State Court Next Stop for Union Plan Wrongful Payment
Suit
October 9, 2009 (PLANSPONSOR.com) - A Taft-Hartley
plan is not permitted to recoup more than $13,000 in wrongly
paid health plan claims under the Employee Retirement Income
Security Act (ERISA), but may be able to take the dispute
into New York state court, a federal judge in New York has
ruled.
The decision came in a suit by the
N.Y. State Teamsters Council Health & Hosp.
Fund
against
Daniel Williams and his ex-wife Nicole Ferren, with
allegations that Williams and Ferren submitted $13,287.43
in medical claims for Ferren after the two were divorced
and that the plan mistakenly paid them. The suit said
Williams never informed the plan of the divorce.
Plan lawyers' suit against Williams and Ferren
made claims of breach of contract, fraud, and unjust
enrichment both under state law and under ERISA's
civil enforcement mechanism.
However, Senior U.S. District Judge Neal P. McCurn
of the U.S. District Court for the Northern District of
New York rejected the ERISA claims, saying that ordering
the money to be repaid to the fund would constitute money
damages, which are considered "legal relief"
rather than "equitable relief" claims available
under ERISA.
McCurn also declined to rule on the claims based on
New York state law, but did leave open the possibility
plan lawyers could refile the suit in state court.
An EBIA report pointed out that case law on the
issue of where to bring claims like those in the case is
still unsettled, but that most judges considering similar
cases have permitted state claims to move forward after
ruling they are not pre-empted by ERISA.
McCurn's ruling is available
here
.
Fred Schneyer
editors@plansponsor.com