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Montanile v. Bd. Tr. Nat'l Elevator Indus Health, AARP Asks... Skip to content

AARP Asks the Supreme Court to Protect Integrity of Employee Recoveries

AARP filed a friend-of-the-court brief in Montanile v. Board of Trustees of National Elevator Industrial Health, supporting an employee challenging  a health plan’s attempts to claim reimbursement for benefits that it paid to the employee — who was injured and then won a settlement against the third party that injured him — without tracing the settlement monies.


Robert Montanile was a participant in the National Elevator Industry Health Benefit Plan, which paid his medical bills related to injuries that he suffered in a car accident in 2008. Eventually, Montanile obtained a settlement from the other driver involved in the accident and paid his attorney more than half of the settlement to cover fees and costs. Pursuant to a subrogation clause in the plan, the plan trustees demanded repayment of the total amount that the plan had paid in medical bills related to the accident, but refused to pay any portion of the attorneys’ fees. Since the parties could not resolve their differences concerning the attorneys’ fees, Montanile’s attorney suggested the health plan sue to resolve the matter. After the plan took no legal action for six months, the attorney released the money to the client who used it for living expenses.

After six more months had passed, the trustees finally sued under § 502(a)(3) of the federal Employee Retirement Income Security Act (ERISA). ERISA is the main federal law overseeing employer-provided benefits and is based on  venerable, centuries-old equitable laws governing trusts — money held by one party for the benefit of another.
The circuit courts have split over whether §502(a)(3) — which requires that any suits by plan fiduciaries seek only “equitable relief” — allows a fiduciary to sue a participant who is no longer in possession of the disputed benefit amounts. This is sometimes referred to as ERISA's “tracing requirement.” Courts imposing such a requirement generally rule against fiduciaries in cases where participants are no longer in possession of the sought after funds.

But in this case, both the district and appellate courts denied Montanile's claim that the settlement funds were not traceable since they had already been dissipated. The Eleventh Circuit joined the majority circuit courts, finding that strict tracing was not required to obtain a remedy for equitable liens by agreement, such as the subrogation clause at issue. Montanile appealed to the U.S. Supreme Court.

AARP Foundation Litigation attorneys filed a friend-of-the-court brief on behalf of AARP, focusing on a different, but related, issue — pension plan overpayments. AARP’s brief argued that the Court should recognize equitable defenses such as unreasonable delay in filing suit and change of circumstances to claims of overpayments.

What’s at Stake

This case is important to people over the age of 50 because the plan’s position will permit it to obtain rights in any overpayment at the time the benefit payments are made. Under the plan’s argument, not only would the plan not have to trace any specific assets, but also no equitable defenses would be available. Such an outcome would leave participants with fewer protections than before ERISA was enacted.

Case Status

Montanile v. Board of Trustees of National Elevator Industrial Health is before the U.S. Supreme Court.