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What is "appropriate equitable relief"?

The ERISA statute contains a provision that permits a large universe of potential claimants to seek "appropriate equitable relief."  29 U.S.C. Sec. 1132(a)(3).  Over a series of rulings the Supreme Court has wrestled with the meaning of that term. Historically, courts of equity were limited in the remedies they could provide litigants who came before such courts.  But with a growing recognition that monetary damages were sometimes necessary to allow recovery when a wrong had been committed, the courts in England and then in America permitted courts of equity to award money damages.  Finally, in 1938, the distinction between courts of equity and courts of law was blurred as the divided bench was joined together.

The ERISA law (Employee Retirement Security Act of 1974) was passed by Congress nearly 40 years afer the merger of courts of equity and law, yet in a trilogy of cases, the Supreme Court has consistently ruled that the only equitable relief that courts addressing ERISA disputes could issue was the type of relief that equity courts were able to issue during the days of the divided bench - Mertens v. Hewitt Associates, 508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993); Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 217, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002); Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356, 363, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006). 

A leading scholar on equity and ERISA, John Langbein, was harshly critical of the Supreme Court's analysis in his artlce titled, "What ERISA Means by 'Equitable': The Supreme Court's Trail of Error in Russell, Mertens, and Great-West," 103 Colum. L. Rev. 1317, 1365 (2003).  Yet despite the criticism of Professor Langbein and others, the Supreme Court did it again Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 2016 WL 228344 (U.S.S.C. January 20, 2016).  

Montanile dealt with a familiar situation.  It has become nearly-universal for health benefit plans to contain provisions that allow the plans to seek reimbursement of expenses from parties who have themselves received reimbursement from third-parties through personal injury, products liability and medical malpractice claims.  However, the Supreme Court has steadfastly maintained that the only mechanism for obtaining such reimbursement is through a claim seeking equitable relief.  In both the Great-West and Sereboff rulings, the Court laid down a marker as to how and when such claims may be pursued.  The key is that the claims must be asserted against identifiable funds that can be traced to the benefits paid by the plan in order to permit equitable restitution of those funds.  

In Montanile, the personal injury settlement had been disbursed before the plan asserted its claim for reimbursement in a legal proceeding.  Hence, the Supreme Court ruled that the claim asserted by the fund was legal, not equitable, and could not be maintained unless the settlement proceeds could be traced and shown to have been used to purchase tangible assets such as a house.

Justice Ruth Bader Ginsburg dissented.  She argued that Professor Langbein was correct and that this artificial distinction between legal and equitable relief is nonsense since there is no longer a divided bench, nor was there a divided bench when ERISA was passed.

The result of the Montanile ruling is thus quite peculiar.  A majority of the Supreme Court that is typically viewed as the conservative wing of the Court ruled that Montanile could evade his contractual obligation to repay his health benefit provider the expenses it incurred for treating injuries for which he recovered $500,000.  On the other hand, a Supreme Court justice who is viewed as liberal, Justice Ginsburg, would have required Montanile to repay the National Elevator Plan.  

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