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Central States, Southeast and Southwest Areas Health and Welfare Fund v. American International Group, Inc.

United States Court of Appeals, Seventh Circuit

October 24, 2016

Central States, Southeast and Southwest Areas Health and Welfare Fund, an Employee Welfare Benefit Plan, by Arthur H. Bunte, Jr., Trustee, in his representative capacity, Plain tiffs-Appellan ts,
v.
American International Group, Inc., et al., Defendants-Appellees.

          Argued December 7, 2015

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C 5195 - John Z. Lee, Judge.

          Before Flaum, Williams, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         A self-funded ERISA plan has sued several independent health insurers seeking reimbursement for medical expenses it paid on behalf of beneficiaries who were covered under both the plan and the insurers' policies. We're asked to decide whether a lawsuit like this one-a "coordination of benefits" dispute-seeks "appropriate equitable relief" under section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). Six circuits have held that section 502(a)(3) does not authorize suits of this type because the relief sought is legal, not equitable. We join this consensus and affirm the dismissal of the ERISA plan's suit.

         I. Background

         Central States, Southeast and Southwest Areas Health and Welfare Fund ("Central States" or "the plan") is a self-funded ERISA plan that provides health coverage to participating Teamsters and their dependents. The plan's trustee filed suit on the plan's behalf seeking a declaratory judgment enforcing the plan's terms and awarding restitution on various theories. The defendants are insurance companies that underwrite and administer insurance policies for schools and youth sports leagues; their policies cover injuries sustained by young athletes while participating in athletic activities sponsored by these schools and leagues. The case arises from injuries sustained by student athletes who had medical coverage under both the Central States plan and the independent insurers' policies. The trustee alleges that the plan paid the beneficiaries' medical bills in full, in the total amount of about $343, 000, and the insurers owe reimbursement.

         The plan and the insurers' policies have competing coordination-of-benefits clauses, and each side claims that its respective provision makes the other primarily liable for the beneficiaries' medical expenses. Coordination-of-benefits disputes like this one are often resolved in state court in a declaratory-judgment action on an equitable-contribution theory.[1] See 16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 232:71 (3d ed. 2000).

         But the trustee sued in federal court under section 502(a)(3) of ERISA (the Employee Retirement Income Security Act of 1974), which provides in relevant part that a participant, beneficiary, or fiduciary of an employee-benefits plan may bring a civil action "to obtain ... appropriate equitable relief ... to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3)(B) (emphasis added). The trustee contends that the suit seeks "appropriate equitable relief" to enforce the plan's coordination-of-benefits provision.

         More specifically, the trustee seeks: (1) a declaratory judgment that the insurers are primarily liable for "current unpaid and future medical expenses" incurred by athletes who are covered by both the plan and one of the insurers; (2) a declaratory judgment that the insurers are primarily liable for medical expenses for injuries already incurred and treated; (3) the imposition of an equitable lien on sums held by the insurers in the amount of the benefits paid by the plan; and (4) an order that the insurers must reimburse the plan, variously justified on restitution, unjust enrichment, and subrogation theories.

         The insurers moved to dismiss all claims. The district judge granted the motion on two different grounds. To the extent that the suit sought a declaratory judgment regarding future medical expenses, the judge held that it did not raise a controversy sufficient to invoke the court's power to award declaratory relief and dismissed that claim for lack of subject-matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). The remaining claims were dismissed under Rule 12(b)(6) for failure to state a claim. The judge reasoned that the relief sought, though phrased in equitable terms, was not equitable relief within the meaning of section 502(a)(3).

         II. Discussion

         A. Jurisdiction

         As always, our first question is subject-matter jurisdiction. We're satisfied that jurisdiction is secure over most of this case. The Central States plan has clearly been injured by the independent insurers' failure to reimburse it for the medical expenses it has paid, and its claim arises under a federal statute, section 502(a)(3) of ERISA. But the request for a declaratory judgment regarding the insurers' liability for "current unpaid and future medical expenses" is jurisdictionally problematic. For starters, the trustee's use of the phrase "current unpaid and future medical expenses" is odd. The amended complaint alleges that Central States paid the injured students' medical expenses in full. Accepting that as true, there are no "current unpaid" medical expenses at all. The trustee ...


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