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How Specific Must It Be To Meet ERISA’s ‘Specifically Identifiable’ Requirement?

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Since the United States Supreme Court issued Sereboff v. Mid-Atlantic Medical Services, 547 U.S. 356 (2006), federal courts interpreting ERISA claims have in a number of cases wrestled with the concept of equitable relief as against a specifically identifiable fund. Specifically, parties have disputed whether a claim involves equitable restitution under 29 U.S.C. § 1132(a)(3), in the form of a constructive trust or an equitable lien, and not legal restitution. The Supreme Court has said that an equitable lien or constructive trust may be imposed when a claim seeks recovery from a specifically identifiable fund, distinct from a party’s general assets. 

In a US Airways, Inc. v. McCutchen, 2010 WL 3240951 (W.D. Pa. Aug. 30, 2010), the U.S. District Court for the Western District of Pennsylvania applied these rules and concluded that ERISA permitted U.S. Airways to recover from two specifically identifiable funds. According to the opinion, McCutchen was a U.S. Airways employee and beneficiary under the company’s health benefit plan at the time he was injured in a car accident. The plan paid about $66,000 in accident-related medical expenses on his behalf. McCutchen brought a personal injury claim, and settled for $10,000 from the driver whose vehicle hit McCutchen; he also recovered $100,000 in underinsured motorist (UIM) benefits under McCutchen’s car insurance policy. McCutchen’s attorney deducted a fee and further retained a portion of the recoveries in a trust account for any liens that were found to be valid. The plan sought to recover from McCutchen and from the attorney.

Applying the recovery claims against these facts, the federal court said that the plan may recover, and in full, as against the identifiable funds:

U.S. Airways seeks the restoration of particular funds, the lawsuit settlement and UIM benefits, as distinct from McCutchen’s general assets, traceable to the Plan and subject to an equitable lien for the benefit of the Plan. Therefore, even if the monies paid to McCutchen are not specifically traceable to McCutchen’s current assets because of commingling or dissipation, such monies remain subject to the Plan’s equitable lien. . . . U.S. Airways, therefore, has a claim for equitable relief over the ‘specifically identifiable’ fund consisting of the $100,000.00 from the UIM Claim and the $10,000.00 from the personal injury settlement.

US Airways, Inc. v. McCutchen, 2010 WL 3240951.

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