Plan Committee Can Seek Reimbursement of Disability Overpayment

March 25, 2008 ( - The U.S. District Court for the Northern District of Illinois has ruled that a retirement and welfare plan committee can seek reimbursement of over $260,000 in overpaid disability benefits to a retired airline pilot.

In its decision, the court rejected William Van Slyck’s argument that the relief sought by United Air Lines, Inc. Retirement and Welfare Administration Committee was not proper equitable relief under the Employee Retirement Income Security Act (ERISA) because it could not trace the money to an identifiable fund. The court said the provision of the plan that allows for offsetting of benefits where a participant chooses to retire creates an equitable lien by agreement under ERISA and the committee is not required to trace the funds to a specific source.

Van Slyck also contended that the Committee’s unjust enrichment claims should be dismissed because the 7 th U.S. Circuit Court of Appeals does not allow unjust enrichment claims, but the district court pointed to several cases where the 7 th Circuit did recognize such claims.

Finally, Van Slyck pointed to the plans “Limitations on Actions” provision, which stated that a claim must be brought within three years of the initial filing of a claim for benefits. The court concluded that a reasonable interpretation of the plan indicated this provision only applied to claims brought by participants and not claims brought by the Committee.

Van Slyck began receiving long-term disability payments from the plan in 1995. He retired in November 2002 and received both disability benefits and retirement benefits until August 2005.

The administration committee filed suit alleging a right to recover $261, 559.59 in disability benefits paid to Van Slyck from November 2002 to August 2005.

The case is United Air Lines Inc. Retirement and Welfare Administration Committee v. Van Slyck, N.D. Ill., No. 07 C 4289, 3/19/08.