United States District Court, Northern District of Illinois, Eastern Division
December 13, 2002
PRIMAX RECOVERIES INCORPORATED, PLAINTIFF,
NEAL GOSS, A MINOR, BY AND THROUGH ROBERT M. GOSS, HIS FATHER AND NEXT FRIEND, DEFENDANT.
The opinion of the court was delivered by: James B. Moran, Senior Judge, U.S. District Court
MEMORANDUM OPINION AND ORDER
Plaintiff Primax Recoveries Incorporated (Primax) brings this suit
seeking injunctive and declaratory relief to reinstate the lien on
proceeds of a lawsuit between the defendant, Neal Goss, and third party
tortfeasors. Defendant moves to dismiss the suit pursuant to Federal Rule
of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. For
the following reasons, defendant's motion is granted and plaintiff's
claim is dismissed,
The facts are taken from plaintiff's complaint. Robert Goss was an
employee of AON Corporation and a participant in AON's heath care
benefits program. As his son, defendant Neal Goss was a beneficiary under
the terms of the plan. The plan contains a reimbursement provision that
COORDINATION WITH THIRD PARTY CLAIMS
No payment will be made for expenses incurred for
injuries received in or as a result of an accident to
the extent a third party is responsible for paying
these expenses. These Injuries include expenses
arising out of, or in the course of, any employment
for wage or profit, where it is determined that the
Individual is not covered by Workers' Compensation or
similar law. If you or a covered dependent incurs
expenses for injuries received in an accident, for
which CIGNA's Claims Administrator determines a third
party may be liable, CIGNA's plan will provide its
normal benefits. However, you first must agree, in
writing, to refund at the time the amount of the third
party's responsibility is determined and satisfied,
the lessor of:
? the amount actually paid by the plan for those
? an amount equal to the payment actually
received from the third party for those expenses.
In the event you or a covered dependent subsequently
files a Workers' Compensation claim, CIGNA's Claims
Administrator shall have a lien on any amount or
settlement to the extent you have already been
reimbursed under the medical option.
On November 3, 1999, Neal was seriously injured in a sports accident.
The health care plan advanced benefits on behalf of Neal in the amount of
$491,641.78. Neal and his family filed personal injury lawsuits against
third party tortfeasors allegedly responsible for Neal's injuries.
Primax, on behalf of the plan, asserted a lien against any potential
recovery to the extent of the benefits advanced, pursuant to the above
reimbursement provision. Defendant filed a petition in the Circuit Court
of Cook County to extinguish the lien, which was granted on September 2,
2002, after plaintiff failed to appear, respond or otherwise contest the
In deciding a Rule 12(b)(1) motion to dismiss we treat all well-pleaded
factual allegations as true, drawing all reasonable inferences in favor
of the plaintiff.*fn1 Iddir v. I.N.S., 301 F.3d 492, 496 (7th Cir.
2002). To determine if we have jurisdiction, we look beyond the face of
the complaint to any evidence submitted regarding jurisdiction. Id.
Plaintiff now seeks to reinstate the lien and defendant moves to
dismiss the claim, arguing that this court lacks subject matter
jurisdiction. The health care benefits plan is governed by the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.
Section 502(a)(3) of ERISA authorizes civil action
by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates any
provision of this subchapter or the terms of the
plan, or (B) to obtain other appropriate equitable
relief (i) to redress such violation or (ii) to
enforce any provision of this subchapter or the terms
of the plan. 29 U.S.C. § 1132(a)(3).
By its terms, this statute authorites suits for equitable relief only,
not legal relief. Great-West Life & Annuity Ins. Co. v. Knudson,
534 U.S. 204
, 221 (2002). To determine whether we have jurisdiction over
plaintiff's suit, we must determine whether the claim is for equitable
relief and, if not, dismiss the action.
Plaintiff seeks the following relief: a declaratory judgment declaring
that plaintiff is entitled to recover the funds (if any) from the
defendant; an injunction barring the defendant from disposing of the
funds in any way to prevent plaintiff from collecting; restitutionary
relief In the amount that plaintiff paid to defendant; a constructive
trust imposed upon any proceeds of the third party lawsuit; and an
injunction requiring defendant to tender restitutionary relief to
plaintiff upon receipt. While on its face plaintiff appears to be seeking
equitable relief, we must look at the substance of plaintiff's complaint
and determine whether it seeks "those categories of relief that were
typically available in equity." Knudson, 534 U.S. at 210 (quoting Mertens
v. Hewitt Associates, 508 U.S. 248, 256 (1993)).
In Knudson, the Supreme Court determined that ERISA does not authorize
a suit by a plan to impose a lien on funds received by a beneficiary in a
lawsuit against third parties. 534 U.S. at 221. Writing for the
majority, Justice Scalia stated that the petitioners (the plan) did not
seek "particular funds that, in good conscience, belong to petitioners,
but that petitioners are contractually entitled to some funds for
benefits that they conferred." Id. at 214. Therefore, "[t]he kind of
restitution that petitioners seek, therefore, is not equitable —
the imposition of a constructive trust or equitable lien on particular
property — but legal — the imposition of personal liability
for the benefits that they conferred upon respondents." Id. Because the
funds in question had already been "dissipated" so that they were not
easily identifiable, it was impossible for plaintiff to identify a res
that could be the subject of the trust. Id. at 213-14.
The only factual difference between this case and Knudson is that here
plaintiffs seek to impose a trust on funds which have not yet been
received (and may never be) by defendant. Plaintiff argues that because
they seek prospective relief rather than retrospective restitution, their
claim is different. The circuit courts have not yet addressed whether
this matters in light of Knudson, and the district courts are split on
the issue. Two district courts, both in cases Involving the plaintiff in
this matter, reached differing conclusions.
In Primax Recoveries Inc. v. Duffy, 204 F. Supp.2d 1111, 1113
(N.D.Ill. 2002), Judge Bucklo determined that Knudson does not "bar a
lien on specific funds not yet received." There, Judge Bucklo indicated
that Knudson was raised only in a supplemental brief, to which plaintiff
did not reply. In Primax Recoveries Inc. v. Carey, 2002 WL 1968339, *3,
n. 5 (S.D.N.Y. 2002), Judge Lynch held, following a lengthy discussion of
Knudson that a suit of this type was barred by Knudson, stating that
"[s]urely the same conclusion follows a fortiori when the `settlement
proceeds' are in nobody's possession, because they are the entirely
hypothetical fruit of a potential future settlement that does not yet
exist and may never come into being at all."
It seems clear that the fundamental goal of plaintiff's suit is to
impose a constructive trust in order to get the money it believes is due
under the terms of the benefits plan. Judge Cardozo stated that a
"constructive trust is the formula through which the conscience of equity
finds expression." Beatty v. Guggenheim Exploration Co., 225 N.Y. 380,
386 (N.Y. 1919). Generally, parties seek to impose a constructive trust
to prevent unjust enrichment. See 1 G. Palmer, Law of Restitution §
1.4, p. 16-17 (1978). Where a unique chattel is wrongfully held by one
party, another party has an action in equity to gain title to the
property. Restatement of Restitution § 160, comment e, at 644 (1937).
However, "where money is paid by one person to another as a result of a
mistake of such character that the payor is entitled to restitution, be
is ordinarily not entitled to maintain a suit in equity for the specific
recovery of the money, even though the payee still holds the money so
that specific restitution would be possible, since a quasi-contractual
action at law would give an adequate remedy." Restatement of Restitution
§ 160, comment e, at 645. Courts of equity did not traditionally
allow suits for money damages, even if the plaintiff attempted to
characterize the suit as a trust or lien over specific money damages. The
Court requires that we recognize this law/equity distinction in
determining whether ERISA allows a particular lawsuit. Knudson, 534 U.S.
This is exactly the situation here. Plaintiff feels that, should
defendant be awarded damages or a settlement arising from a third party
lawsuit, defendant will be unjustly enriched. As a result, it seeks to
recover the money that it advanced under the terms of the plan. It does
not matter to plaintiff which money it recovers, so long as it gets the
money. As such, the substance of its claim is a breach of contract action
for damages — a traditional legal claim.
We read the Court's opinion in Knudson to stand for the proposition
that, regardless of their motivation, Congress drew a clear line between
suits-at-law and suits-at-equity, only the latter of which are authorized
by ERISA. "`Equitable' relief must mean something less than all relief."
Knudson, 534 U.S. at 209 (quoting Mertens, 508 U.S. at 258, n. 8).
Allowing suits of this nature would allow parties to circumvent the
statute based simply on when they file the lawsuit, rather than the
relief they desire. We believe that suits like this are basically suits
for money damages "since they seek no more than compensation for loss
resulting from the defendant's breach of legal duty." Id. at 210
(quoting Bowen v. Massachusetts, 487 U.S. 879, 918-19 (1988) (Scalia,
J., dissenting)). As suits for money damages seek "the classic form of
legal relief," they are not authorized by section 502(a)(3). Id.
(quoting Mertens, 508 U.S. at 255).
For the foregoing reasons, defendant's motion to dismiss is granted.