In Central States, Southeast & Southwest Areas Health & Welfare Fund v. Gerber Life Ins. Co., 771 F.3d 150 (2d Cir 2014), the Second Circuit joined the Fifth Circuit in ruling that an ERISA health plan generally has no equitable remedy against another insurer in a coordination of benefits dispute.
The plaintiff paid health claims for various beneficiaries that, it claimed, were also covered by the defendant. The plaintiff further claimed that the defendant’s coverage was primary, and its own coverage was secondary. Plaintiff asserted various purportedly equitable claims seeking reimbursement.
The Second Circuit held that an ERISA plan could not maintain equitable claims denominated as declaratory judgment claims, but which really was nothing more than a claim for money damages. The court also rejected claims for restitution and equitable lien, holding that it does not assert a claim to particular property, but only a claim against the defendant’s general assets. Plaintiff could not assert an equitable lien because there was no agreement between the parties providing for such a lien.
The Court noted, with some concern, that its decision may leave ERISA plans with no remedy If both policies had been non-ERISA policies, then the coordination-of-benefits dispute would be a fairly routine case handled under state law. But ERISA preemption prevents that, and would impose on the plan an incentive not to pay a claim when it believes there may be other, primary coverage available. The court expressed concern that this incentive could ham beneficiaries who have extra coverage, who might have to sue both carriers to obtain a benefit that each may be liable to pay.