Moore, William v. CapitalCare Inc

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 1, 2005 Decided August 29, 2006

No. 04-7121

WILLIAM MOORE,
INDIVIDUALLY AND AS PARENTS AND GUARDIANS
OF ALISTAIRE MOORE;
JUDITH MOORE,
INDIVIDUALLY AND AS PARENTS AND GUARDIANS
OF ALISTAIRE MOORE,
APPELLANTS

v.

CAPITALCARE, INC. ET AL.,
APPELLEES

No. 04-7122

WILLIAM MOORE,
INDIVIDUALLY AND AS PARENTS AND GUARDIANS
OF ALISTAIRE MOORE;
JUDITH MOORE,
INDIVIDUALLY AND AS PARENTS AND GUARDIANS
OF ALISTAIRE MOORE, ET AL.
APPELLEES

v.

CAPITALCARE, INC. ET AL.,
APPELLANTS
 2

Appeals from the United States District Court
for the District of Columbia
(No. 94cv01326)

Martin H. Freeman argued the cause for the
appellants/cross-appellees.

Jacqueline Marie Saue argued the cause for the
appellees/cross-appellants. Charles J. Steele entered an
appearance.

Before: HENDERSON, Circuit Judge, and Edwards* and
WILLIAMS, Senior Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Alistaire
Moore, the daughter of William and Judith Moore (collectively,
Moores), was severely injured in an automobile accident and as
a result required extensive medical care. She is the beneficiary
of a health insurance plan administered by CapitalCare, Inc. and
Blue Cross & Blue Shield of the National Capital Area (BCBS)
(collectively, CC/BCBS). CC/BCBS paid over $200,000 in
accident-related benefits on Alistaire’s behalf. Alistaire also
recovered a $1.3 million settlement for her injuries from a
personal injury lawsuit. In 1994, the Moores instituted this
action under the Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. §§ 1001 et seq., alleging that

*
Senior Circuit Judge Edwards was in regular active service at the
time of oral argument.
 3

CC/BCBS failed to pay benefits due under the plan. CC/BCBS
countersued under ERISA, claiming that, pursuant to a
subrogation clause in the plan, it was entitled to reimbursement
because Alistaire received compensation from a third party for
her injuries. The district court awarded the Moores $72,083.52
in unpaid benefits, awarded CC/BCBS an equitable lien of
$194,274.72 against the settlement funds and denied both
parties’ motions for prejudgment interest and attorney’s fees.
The Moores appeal the grant of the equitable lien against the
settlement proceeds claiming that, because Alistaire was not
“made whole” for her injuries, CC/BCBS are not entitled to
reimbursement. We disagree, concluding that Alistaire’s health
insurance plan expressly provides for reimbursement in the
event of partial recovery from a third party. Both the Moores
and CC/BCBS appeal the denial of prejudgment interest and
attorney’s fees, which we reverse and remand as to all parties.
I.
In 1991, the Moores purchased a group benefit plan (ERISA
plan) from BCBS and its wholly-owned subsidiary, CapitalCare.
The ERISA plan included various contracts that together
provided “dual option coverage.” The ERISA plan’s dual option
coverage allowed an insured to seek medical attention at his
option either from the HMO side through CapitalCare or from
the indemnity side through BCBS. The ERISA plan also
included a subrogation clause, by which an injured beneficiary
agreed to reimburse CC/BCBS for medical expenses the ERISA
plan paid if he recovered compensation from a third party for his
injuries.1

1
The subrogation clause provides as follows:
12. Subrogation . . . .
a. To the extent that benefits for covered services
are provided or paid under this Contract, the
 4

On September 10, 1992, Alistaire Moore sustained life-
threatening injuries when the chauffeured car in which she was
a passenger crashed. Her resulting medical care was lengthy
and expensive. She is a beneficiary under the ERISA plan.
After several years of wrangling with CC/BCBS over Alistaire’s
healthcare expenses, the Moores initiated this lawsuit against
CC/BCBS in 1994.2 The suit, brought under section

Corporation shall be subrogated and succeed to
any rights of recovery of a Participant for
expenses incurred against any persons or
organizations except insurers on policies of
health insurance issued to and in the name of the
Participant.
b. The Participant shall pay the Corporation all
amounts recovered by suit, settlement, or
otherwise from any third party or his insurer to
the extent of the benefits provided by this
Contract.
c. Attorneys’s [sic] fees, court costs, and any
other costs expended in the course of securing
recovery by suit, settlement, or otherwise, shall
be subtracted from the amount to be paid to the
Corporation; the amount to be subtracted shall
be as follows:
(1) If the case is settled out of court--one-quarter
of the amount of benefits paid or to be paid for
covered services; or
(2) If the case is settled as a result of litigation--
one third of the amount of benefits paid or to be
paid for the covered services.
Moore v. CapitalCare, Inc., 70 F. Supp. 2d 9, 38 (D.D.C. 1999).
2
The Moores initially sued only CapitalCare; BCBS was later
joined as a party-defendant pursuant to Federal Rule of Civil
 5

502(a)(1)(B) of ERISA, see 29 U.S.C. § 1132(a)(1)(B),3 sought
unpaid benefits allegedly due under the ERISA plan.
During discovery, CC/BCBS learned that Alistaire had
obtained a $1.3 million settlement from a personal injury suit
that was filed on her behalf against the chauffeur and his
insurers. CC/BCBS believed that the proceeds of the settlement
were held in an irrevocable trust for the benefit of Alistaire M.
Moore (Trust) with Judith Deitz as the named trustee.4
CC/BCBS then filed a counterclaim against the Moores,
asserting their subrogation claim. CC/BCBS also filed a third
party complaint against Alistaire M. Moore, the Trust and Judith
Deitz Moore as trustee, seeking reimbursement for the benefits
they had paid for Alistaire’s care. The Moores never responded
to CC/BCBS’s counterclaim. The third party defendants
admitted that the Trust had been created with and/or contained
funds from the settlement. Pls.’ Answer to Third Party Compl.
¶ 3, reprinted at Supplemental Appendix (SA) 124.
Following a bench trial, the district court concluded that
CC/BCBS had failed to pay the Moores benefits due under
ERISA but that CC/BCBS also had a subrogation right to the
settlement proceeds to the extent they had paid benefits to
Alistaire or on her behalf. See Moore v. CapitalCare, Inc., 70
F. Supp. 2d 9 (D.D.C. 1999). Thereafter, the Moores moved for

Procedure 19.
3
Section 502(a)(1)(B) authorizes a beneficiary to bring a civil
action “to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his rights
to future benefits under the terms of the plan.” 29 U.S.C. §
1132(a)(1)(B).
4
Deitz is apparently the maiden name of Judith Moore. She is
referred to as Judith Deitz Moore in the Third Party Complaint. See
3d Party Compl. ¶ 3.
 6

reconsideration of the subrogation ruling, which motion the
court denied. See Moore v. CapitalCare, Inc., No. 94-1326
(D.D.C. June 1, 2000). The court also ordered an accounting to
determine the amount each party was due. See id. Following
the accounting, the Moores first claimed that the settlement
proceeds had dissipated and therefore could not be subject to an
equitable lien. Pls.’ Reply Mem. in Supp. of Pls.’ Mot. for
Recons. on Issue of Reimbursement/Subrogation ¶ 7, R. Doc.
No. 200. CC/BCBS moved for another accounting. Defs.’ Mot.
for Accounting & Declaratory & Equitable Remedies under
Section 502(a)(3) of ERISA & Mem. of P. & A. in Supp.
Thereof, R. Doc. No. 204. Without addressing the Moores’
dissipation claim, the court directed CC/BCBS to pay the
Moores $72,083.52 due under the ERISA plan and granted
CC/BCBS an equitable lien “in the amount of $194,274.72 upon
the proceeds of any recovery from any third party by reason of
the injury to Alistaire Moore that is the subject of this action in
aid of defendants’ subrogation rights under ERISA.” Moore v.
CapitalCare, Inc., No. 94-1326, slip op. at 1–2 (D.D.C. July 20,
2004). It also denied without prejudice CC/BCBS’s motion for
a second accounting as well as all parties’ petitions for
prejudgment interest and attorney’s fees. Id. The Moores
appeal the reimbursement award,5 arguing that CC/BCBS’s
subrogation claim is legal, not equitable, and therefore barred by
ERISA and, alternatively, that CC/BCBS are not entitled to
reimbursement because Alistaire was not “made whole” by her
settlement. The Moores also appeal the denial of their petitions
for prejudgment interest and attorney’s fees. CC/BCBS cross-
appeal, similarly arguing that they are entitled to prejudgment

5
The third party defendants, Alistaire Moore, the Trust and Judith
Deitz Moore as trustee, do not appeal and thus are the appellees here.
 7

interest and attorney’s fees.6
II.
A.
We turn first to the Moores’ challenge of the district court’s
subrogation ruling. Originally, the Moores had argued that the
award was improper under ERISA section 502(a)(3), see 29
U.S.C. § 1132(a)(3), because CC/BCBS seek legal relief, not the
“other appropriate equitable relief” authorized therein. ERISA
section 502(a)(3) authorizes the ERISA plan fiduciary “(A) to
enjoin any act or practice which violates . . . the terms of the
plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of . . .
the terms of the plan.” Id. (emphasis added).
At the time of oral argument on November 1, 2005, the
circuits were split regarding an ERISA fiduciary’s subrogation
right under section 502(a)(3).7 Shortly after oral argument, the

6
CC/BCBS also appeal the denial of their motion for an
accounting. Appellees’ Br. 35–37. They argue that an accounting is
warranted in light of the Moores’ continued insistence that the
settlement funds were “never segregated” and have “long since been
dissipated,” Reply Mem. in Supp. of Pls.’ Mot. for Recons. on Issue
of Reimbursement/Subrogation ¶¶ 7–8, R. Doc. No. 200—claims the
Moores continue to press on appeal, see Appellants’ Br. 21–22 & n.9;
Appellants’ Reply Br. at 5–6. After oral argument, the Moores
deposited $210,000 into the district court registry and stipulated that,
if they lose on appeal, CC/BCBS may collect from the registry. Pls.’
Opp’ns to Defs.’ Mot. for Recons., Mot. for Prelim. Inj., & Mot. for
Hr’g ¶ 1–2, R. Doc. No. 255.
7
The United States Supreme Court has thrice interpreted the
meaning of “appropriate equitable relief” as used in section 502(a)(3):
first, in Mertens v. Hewitt Associates, 508 U.S. 248 (1993), then, in
Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204
 8

(2002), and, most recently, in Sereboff v. Mid Atlantic Medical
Services, LLC, 126 S. Ct. 1869 (2006). In Mertens, the Court
determined that “ ‘[e]quitable’ relief ” as used in section 502(a)(3)
“must mean something less than all relief” and thereby rejected a
reading of the language that included all relief a court of equity was
authorized to award in a given case. 508 U.S. at 258 n.8 (emphasis in
original). Instead, the Court determined that “ ‘equitable relief’ ”
embraced only “those categories of relief that were typically available
in equity,” id. at 256 (emphasis in original), such as “injunction or
restitution,” id. at 255.
In Knudson, the Court distinguished equitable claims for
restitution—embraced by section 502(a)(3)—and legal claims for
restitution—not embraced by section 502(a)(3). In a claim for
equitable restitution, the plaintiff may obtain “a constructive trust or
an equitable lien, where money or property identified as belonging in
good conscience to the plaintiff [can] clearly be traced to particular
funds or property in the defendant’s possession.” Id. at 213. The
defendant in Knudson had received a settlement from a tort suit and,
as required by California law, placed the settlement funds in a trust
with an independent trustee. The plaintiff insurer then brought suit
under section 502(a)(3). Because the funds were no longer in the
defendant’s possession, “the plaintiff ‘[could not] enforce a
constructive trust of or an equitable lien upon other property of the
[defendant].’ ” Id. at 213–14. The plaintiff thus sought a legal
remedy—the defendant’s obligation to pay a sum of money to which
the plaintiff was owed—and could not maintain suit under section
502(a)(3). See id. at 210.
After Knudson, the circuits split over whether a fiduciary could
enforce a subrogation provision under section 502(a)(3). The Fourth,
Fifth, Seventh, Eighth and Tenth Circuits decided that if a plaintiff’s
request for reimbursement under ERISA section 502(a)(3) did not seek
to impose personal liability but instead sought relief (such as a
constructive trust or equitable lien) against identifiable funds in the
actual or constructive possession of the insured, the relief was
equitable in nature and therefore permitted under section 502(a)(3).
See Mid Atlantic Med. Servs., Inc. v. Sereboff, 407 F.3d 212, 217–21
 9

United States Supreme Court granted certiorari in Mid Atlantic
Medical Services, LLC v. Sereboff, 407 F.3d 212 (4th Cir.). In
that case, the Sereboffs, beneficiaries of a health insurance plan
administered by Mid Atlantic Medical Services obtained a
settlement from a third party for injuries they sustained in an
accident. Mid Atlantic brought suit under section 502(a)(3)
seeking reimbursement pursuant to the “Acts of Third Party”
provision of the Sereboffs’ ERISA plan, under which the
Sereboffs agreed to reimburse Mid Atlantic for medical
expenses the latter paid if they recovered from a third party for
their injuries. The district court found in favor of Mid Atlantic.
The Sereboffs appealed and the Fourth Circuit affirmed,

(4th Cir. 2005) (“We agree with the district court that, in this dispute,
MAMSI’s action seeks equitable restitution, as that term is used in
Knudson, because MAMSI seeks to recover funds that are specifically
identifiable, belong in good conscience to MAMSI, and are within the
possession and control of the Sereboffs.”), aff’d, 126 S. Ct. 1869
(2006); N. Am. Coal Corp. v. Roth, 395 F.3d 916, 917 (8th Cir. 2005)
(plaintiff stated claim under 29 U.S.C. § 1132(a)(3) and district court
properly imposed constructive trust on overpaid benefits, permanently
enjoined defendants from disposing of or transferring funds in their
possession and required tracing of funds no longer in defendants’
possession); Admin. Comm. of Wal-Mart Assocs.’Health & Welfare
Plan v. Willard, 393 F.3d 1119, 1120, 1125 (10th Cir. 2004) (action
seeking injunction, declaration of rights, constructive trust and
equitable restitution was equitable in nature as in Great-West, even
though defendant never had disputed funds in his possession);
Bombardier Aerospace Employee Welfare Benefits Plan, 354 F.3d
348, 358 (5th Cir. 2003); Admin. Comm. of the Wal-Mart Stores, Inc.
Assocs.’ Health & Welfare Plan v. Varco, 338 F.3d 680, 687–88 (7th
Cir. 2003); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 445 (5th
Cir. 2002). The Sixth and Ninth Circuits, by contrast, found that any
attempt by an insurer to enforce a subrogation clause was a request for
reimbursement which constituted legal relief. See Qualchoice, Inc. v.
Rowland, 367 F.3d 638, 650 (6th Cir. 2004); Westaff (USA) Inc. v.
Arce, 298 F.3d 1164 (9th Cir. 2002).
 10

concluding that Mid Atlantic sought equitable restitution.
The High Court affirmed the Fourth Circuit. It first
considered whether the type of relief Mid Atlantic sought was
equitable or legal. See Sereboff v. Mid Atlantic Med. Servs.,
LLC, 126 S. Ct. 1869, 1873–74 (2006). The Court determined
that Mid Atlantic sought an “equitable lien,” properly
characterized as equitable because the funds were specifically
identifiable and remained in the possession and control of the
Sereboffs. Id. at 1874. The Court next analyzed whether the
basis for Mid Atlantic’s claim was equitable, applying “ ‘the
familiar rul[e] of equity that a contract to convey a specific
object even before it is acquired will make the contractor a
trustee as soon as he gets a title to the thing.’ ” Id. at 1875
(quoting Barnes v. Alexander, 232 U.S. 117, 121 (1914))
(alteration in Sereboff). The Court found that the “ ‘Acts of
Third Parties’ provision in the Sereboffs’ plan specifically
identified a particular fund, distinct from the Sereboffs’ general
assets—‘[a]ll recoveries from a third party (whether by lawsuit,
settlement, or otherwise)’—and a particular share of that fund to
which Mid Atlantic was entitled—‘that portion of the total
recovery which is due [Mid Atlantic] for benefits paid.’ ” Id.
(alteration in original) (citation omitted). Mid Atlantic therefore
“could rely on a ‘familiar rul[e] of equity’ to collect for the
medical bills it had paid on the Sereboffs’ behalf.” Id. (citing
Barnes, 232 U.S. at 121) (alteration in original). We then
sua sponte ordered the parties to address the implications of
Sereboff.8 See Moore v. CapitalCare, Inc., No. 04-7121 (D.C.

8
The order reads:
It is ORDERED, on the court’s own motion, that the parties
submit supplemental briefs addressing the following
questions.
1. The District Court awarded CapitalCare and
BCBSNCA “an equitable lien in the amount of $194,274.72
 11

Cir. June 22, 2006). In their supplemental brief submitted in
response, the Moores dropped their section 502(a)(3) challenge
to CC/BCBS’s subrogation claim because “the Sereboff Court
has made the decision that, where the fund is identifiable, the
remedy is equitable.” Appellants’ Supplemental Br. 3.
We therefore turn to the Moores’ only remaining challenge
to the subrogation ruling: that CC/BCBS are not entitled to
reimbursement because Alistaire has not been made whole by
the settlement. The Moores urge us to adopt, as a matter of
federal common law, the make whole doctrine as a default rule

upon the proceeds of any recovery from any third party by
reason of the injury to Alistaire Moore that is the subject of
this action in aid of [CapitalCare and BCBSNCA’s] equitable
subrogation rights under ERISA.” Appellants’ Appx. at 69.
This decision has been appealed by William Moore and Judith
Moore, individually and in their capacities as parents and
guardians of Alistaire Moore, but not by the Irrevocable Trust
between Alistaire M. Moore, Grantor, and Judith Deitz,
Trustee, nor by Judith Deitz in her capacity as trustee of that
trust. What are the implications of the identities of the
appellants for CapitalCare and BCBSNCA’s subrogation
claim under ERISA § 502(a)(3), particularly in light of the
Supreme Court’s decision in Sereboff v. Mid Atlantic Medical
Services, LLC, 126 S. Ct. 1869 (2006)?
2. Apart from the question above, does Sereboff have any
other implications for CapitalCare and BCBCNCA’s
subrogation claim under ERISA § 502(a)(3)?
3.What evidence is there in the record of the disposition
of the proceeds of the settlement of the tort action in the
Circuit Court for Baltimore County?
Moore v. CapitalCare, Inc., No. 04-7121 (D.C. Cir. June 22, 2006)
(emphases in original).
 12

of construction.9 Appellants’ Suppl. Br. at 4. The make whole
doctrine is an equitable insurance law principle and can be
summarized as follows:
[I]n the absence of contrary statutory law or
valid contractual obligations to the contrary, the

9
In Sereboff, the defendants asserted the make whole doctrine as an
equitable defense but the Supreme Court rejected it, finding the
defense inapplicable and noting:
Mid Atlantic’s action to enforce the “Acts of Third Parties”
provision qualifies as an equitable remedy because it is
indistinguishable from an action to enforce an equitable lien
established by agreement, of the sort epitomized by our
decision in Barnes. Mid Atlantic need not characterize its
claim as a freestanding action for equitable subrogation.
Accordingly, the parcel of equitable defenses the Sereboffs
claim accompany any such action are beside the point.
Sereboff, 126 S. Ct. at 1877 (internal citations omitted). The Sereboffs
also argued that the relief Mid Atlantic sought was not “appropriate”
within the meaning of section 502(a)(3)’s because it contravened the
make whole doctrine. The Court declined to address the latter
argument because the Sereboffs had not raised it earlier in the suit.
See id. at 1877 n.2.
In their supplemental brief, the Moores claim that their make
whole doctrine argument is similar to the Sereboffs’ second
argument—that is, CC/BCBS’s claim is not “appropriate” because
Alistaire was not made whole—and thus Sereboff is not dispositive.
Appellants’ Suppl. Br. at 4. CC/BCBS respond that, in the district
court, the Moores argued only the make whole doctrine as an equitable
defense and thus Sereboff forecloses that argument. Appellees’ Suppl.
Br. at 5–6. They also contend that, as in Sereboff, the Moores waived
the assertion that the equitable lien was not appropriate equitable
relief. We need not decide the waiver issue because even assuming
the Moores preserved the issue on appeal CC/BCBS are nonetheless
entitled to reimbursement.
 13

general rule under the doctrine of equitable
subrogation is that where an insured is entitled to
receive recovery for the same loss from more
than one source, e.g., the insurer and the
tortfeasor, it is only after the insured has been
fully compensated for all of the loss that the
insurer acquires a right to subrogation, or is
entitled to enforce its subrogation rights. The
rule applies as well to instances in which the
insured has recovered from the third party and
the insurer attempts to exercise its subrogation
right by way of reimbursement against the
insured’s recovery.
16 Lee R. Russ et. al, Couch on Insurance § 223:134 (3d ed.
2000) (footnotes omitted) (emphasis added). At least three
circuits have adopted the make whole doctrine into federal
common law as a default rule. See, e.g., Copeland Oaks v.
Haupt, 209 F.3d 811, 813 (6th Cir. 2000) (“In Marshall, we
adopted the so-called ‘make whole’ rule of federal common law,
which requires that an insured be made whole before an insurer
can enforce its right to subrogation under ERISA, unless there
is a clear contractual provision to the contrary. . . . Also, the
make-whole rule is merely a default rule. If a plan sets out the
extent of the subrogation right or states that the participant’s
right to be made whole is superseded by the plan’s subrogation
right[,] no silence or ambiguity exists.” (alterations in original)
(citation omitted)); Cagle v. Bruner, 112 F.3d 1510, 1521–22
(11th Cir. 1997) (“We hold today that the make whole doctrine
is a default rule in ERISA cases.”); Barnes v. Indep. Auto.
Dealers Ass’n of Cal. Health & Welfare Benefit Plan, 64 F.3d
1389, 1394–95 (9th Cir. 1995) (“We would not apply the
interpretive ‘make-whole rule’ as a ‘gap-filler’ if the
subrogation clause in the Plan document specifically allowed the
Plan the right of first reimbursement out of any recovery Barnes
was able to obtain even if Barnes were not made whole. The
 14

clause, however, contains no such language.”); see also Hiney
Printing Co. v. Brantner, 243 F.3d 956, 960 (6th Cir. 2001)
(“We therefore find the reimbursement provision ambiguous
because it is silent as to whether the right of reimbursement
applies to partial recovery, and accordingly, the make-whole
rule applies.”). Other circuits have declined to do so. See, e.g.,
Harris v. Harvard Pilgrim Health Care, Inc., 208 F.3d 274,
280–81 (1st Cir. 2000) (declining to adopt make whole doctrine
because it conflicts with policy objectives of ERISA); In re
Paris v. Iron Workers Trust Fund, No. 99-1558, 2000 WL
384036 (4th Cir. 2000) (same); Waller v. Hormel Foods Corp.,
120 F.3d 138, 140 (8th Cir. 1997) (declining to adopt make
whole doctrine because it does not comport with employee
benefit plans); see also Sunbeam-Oster Co. Group Benefits Plan
for Salaried & Non-Bargaining Hourly Employees v.
Whitehurst, 102 F.3d 1368, 1377 (5th Cir. 1996) (“[W]e shall
supply a default rule only when the necessary rule has not been
supplied by the plan, the law, or the parties through their
agreements.”).
It is undisputed that the $1.3 million settlement did not fully
compensate Alistaire for her injuries. Nevertheless we need not
decide whether to adopt the make whole doctrine as a default
rule because the ERISA plan unambiguously establishes a plan
priority to any third party recovery the beneficiary obtains
regardless whether the beneficiary has been made whole by the
recovery.10 Subsection “a” of the subrogation provision

10
The Moores do not argue that the subrogation provision is
ambiguous nor do they challenge the district court ruling that “[t]he
Plan provisions, when read in context, can only mean that the Plan is
entitled to be reimbursed by the beneficiary all amounts that the Plan
has paid to the beneficiary, or on her behalf, to the full extent that the
beneficiary recovers from another source.” Moore, 70 F. Supp. 2d at
39. They argue instead that we should adopt the make whole doctrine
as a matter of substantive federal common law, apparently without
 15

provides the ERISA plan “shall . . . succeed to any rights of
recovery of a Participant” and subsection “b” provides that the
“Participant shall pay the Corporation all amounts recovered by
suit, settlement, or otherwise from any third party or his insurer
to the extent of the benefits provided by this Contract.” See
Moore, 70 F. Supp. 2d at 38 (emphases added). We believe that
this language plainly entitles CC/BCBS to recover from the
Moores all amounts the ERISA plan has paid to Alistaire or on
her behalf to the extent that she has recovered from a third party.
Some circuits have interpreted similar language sufficiently
unambiguous to override the default make whole doctrine. For
example, in Sunbeam-Oster Co., the Fifth Circuit found
unambiguous a provision stating “ ‘[s]ubrogation allows the
Plan to recover duplicate benefit amounts . . . .,’ and added by
way of explanation that, ‘[i]f the plan has already paid benefits,
it has the right to recover payment from you.’ ” 102 F.3d at
1375 (alteration in original). Because the Sunbeam-Oster Co.
provision was unambiguous, the Fifth Circuit declined to
expressly accept or reject the make whole doctrine, noting: “we
have serious doubts whether we would ever approve or adopt the
Make Whole rule as this circuit's default rule for the priority of
recovery in reimbursement or subrogation between an ERISA
plan and its participant or beneficiary under circumstances such
as the ones we consider today.” Id. at 1378. In Fields v.
Farmers Insurance Co., the Tenth Circuit reviewed a provision
which provided, inter alia: “ ‘If you or your dependent sustain
an injury caused by a third party, the Plan will pay for the injury,
subject to[ ] the Plan being subrogated to any recovery or any
right of recovery you or your dependent has against that third

reference to its having been applied as a default rule only. See
Appellants’ Supplemental Br. 5 (“Under these undisputed facts [that
Alistaire was not fully compensated for her injuries], the case law
appears clearly to support the application of the Make-Whole
Doctrine.”).
 16

party, including the right to bring suit in your name.’ ” 18 F.3d
831, 835 (10th Cir. 1994).11 The court noted, “Here, the clear
language of the insurance contract provides that [the insurance
company] shall be subrogated to any recovery that plaintiff
receives from the negligent third party or its insurer” and
accordingly held that the contract contained a “clear and
unambiguous” “modif[ication] [of] general common law
principles [that is, the make whole doctine] that would apply
absent express contractual provisions.” Id. at 836 (emphasis in
original).12
Moreover, even if we found the subrogation language

11
Fields involved an Oklahoma state insurance law claim and was
in federal court under diversity jurisdiction. The Tenth Circuit applied
Oklahoma state law, which adopted the make whole doctrine as a
default rule of construction.
12
There is some conflict among the circuits regarding how clear a
subrogation provision must be to supersede the default make whole
doctrine. At least two courts have found similar provisions ambiguous
because they did not contain an express disavowal of the make whole
doctrine. See, e.g., Copeland Oaks, 209 F.3d at 813 ([I]n order for
plan language to conclusively disavow the default rule, it must be
specific and clear in establishing both a priority to the funds recovered
and a right to any full or partial recovery.” (emphases in original));
Cagle, 112 F.3d 1521–22 (“An ERISA plan overrides the make whole
doctrine only if it includes language ‘specifically allow[ing] the Plan
the right of first reimbursement out of any recovery [the participant]
was able to obtain even if [the participant] were not made whole.’ ”
(citation omitted)). We do not agree that the “absence of separate,
specifically articulated rules for situations of partial recovery and total
recovery with variations depending on the nature of the source of
recovery” is always ambiguous. See Sunbeam-Oster Co., 102 F.3d at
1376. Rather, as with the provisions here, the silence may “signif[y]
nothing more than that, regardless of source, the rule is the same for
total and partial recoveries.” Id.
 17

ambiguous, that would not end the matter. In Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989), the Supreme
Court held that “a denial of benefits challenged under [29
U.S.C.] § 1132(a)(1)(B) is to be reviewed under a de novo
standard unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility for
benefits or to construe the terms of the plan.” If the
administrator/fiduciary has discretion, the Firestone Court has
described the standard of review as “abuse of discretion” and
“arbitrary and capricious.” See id. at 111–15. We have
described the standard as one of “ ‘reasonableness,’ ” Wagener
v. SBC Pension Benefit Plan-Non Bargained Program, 407 F.3d
395, 402 (D.C. Cir. 2005) (quoting Block v. Pitney Bowes, Inc.,
952 F.2d 1450, 1454 (D.C. Cir. 1992)). Other courts apply a
similar standard of review in an ERISA suit brought by a
fiduciary to enforce a subrogation provision. See Sunbeam-
Oster Co., 102 F.3d at 1373 (“Federal courts have consistently
applied Firestone’s deference principles to actions concerning
benefit determinations brought not only by participants but also
by ERISA plans and, in particular, claims involving ERISA
plans’ assertions of purported reimbursement and subrogation
rights.”); see also Harris, 208 F.3d at 277 n.3; Cagle, 112 F.3d
at 1516–17; Barnes, 64 F.3d at 1392; Cutting v. Jerome Foods,
Inc., 993 F.2d 1293, 1295–96 (7th Cir.), cert. denied, 510 U.S.
916 (1993); Baxter ex. rel. Baxter v. Lynn, 886 F.2d 182, 187
(8th Cir. 1989). Here, the ERISA plan vests the administrator
with the authority to make eligibility determinations and to
construe the ERISA plan’s terms. Compare Moore, 70 F. Supp.
2d at 20 (Plan administrator, CapitalCare, “ ‘has full
discretionary authority to operate and administer the terms of
[the] health benefits program . . . determination(s) as to . . .
eligibility for coverage and/or benefits shall be final and
binding, subject to your right of appeal . . . .’ ” (quoting Pls.’ Ex.
2, p. 55) (alterations in original)), with Block, 952 F.2d at 1453
n.4 (“Thus, § 7.7(a) (power to ‘interpret and construe’ the plan)
 18

or § 7.4 (power to make ‘final and binding’ decisions) of the
Pitney Bowes Plan, standing alone, would probably meet the
Firestone test for deferential review.” (emphasis in original)).
Accordingly, we will uphold CapitalCare’s—the
administrator’s—interpretation of the ERISA plan’s subrogation
clause unless it is an abuse of discretion. In Cutting, the Seventh
Circuit interpreted an analogous provision which “state[d] rather
flatly that the plan shall be subrogated to ‘all claims’ by the
covered individual against a third party to the extent of ‘any and
all payments’ made (or to be made) by the plan.” 993 F.2d at
1299. Although the court found the language ambiguous, it
applied the same deferential standard of review it uses if the
plan vests the administrator with discretion; it could not “say
that the company was unreasonable in interpreting this plan as
disclaiming the make-whole principle.” Id. (emphasis in
original). So too here. CC/BCBS’s interpretation of the
subrogation provision to apply to Alistaire’s partial recovery is
reasonable and we therefore affirm the district court’s award to
them of an equitable lien of $194,274.72 against the settlement
funds.13
B.
The Moores claim that the district court abused its
discretion in denying them prejudgment interest on the award of
$92,083.52 in unpaid benefits against CC/BCBS. ERISA does

13
We need not address further our sua sponte questions to the
parties, see supra note 8, especially Question No. 3, in view of the fact
that the Moores have now deposited $210,000 in the district court
registry and have stipulated that CC/BCBS may collect from that fund
if they prevail on appeal. See supra note 6. “[T]he implications of the
identities of the appellants,” as noted in Question No. 1, see supra note
8, are no longer relevant because the Moores have dropped their
section 502(a)(3) challenge to the subrogation ruling. See Appellants’
Supplemental Br. 3.
 19

not expressly provide for prejudgment interest. In enacting
ERISA, however, the Congress intended the courts to develop
a body of federal law “ ‘to deal with issues involving rights and
obligations under private welfare and pension plans.’ ” Pilot
Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987) (quoting 120
Cong. Rec. 29,942 (1974) (statement of Sen. Javits)). Other
circuits have held that a beneficiary may seek prejudgment
interest in a suit to recover ERISA benefits due. See Fotta v.
Trustees of United Mine Workers of Am., Health & Ret. Fund of
1974, 165 F.3d 209, 212 (3d Cir. 1998) (“It is of considerable
moment that we have previously recognized that a beneficiary
may seek prejudgment interest in a suit to recover [ERISA]
benefits due, notwithstanding the lack of an express directive
from Congress to that effect.”); Rivera v. Benefit Trust Life Ins.
Co., 921 F.2d 692, 696 (7th Cir. 1991) (“The award of
prejudgment interest for a federal law violation is governed by
federal common law. . . . The growing recognition of the time
value of money has led this court to rule that prejudgment
interest should be presumptively available to victims of federal
law violations.” (quotation marks omitted)). We believe that a
beneficiary’s “recover[y] [of] benefits due to him under the
terms of his plan,” 29 U.S.C. § 1132(a)(1)(B), includes not only
the benefits withheld but also their time value. See, e.g.,
Skretvedt v. E.I. DuPont De Nemours, 372 F.3d 193, 207–08 (3d
Cir. 2004) (“We now make explicit that . . . an ERISA plaintiff
who prevails under § 502(a)(1)(B) in seeking an award of
benefits may request prejudgment interest under that section as
part of his or her benefits award.”); Ford v. Uniroyal Pension
Plan, 154 F.3d 613, 618 (6th Cir.1998) (“Awards of
prejudgment interest pursuant to § 1132(a)(1)(B), however, are
not punitive, but simply compensate a beneficiary for the lost
interest value of money wrongly withheld from him or her.”).
We agree with the circuits that have held that prejudgment
interest on unpaid ERISA benefits is presumptively appropriate.
See, e.g., Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 820
 20

(7th Cir. 2002) (presumption of prejudgment interest in ERISA
case); Holmes v. Pension Plan of Bethlehem Steel Corp., 213
F.3d 124, 131 (3d Cir. 2000) (same); U.S. Indus., Inc. v. Touche
Ross & Co., 854 F.2d 1223, 1256–58 (10th Cir. 1988) (same);
Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 752
(8th Cir. 1986) (same). The presumption in favor of
prejudgment interest has three recognized bases. First, to permit
the fiduciary to retain the interest earned on wrongfully withheld
benefits would amount to unjust enrichment—a fiduciary would
benefit from failing to pay ERISA benefits. See Fotta, 165 F.3d
at 212 (“To allow the Fund to retain the interest it earned on
funds wrongfully withheld would be to approve of unjust
enrichment.” (internal quotation marks omitted)). Second,
prejudgment interest ensures that a beneficiary is fully
compensated, including for the loss of the use of money that is
his. See Holmes, 213 F.3d at 132; Short v. Cent. States, Se. &
Sw. Areas Pension Fund, 729 F.2d 567, 576 (8th Cir. 1984).
Finally, prejudgment interest promotes settlement and deters any
attempt to benefit unfairly from inevitable litigation delay. See
Gen. Facilities, Inc. v. Nat’l Marine Serv., Inc., 664 F.2d 672,
674 (8th Cir. 1981). Prejudgment interest, therefore, should be
denied only if exceptional circumstances—a claimant’s bad
faith, dilatoriness or frivolous claim—make the award unfair.
See Stroh Container, 783 F.2d at 752 (“Thus, prejudgment
interest should ordinarily be granted unless exceptional or
unusual circumstances exist making the award of interest
inequitable. Such circumstances may include bad faith or
dilatoriness by the claimant, or a claimant's assertion of
frivolous claims.” (internal citations omitted)).
We believe the district court abused its discretion in
denying the Moores prejudgment interest on the $72,083.52 in
unpaid benefits it awarded them. Although CC/BCBS claim that
the Moores exhibited bad faith by failing to supplement their
responses to interrogatories, discovery matters are more
appropriately dealt with under Federal Rule of Civil Procedure
 21

37 and, in any event, do not make an award of prejudgment
interest inequitable.
CC/BCBS also claim that the district court erred in denying
them prejudgment interest on the value of their equitable lien.
Because a fiduciary may seek only “appropriate equitable
relief,” 29 U.S.C. § 1132(a)(3), CC/BCBS’s ability to obtain
prejudgment interest turns on whether their claim is fairly
characterized as seeking equitable relief. We believe that it is.
The Supreme Court in Knudson explicitly recognized that an
accounting for profits—whereby a party that obtains a
constructive trust may also “recover profits produced by the
defendant’s use of that property, even if he cannot identify a
particular res containing the profits sought to be recovered”—is
“a form of equitable restitution.” Knudson, 534 U.S. at 214 n.2.
An accounting for profits “is a restitutionary remedy based upon
avoiding unjust enrichment” and its purpose is to “disgorge
gains received from improper use of the plaintiff’s property or
entitlements.” 1 Dan B. Dobbs, Law of Remedies § 4.3(5) (2d
ed.1993). CC/BCBS, having obtained an equitable lien on the
settlement funds, are also entitled to prejudgment interest
thereon.
C.
We finally consider each side’s claim that it is entitled to
attorney’s fees. ERISA provides that “[i]n any action under this
subchapter . . . by a participant, beneficiary, or fiduciary, the
court in its discretion may allow a reasonable attorney’s fee and
costs of action to either party.” 29 U.S.C. § 1132(g)(1). In Eddy
v. Colonial Life Insurance Co. of America, we laid out five
factors the district court is to weigh in determining whether or
not attorney’s fees are appropriate in an ERISA case: “(1) the
losing party’s culpability or bad faith; (2) the losing party’s
ability to satisfy a fee award; (3) the deterrent effect of such an
award; (4) the value of the victory to plan participants and
beneficiaries, and the significance of the legal issue involved;
 22

and (5) the relative merits of the parties’ positions.” 59 F.3d
201, 206 (D.C. Cir. 1995). We review the district court’s
determination for abuse of discretion. See id. at 203. The
district court denied each party an award of attorney’s fees
without explanation, much less discussion of the Eddy factors.
As we have recently noted, “[m]eaningful review requires us to
evaluate the district court’s rationale for its holding.” Davy v.
Central Intelligence Agency, No. 05-5151, 2006 WL 1889141,
*5 (D.C. Cir. July 11, 2006) (citing Copeland v. Marshall, 641
F.2d 880, 901 n.39 (D.C. Cir. 1980) (en banc) (“It is axiomatic
that we cannot identify an unreasonable award [of attorney’s
fees] unless it is accompanied by a statement of reasons.”)). “If
the district court fails to articulate the basis for its attorney fee
decision,” as it has here, “we believe remand for adequate
explanation of its reasoning is in order.” Id. (citing Copeland,
641 F.2d at 901 n.39 (“[A] remand may be necessary where the
District Court awards a fee without adequately articulating
underlying reasons.”)).
For the foregoing reasons, we affirm the district court’s
grant to CC/BCBS of “an equitable lien in the amount of
$194,274.72 upon the proceeds of any recovery from any third
party by reason of the injury to Alistaire Moore,” see Moore,
No. 94-1326, slip op. at 1–2 (D.D.C. July 20, 2004), reverse the
denial of prejudgment interest and attorney’s fees to both sides
and remand for further proceedings consistent with this opinion.

So ordered.