Funds Must be Identifiable for 502(a)(3) Claim to Proceed

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Funds Must be Identifiable for 502(a)(3) Claim to Proceed

In Martorello v. Sun Life Assurance Co. of Canada, 2009 U.S. Dist. LEXIS 41465, No. C 09-0912 PJH (May1, 2009), the court held the Sun Life failed to state a claim for equitable relief under 502(a)(3) of ERISA(29 U.S.C. 1132(a)(3)) sufficient to compel reimbursement of amounts previously paid. Charles Martorellowas a Senior Vice President of Sales for Hilti, Inc. As a benefit of his employment, Mr. Martorello was a participant under the Hilti Long Term Disability Plan. Unfortunately, on December 22, 2005, Mr. Martorellosuffered a Type A aortic dissection which required multiple surgeries.


At the time of his disability, Mr. Martorello base salary was
$172,636 prior to bonuses received. In 2006, Mr. Martorello returned to work in a different capacity, receiving roughly $100,000 prior to any bonuses received. Mr. Martello invoked the residual disability provisions contained in his insurance policy and sought payment for his loss in income. Sun Life agreed to pay such amounts until June18, 2008. In a letter of the same date, Sun Life informed Mr.Martorello that it would not pay any benefits retroactive to September 1, 2007, as Mr. Martorello’s loss income did not meet the 20% reduction required under the terms of the Plan. In reaching this conclusion, Sun Life determined that while Mr. Martorello’s pre-disability earnings were determined without consideration of his bonus, for purposes determining his loss of income, his bonuses would be used. Mr. Martorello filed suit seeking, amongst other claims, a right to receive benefits. Sun Life filed a counterclaim alleging a right to reimbursement for the amounts it “mistakenly” overpaid.

The district court dismissed Sun Life’s claim for reimbursement under 502(a)(3). In doing so, the court relied on the Supreme Court’s ruling in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002).Great-West mandates that suit brought under that section must be of the type traditionally found inequity-namely a constructive trust or equitable lien. As Sun Life plead an entitlement to specific funds, the court held that its claim was insufficient for purposes of 502(a)(3) and dismissed the claim.

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