IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
April 22, 2009
No. 08-50860 Charles R. Fulbruge III
Summary Calendar Clerk
AT&T, INC., as Fiduciary of the SBC Medical and Group Life Insurance Plan-
Customcare
Plaintiff-Appellee
v.
JAKE FLORES; MIDANI, HINKLE & COLE
Defendants-Appellants
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:07-CV-343
Before DAVIS, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
Defendant-Appellants Jake Flores and his attorneys Midani, Hinkle &
Cole (“Appellants”) appeal the district court’s grant of summary judgment to
Plaintiff-Appellee AT&T, Inc. (“AT&T”), as fiduciary of the SBC Medical and
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-50860
Group Life Insurance Plan (“the Plan”). We AFFIRM the district court’s grant
of summary judgment, and DENY the Plan’s motion to strike new evidence
offered by Flores on appeal.
Flores, a participant in the Plan, was injured in an automobile accident
and received $315,512.62 worth of medical coverage from the Plan. Flores later
settled with a third-party for $850,000 for claims arising out of the accident. The
money is held in the trust account of his attorneys, Midani, Hinkle and Cole.
Pursuant to a provision of the Plan that required reimbursement for medical
benefits paid,1 AT&T sought reimbursement from Flores from funds from the
settlement. Flores refused and AT&T filed suit in district court, pursuant to 29
U.S.C. § 1132(a)(3), which authorizes civil suits to obtain “appropriate equitable
relief” to enforce an ERISA plan’s terms. AT&T sought specific relief in the
form of: (1) the imposition of a constructive trust and equitable lien; (2) a
declaration that the Plan was the true owner of the settlement funds up to the
amount it paid; and (3) an order directing Flores and his attorneys to turn over
the disputed funds.
AT&T filed for summary judgment, and no response was filed by
Appellants. The district court granted summary judgment to AT&T. Appellants
filed for a Motion for a New Trial, in which they raised new arguments; the
district court treated the motion as a Motion for Reconsideration and denied it.
This Court reviews the grant of summary judgment in an ERISA case de
novo, applying the same standards used by the district court. Wade v.
1
The Summary Plan Description provides:
SUBROGATION /RIGHT OF REIMBURSEMEN T (THE PLAN’S RIGHT TO RECOVER
PAYMENT FROM A THIRD PARTY IF YOU ARE INJURED OR DISABLED):
If you are injured or disabled as a result of negligent or wrongful act or omission of a third party,
the Plan will pay benefits, but reserves the right to recover those payments from the person who
injured you or his or her insurance company. . . The plan shall have a lien on any amounts
recovered from any other source to the extent permitted by applicable law. The amount of
money to be subrogated shall not be reduced by any legal fees or costs.
2
No. 08-50860
Hewlett-Packard Development Co. LP Short Term Disability Plan, 493 F.3d 533,
537 (5th Cir. 2007). Summary judgment is proper when pleadings, depositions,
discovery answers, and affidavits reveal no genuine issue of material fact and
show the movant is entitled to judgment as a matter of law. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247–48 (1986).
The issues addressed by the district court were whether AT&T’s request
for (1) a constructive trust and (2) an equitable lien are justified in law; and (3)
whether AT&T’s basis for its claim is equitable.
1. Constructive trust
In Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot
and Wansbrough, 354 F.3d 348 (5th Cir. 2003), an ERISA plan brought suit
against a plan participant and law firm to obtain a constructive trust over
settlement funds, for the purposes of reimbursement of medical benefits. In that
case, we established that a constructive trust was “appropriate equitable relief”
properly sought under 29 U.S.C. § 1132(a)(3).2 The Bombardier court set out a
three-part test to determine whether a claim qualified as relief pursuant to §
1132(a)(3), asking: does the Plan seek to recover funds (1) that are specifically
identifiable, (2) that belong in good conscience to the Plan, and (3) that are
within the possession and control of the defendant beneficiary? Id. at 356. Here,
as in Bombardier, the funds are specifically identifiable, due to the settlement;
belong in good conscience to the Plan (due to the unambiguous subrogation
provision); and are within the possession and control of the defendant
beneficiary, as they are being held in trust by Flores’s attorneys. Thus, the
2
§1132(a)(3) holds that a civil action m ay be brought: “[B]y 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 violations or (ii) to
enforce any provisions of this subchapter or the terms of the plan.”
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No. 08-50860
constructive trust remedy was an appropriate one for the district court to grant
to Allstate.
2. Equitable lien
The Supreme Court considered the use of equitable liens for the purpose
of the recovery of benefits paid out by an ERISA plan in Sereboff v. Mid-Atlantic
Medical Services, 547 U.S. 356 (2006). Under circumstances very similar to the
instant case, the Supreme Court held that an equitable lien placed on
“specifically identifiable” funds that were “in the possession of [the plaintiffs]”
was an “appropriate equitable remedy” under § 1132(a)(3). Sereboff, 547 U.S. at
362. As previously discussed, the funds in this case are specifically identifiable
and in possession of the Plaintiff-Appellants; the district court thus did not err
in granting an equitable lien to the Plan.
3. Equity of enforcement and the “made-whole” doctrine
Though constructive trusts and equitable liens are appropriate remedies
§ 1132(a)(3), AT&T must still establish that the basis for its claim is equitable.
Sereboff, 547 U.S. at 363. Flores argues that it would be inequitable to enforce
the contract in this case, which is “harsh, unconscionable, [and] unfair.” Flores
additionally invokes the “made whole” doctrine, which holds that
subrogation/reimbursement provisions in insurance contracts should not be
enforced until the insured is first made whole, i.e. recovered all compensatory
damages to which he is entitled.
The subrogation provision of the plan at issue clearly provides that the
Plan is entitled to reimbursement out of payments made by an injuring party,
and similar provisions have been enforced by the this Court. In Sunbeam-Oster
Company, Inc. v. Whitehurst, 102 F.3d 1368, 1376 (5th Cir. 1996), which was
relied on by the district court, we rejected the “made whole” doctrine where it
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No. 08-50860
was not expressly included in the language of the plan, and held that a clear and
unambiguous subrogation/reimbursement provision entitled the Plan to the full
amount of medical benefits paid on the insured’s behalf. We follow Sunbeam-
Oster and find that the subrogation/reimbursement provision in this case is
equitable and not subject to the “made whole” doctrine.
4. Motion to strike new evidence
AT&T argues that Flores introduces evidence into the record on appeal
that was not presented before the district court, and urges that the Court strike
the proffered evidence. Much of what AT&T argues constitutes “new evidence”
are actually just arguments (including conclusory assertions) made by Flores in
his brief; Flores does not offer any actual evidence into the record on appeal.
Thus, we DENY the motion to strike new evidence.
For the foregoing reasons, we DENY the motion to strike new evidence,
and AFFIRM the district court’s grant of summary judgment.
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