In
Patterson v. United Healthcare Insurance Company, 76 F.4th 487 (6th Cir. 2023), the Sixth Circuit held that the plaintiff insured had stated an equitable claim for disgorgement under ERISA where he sought disgorgement of money he had paid his insurer following a request for reimbursement based on a third-party judgment. Insured Eric Patterson recovered medical expenses from defendant United Healthcare Insurance Company (“United”) after a car accident. After learning that Patterson recovered from the other driver, United claimed that it had a right to be reimbursed based on Patterson’s third-party recovery, and Patterson eventually agreed to pay United $25,000.
Later, Patterson discovered that, although the summary plan description outlined United’s right to reimbursement in the context of a third-party recovery, the plan document—which United initially stated did not exist—did not contain any similar language. As a result, Patterson filed suit in the Northern District of Ohio against a number of defendants, including his employer (who sponsored the ERISA plan), United, and United’s agent, claiming the violation of various ERISA duties. The district court dismissed some claims due to a lack of standing and others because they failed to state a claim. With respect to the $25,000 that Patterson paid to United in settlement of the third-party judgment, the district court first concluded that Patterson could not state a denial-of-benefits claim under ERISA,
see 29 U.S.C. § 1132(a)(1)(B), because United properly paid the medical benefits due under the plan. Further, under ERISA’s equitable remedies,
see 29 U.S.C. § 1132(a)(3), the district court held that Patterson failed to state a claim for disgorgement of the $25,000 because any such claim represented a request for restitution at law, as opposed to in equity.
On appeal, the Sixth Circuit affirmed the district court in all but the dismissal of the equitable claims. With respect to equitable claims, the Sixth Circuit concluded that claims for disgorgement and equitable restitution may be pursued through § 1132(a)(3).
Notably, although a settlement agreement prompted the payment of $25,000 at issue in the lawsuit, because Patterson pursued the claim under equitable ERISA theories (specifically, breach of fiduciary duty and engagement in prohibited transactions), the Sixth Circuit determined that the claims could proceed past the motion to dismiss stage. The
Patterson decision is noteworthy because it clarifies the universe of claims that the Sixth Circuit will consider under ERISA’s provisions for equitable remedies. Where a claimant can prove the requisite elements for disgorgement—which the
Patterson decision notes would likely include a tracing requirement—a disgorgement theory can fall within the equitable remedies contemplated by ERISA.