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The Supreme Court held 5/15/06 that section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), authorizes an action by a plan fiduciary against a beneficiary to recover specifically identified funds where the beneficiary has recovered for its injuries from a third party. According to the terms of the ERISA plan administered by Respondent, Mid Atlantic Medical Services, a plan beneficiary is required to reimburse Mid Atlantic for benefits paid by the plan if the beneficiary subsequently recovers from a third-party tortfeasor, as Petitioners, the Sereboffs, did. After Mid Atlantic had claimed a lien on the expected proceeds from the Sereboffs’ tort suit, it brought an action under section 502(a)(3) of ERISA to recover approximately $75,000 in medical expenses that it had paid on the Sereboffs’ behalf. The district court approved a stipulation by the parties creating a separate account to segregate the amount sought by Mid Atlantic from the remainder of the Sereboffs’ recovery. Rejecting the Sereboffs’ argument that Mid Atlantic’s claim was really a legal claim for damages, the Supreme Court held that Mid Atlantic’s claim was “equitable” within the meaning of section 502(a)(3) because Mid Atlantic “sought its recovery through a constructive trust or equitable lien on a specifically identified trust, not from the Sereboffs’ assets generally.” In so holding, the Court relied on precedent “from the days of the divided bench” to determine “those categories of relief that were typically available in equity.” This decision is important to any business that maintains an ERISA plan.

Decision Below: 407 F.3d 212 (4th Cir. 2005)