Va. 2003) (holding that unjust enrichment claim was available to recover reimbursement for mistaken payment to plan participant, stating that a contrary result would "discourage [the fiduciary] from operating an ERISA plan");Empire Kosher Poultry, Inc. v. United Food and Commercial Workers Health and Welfare Fund of Northeastern Pa., 285 F. Supp. 2d 573, 581-82 (M.D. Pa. 2003) (holding that a federal common law action was available to employer seeking restitution of payments mistakenly made to union, showing that the Supreme Court's ruling in Knudson was inapplicable to such a federal common law claim).
D. Unjust Enrichment
Having recognized the viability of a federal common law cause of action for unjust enrichment, the Court must determine whether O'Brien has, in fact, been unjustly enriched. The elements of a claim for unjust enrichment are: (1) a benefit conferred upon the defendant by the plaintiff, (2) appreciation by the defendant of such benefit, and (3) acceptance and retention of such benefit by the defendant under such circumstances that it would be inequitable for him to retain it without paying the value thereof. Hercules Inc., 814 F. Supp. at 80 (citing Henry M. Butler, Inc. v. Trizec Props. Inc., 524 So. 2d 710, 712 (Fla. 2d DCA 1988)) (quoted in Solomon, 996 F. Supp. at 1477).
The three elements are met in this case without any genuine issues of material fact. First, UNUM conferred a benefit on O'Brien in the form of disability benefit overpayments. O'Brien admits in his answer that he held a disability insurance policy with UNUM (Doc. 7 at ¶ 5) and that he began receiving long-term disability benefits under the Policy on October 27, 1999. (Doc. 7 at ¶ 7.)
Second, O'Brien appreciated the overpayments. The policy at issue unambiguously provided that benefits due would be reduced by any monies received from the SSA. (Doc. 1, Exh. A, at LTD-BEN-6.) Additionally. O'Brien admits to signing the Payment Option Form in which he elected to receive unreduced benefits from UNUM while his application for Social Security benefits was pending. (Doc. 7 at ¶ 9.) The Payment Option Form unambiguously provides that O'Brien's election would "result in an overpayment" and that O'Brien must "repay any overpayment in full within 30 days from receipt of the Social Security award check." (Doc. 1. Exh. B.) Finally, O'Brien admits to receiving a lump-sum amount of $32,772.75 from SSA on or about December 15, 2002, representing SSA benefits backdated to December 1999. (Doc. 7 at ¶¶ 10, 11.) This Court has held that "[i]t is a cardinal principle of insurance law that where the provisions of an insurance policy are clear and unambiguous, the terms of the policy will be accorded their plain meaning and enforced as written." Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1358 (M.D. Fla. 2001) (citations omitted). The insurance policy and Payment Option Form plainly called for reimbursement in the event that O'Brien received the SSA award. As such, O'Brien knew or should have known of the benefit that UNUM conferred upon him.
Third, O'Brien accepted and retained the benefit. In his answer, O'Brien explains that the lump-sum from SSA that he owed to UNUM was used to "[pay] off old debts" and on "extras" for his children. (Doc. 7 at 3.) By receiving policy benefits and the lump-sum SSA award, O'Brien essentially received "double recovery" for his disability. Waller, 906 F.2d 985. A double recovery, in this instance, is clearly inequitable. The Court concludes, as a matter of law, that UNUM had a reasonable expectation to be reimbursed for overpayments made to O'Brien as a result of his receipt of social security benefits. By accepting the terms of the policy and Payment Option Form. O'Brien was clearly aware of his obligation to reimburse his insurance company. Accordingly, UNUM is entitled to summary judgment on its unjust enrichment claim.
III. CONCLUSION
The Court finds that the undisputed facts as well as the reasonable inferences drawn therefrom do not establish a genuine issue of material fact that would justify bringing this lawsuit to trial. Based on the foregoing discussion and upon careful consideration of the record and all relevant law, the Court rules as follows:It is ORDERED and ADJUDGED that:
1. Plaintiff UNUM's Motion for Summary Judgment (Doc. 15, filed March 22, 2004), is GRANTED:
2. The case is referred to the Magistrate Judge for Report and Recommendation on the issue of damages;
3. All other pending motions are DENIED AS MOOT.
DONE AND ORDERED