Court Approves Reimbursement of Benefits for Beneficiary not a Legal Spouse

January 28, 2008 (PLANSPONSOR.com) - The U.S. District Court for the Western District of Washington has determined that a health plan administrator should be reimbursed for benefits it paid to a woman who was falsely represented as a participant's legal spouse.

In its opinion, the court said the reimbursement was considered equitable relief under the Employee Retirement Income Security Act (ERISA). The court rejected Ralph W. Cutter’s argument that because the benefits were not paid directly to him and were not in his possession, the plan could not seek reimbursement from him.

Cutter cited the cases of Great-West Life & Annuity Insurance Comp. v. Knudson (See Strict ERISA Read Results in No Benefit Reimbursement ), and Sereboff v. Mid Atlantic Medical Services, Inc. (See High Court Approves ERISA’s Equitable Relief Provisions ), in which it was affirmed that ‘equitable relief’ granted by ERISA’s Section 502 included only those types ‘typically available in equity.’ However, the district court pointed out that in Mertens v. Hewitt Associates, the U.S. Supreme Court decided that equitable relief “includes restitution of ill-gotten plan assets or profits . . .”

The district court said it was through Cutter and due to his misrepresentation of Rosalie Devereaux as his spouse that Devereaux was able to receive medical benefits.

Cutter was a former truck driver for Safeway and participated in the Washington Teamsters Welfare Trust Fund. On several forms filled out for benefits, Cutter indicated he was married to Devereaux.

Northwest Administrators, Inc., which administered medical benefits for the trust fund, paid Devereaux’s medical expenses until she died of cancer. When Cutter presented a claim against her estate, however, a court determined she and Cutter were never legally married under Washington law.

The case is Northwest Administrators Inc. v. Cutter, W.D. Wash., No. C07-0988-JCC, 1/24/08.

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