ERISA: Subrogation,Sereboff,and the “Make Whole” Doctrine: The D.C. Circuit Defines Ambiguity in ERISA Subrogation Clauses— Moore v. Capital Care,Inc.

2006 U.S. App. LEXIS 22075 (Aug. 29, 2006) [hereinafter Moore].

Moore, 2006 U.S. App. LEXIS 22075 at *17 – *19.

Id., at *20 – *23.

Id., at *2–*3.

Id., at *4.

Id., at *1; See 29 U.S.C. § 1132(a)(1)(B) (2005) (authorizing an ERISA beneficiary 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.”); Moore, U.S. App. LEXIS 22075 at *4.

Id. at *3, n. 1.

Id. at *5.

29 U.S.C. § 1132(a)(3) (2005).

Moore , 2006 U.S. App. LEXIS 22075 at *5.

Id., at *6–*7 (quoting Moore v. Capital-Care, Inc., No. 94-1326, slip op. at 1-2 (D.D.C. July 20, 2004)).

Id., at *7.

Id.

Sereboff v. Mid Atlantic Medical Services, LLC, 126 S. Ct. 1869 (May 15, 2006) [hereinafter, Sereboff].

Id., at 1872–73.

Id., at 1873.

Id., at 1875 (quoting Barnes v. Alexander, 232 U.S. 117, 121 (1914).

Id., at 1874. The Sereboffs had kept the contested portion of their settlement in an investment account—rendering it both “specifically identifiable” and in their pos-session—and the respondent insurer was able to base its claim on the familiar rule 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, 232 U.S. at 121).

Moore , 2006 U.S. App. LEXIS 22075 at *12 (quoting Appellants' Supplemental Br. 3).

Id., at *12.

Id., at *13 (quoting 16 Lee Russ R. , Couch on Insurance § 223:134 [3d ed. 2000]).

Id.

Id., at *17.

Id., at *13.

Id., at *14 -*15 (citing Copeland Oaks v. Haupt, 209 F.3d 811, 813 (6th Cir. 2000), Cagle v. Bruner, 112 F.3d 1510, 1521–22 (11th Cir. 1997) [hereinafter, Cagle], Barnes v. Indep. Auto. Dealers Ass'n of Cal. Health & Welfare Benefit Plan, 64 F.3d 1389, 1394–95 (9th Cir. 1995).

Id., at *19, n. 12 (quoting Sunbeam-Oster Co. Group Benefits Plan for Salaried & Non-Bargaining Hourly Employees v. Whitehurst, 102 F.3d 1368, 1376 (5th Cir. 1996) [hereinafter, Sunbeam-Oster Co.]); contra Cagle, 112 F.3d at 1521–22 (holding that the “make whole” doctrine applies unless the plan language “specifically allows” the plan the right of first recovery whether beneficiary's recovery was partial or full).

Id., at *19, n. 12. The court noted that the CC/BCBS subrogation provision's silence with respect to the make whole doctrine and its failure to lay out specific terms for situations of partial versus full recovery “may signify nothing more than that…the rule [requiring reimbursement] is the same for partial and total recoveries.” Id. (quoting Sunbeam-Oster Co. , 102 F.3d at 1376).

Id., at *17.

Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101 (1989) [hereinafter Firestone].

Moore , 2006 U.S. App. LEXIS 22075 at *20–*23.

Firestone , 489 U.S. at 111.

Id., at 108.

See, e.g. Harris v. Harvard Pilgrim Health Care, Inc. 208 F.3d 274, 277 (1st Cir. 2000) (citing Firestone to justify de novo review of subrogation provision where plan did not give administrator authority to interpret it. No explanation or acknowledgement of Firestone's expanded application); Cagle, 112 F.3d at 1516–17 (citing Firestone to justify application of the arbitrary and capricious standard of review to administrator's interpretation of subrogation clause. No explanation or acknowledgement of Firestone's expanded application); Cutting v. Jerome Foods, Inc. , 993 F.2d 1293, 1298–99 (7th Cir.), cert. denied, 510 U.S. 916 (1993) (appellant “concedes” that “make whole rule can be overridden with clear language,” Court relies implicitly on Firestone to justify application of reasonableness standard of review to administrator's interpretation of subrogation provision. No explanation or acknowledgement of Firestone's expanded application); Baxter ex. rel. Baxter v. Lynn, 886 F.2d 182, 187 (8th Cir. 1989) (citing Firestone to justify holding that “if the…plan gives its trustee the discretion to interpret the meaning of the subrogation clause…this interpretation is subject the arbitrary and capricious standard of review.” No explanation or acknowledgment of Firestone's expanded application).

Moore , 2006 U.S. App. LEXIS 22075 at *21 (citing Id.; Sanders v. Scheideler, 816 F.Supp. 1338, 1342 (W.D. Wis., 1993) (Firestone cited to justify de novo review of subrogation provision where plan did not give administrator authority to interpret it because, while the “case does not involve a denial of benefits, the Court's reliance on general principles of trust law in establishing the standard of review of a trustees' plan interpretation supports the applicability of Firestone to this case.”); contra Dugan v. Mikla, 763 F.Supp. 981, 984 (N.D. Ill. 1991), [“this is not a case of appeal from a denial of benefits and, therefore, Firestone is inapplicable.”]).

Moore , 2006 U.S. App. LEXIS 22075 at *21–*23 (citing Wagener v. SBC Pension Benefit Plan-Non Bargained Program, 407 F.3d 395, 402 (D.C. Cir. 2005) for the “reasonableness” standard).

Id., at *21.

Id., at *22–*23.

Id., at *20–*23.

Id., at *17.

See, e.g. Sereboff , 126 S.Ct. at 1878 n. 2 (noting that the Sereboffs made this argument, but that the Court found no need to decide it at the time); Moore, 2006 U.S. App. LEXIS 22075 at *16 (noting that the Moores attempted to make this argument to the appellate court).

The Sereboff Court explicitly declined to decide the issue as petitioner raised it for the first time on appeal. Sereboff, 126 S. Ct. at 1878, note 2.

Footnote 9 reads, in relevant part: “In their supplemental brief the Moores claim…that CC/BCBS's claim is not “appropriate because Alistaire was not made whole—and thus Sereboff is not dispositive…[CC/BCBS] contend[s] that…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 presented the issue on appeal, CC/BCBS are nonetheless entitled to reimbursement.” Moore, 2006 U.S. App. LEXIS 22075 at *16, n. 9.