Special Agents Mutual Benefit Association v. Cowger

Filing 22

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT: It is ORDERED that Plaintiff's 16 Motion for Summary Judgment is granted; Defendant's 18 Motion for Summary Judgment is denied and Plaintiff is awarded $28,127.50, pre and post-judgment interest and reasonable attorneys' fees and costs. Signed by District Judge Irene M. Keeley on 3/18/14. (cnd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
SPECIAL AGENTS MUTUAL BENEFIT
ASSOCIATION,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:13CV6
(Judge Keeley)

SHARON COWGER,
Defendant.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
Pending before the Court are the parties’ cross-motions for
summary judgment.

For the following reasons, the Court GRANTS the

motion of the plaintiff, Special Agents Mutual Benefit Association
(“SAMBA”), and DENIES the motion of the defendant, Sharon Cowger
(“Cowger”).
I.
SAMBA is a not-for-profit corporation that sponsors insurance
plans for federal employees and their families.

These plans are

covered by the Employment Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq.

Cowger, a beneficiary under

the SAMBA long-term disability plan (the “LTD Plan”), filed a claim
in January, 2008, after being diagnosed with autoimmune hepatitis.
SAMBA approved her claim in April, 2008 and awarded her monthly
payments of $2,545.83 beginning retroactively in September, 2007.

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
Pursuant to the LTD Plan’s summary plan description (the
“SPD”), payments to the insured were to be reduced by all “Benefit
Offsets,” which included, inter alia, any payments for which the
insured was eligible under the Federal Employees Retirement System
(“FERS”) and the Social Security Act (“SSA”).

The SPD further

provided that:
We [SAMBA] have the right to recover from you [Cowger]
any amount which We determine to be an Overpayment. You
are obligated to refund to Us any such amount.
Our
rights and your obligations in this regard are set forth
in the reimbursement agreement you are required to sign
upon first qualifying for Disability benefits under the
Program. For this provision, an Overpayment occurs when
We determine that the total amount paid by Us for a
period of Disability exceeds the total amount due under
the Program. This includes Overpayment resulting from:
1.

Retroactive awards received from sources shown
in the Benefit Offsets section;

2.

Fraud; or

3.

Any error We make in processing your claim.

We may, at Our option, recover the Overpayment by:
1.

Reducing or offsetting any future payments to
you or your survivor or estate;

2.

Stopping future benefit payment (including the
minimum monthly payment of $200) which would
otherwise be due under the Program. Benefit
payments will result after the Overpayment has
been recovered; or

2

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
3.

Demanding
an
immediate
Overpayment from you.

refund

of

the

As part of her disability claim, Cowger was required to sign
a reimbursement agreement (the “RA”), in which she promised to
apply for any benefit offsets for which she might be eligible. She
further agreed to “repay SAMBA the full amount of the benefit
offsets that SAMBA determines are due under the terms of the SPD
within 10 days after receiving SAMBA’s determination.”

Finally,

she agreed that her failure to comply with the terms of the RA
would trigger SAMBA’s right to terminate her LTD benefits.
In accordance with her obligations under the RA, Cowger
applied for disability benefits under both the SSA and FERS.
November

11,

2008,

she

was

awarded

retroactively from January, 2008.

SSA

disability

On

benefits

She received a check for $9,333

to cover retroactive payments, and began to receive monthly checks
for $1,244. In December, 2008, SAMBA notified Cowger that she owed
it $12,440 in benefit offsets pursuant to the RA, and provided her
with a payment plan that she was to sign by December 22, 2008.
December

20,

2008,

Cowger

sent

SAMBA

a

$100

check

On

towards

reimbursement, but explained that she could not comply with the
payment plan due to “extreme financial hardship.”
2008,

SAMBA

withdrew

its

payment
3

plan

offer

On December 29,
and

demanded

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
reimbursement in full.

Additionally, SAMBA terminated Cowger’s

benefits under the LTD Plan based on her failure to comply with the
terms of the RA.
On June 23, 2009, Cowger was awarded FERS disability benefits
retroactively from August 2007. These included monthly payments of
$2,132.00, which were reduced to $1,012.00 in January, 2008, and
reduced again to $749.00 in September 2008. The FERS benefits,
combined with the SSA benefits, resulted in a total overpayment of
$28,127.50 by SAMBA to Cowger as of December, 2008, when payments
under the LTD Plan ceased.1
In

January,

collection

2009,

agency.

SAMBA

After

submitted

Cowger’s

unsuccessful

file

efforts

to

to

a

obtain

reimbursement, SAMBA commenced this action on December 4, 2012. It
filed

an

amended

complaint

on

December

13,

2012,

asserting

equitable relief under ERISA, § 1132(a)(3), specifically equitable
restitution of the value of the overpayment, including pre and
post-judgment interest at the rate prescribed by the RA, as well as
attorneys’ fees and costs, pursuant to § 1132(g)(1). On January 11,

1

In its amended complaint and motion, SAMBA seeks reimbursement of
$28,148.21. Cowger, however, only concedes a reimbursement amount of
$28,127.50 ($20.71 less than the amount sought).
Because at summary
judgment all disputed facts are resolved in favor of the non-moving
party, the Court relies on the amount proffered by Cowger.

4

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
2013, Cowger filed a counterclaim, alleging entitlement to unpaid
LTD benefits since December, 2008. On March 21, 2013, both parties
filed motions for summary judgment.
II.
Summary
documents,

judgment

is

electronically

declarations,

stipulations

appropriate
stored
.

.

where

the

information,
.,

admissions,

“depositions,
affidavits

or

interrogatory

answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.”

Fed R. Civ. P. 56(c)(1)(A), (a).

When ruling on

a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party.

Providence

Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.
2000).

The Court must avoid weighing the evidence or determining

the truth, and limit its inquiry solely to a determination of
whether genuine issues of triable fact exist.

Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court

of

the

basis

for

the

motion

nonexistence of genuine issues of fact.
477 U.S. 317, 323 (1986).

and

of

establishing

the

Celotex Corp. v. Catrett,

Once the moving party has made the
5

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.”

Anderson,

477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
evidence

must

be

such

that

a

rational

reasonably find for the nonmoving party.

trier

of

fact

could

Id. at 248–52.

III.
At the outset, the Court addresses whether SAMBA may properly
pursue an action for equitable restitution under ERISA, which
provides as follows:
A civil action may be brought –- (3) by 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.
§ 1132(a)(3).
In Sereboff v. Mid Atl. Med. Svcs., Inc., 547 U.S. 356 (2006),
the United States Supreme Court articulated the features of relief
properly

characterized

as

“equitable”

under

§

1132(a)(3)(B).

Equitable restitution must seek to “impose a constructive trust or
equitable lien on ‘particular funds or property in the defendant’s
6

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
possession.’”

Sereboff, 547 U.S. at 362 (quoting Great-West Life

& Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213 (2002)).
Notably, Sereboff further explains that, notwithstanding the
possession and particularity requirements, a plaintiff suing under
§ 1132(a)(3)(B) also must demonstrate that the basis for his or her
claim is equitable rather than legal.
Supreme

Court

observed

that

547 U.S. at 363.

equitable

restitution

While the
typically

involves “strict tracing rules,” it determined that equitable liens
created by agreement do not require the traceability of the funds
sought.
(1914)).

Id. at 364-65 (citing Barnes v. Alexander, 232 U.S. 117
Moreover, “the fund over which a lien is asserted need

not be in existence when the contract containing the lien provision
is executed.”

Sereboff, 547 U.S. 366.

Here, Cowger has possession of the funds to which SAMBA
asserts

a

claim.

Moreover,

courts

have

determined

that

particularity is satisfied in circumstances where, as in this case,
the beneficiary has received benefits under both a long-term
disability plan and the SSA, and the fiduciary asserts an equitable
lien on the overpayment amount.

See, e.g., Cusson v. Liberty Life

Assur. Co., 592 F.3d 215, 230-31 (1st Cir. 2010); Dillard’s Inc. v.
Liberty Life Assur. Co., 456 F.3d 894, 901 (8th Cir. 2006).
7

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
Finally, the SPD and RA gave rise to SAMBA’s equitable lien on the
overpayment amount, and, according to the Supreme Court, the
contracts’ ex ante existence is of no relevance.

Thus, Sereboff

and its progeny establish that SAMBA may assert an equitable claim
pursuant to § 1132(a)(3).
Next, the Court turns to the question of the balance of
payments.

The parties do not dispute that SAMBA is entitled to

reimbursement of its claimed overpayment.

Instead, the focus of

this litigation has shifted to the question of whether SAMBA was
permitted to terminate Cowger’s LTD benefits.

Following reduction

for her SSA and FERS benefits, Cowger has asserted a right to
monthly payments of $552.83 from SAMBA, arguing that SAMBA lacked
the authority to terminate her payments in December, 2008, and
that, in any event, by withholding the moneys, SAMBA has recovered
the full reimbursement amount.

Moreover, Cowger contends that

SAMBA owes her the difference between the accumulated LTD payments
and the overpayment amount.

According to SAMBA, however, it acted

well within its rights when it terminated Cowger’s LTD benefits and
contends that it has recovered none of the reimbursement amount.
In determining who is owed what amounts, the Court first looks
to the relevant contract lanugage.
8

Provision four of the RA

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
clearly creates a right of termination in SAMBA with a condition
precedent:
If I [Cowger] fail to comply with any of these
obligations [including repaying SAMBA the full amount of
benefit offsets that it determines are due under the
terms of the SPD], I understand and agree that SAMBA may
terminate my LTD benefits and that SAMBA may recoup its
collection costs, including reasonable attorneys’ fees,
from me or from my beneficiaries in the event of my
death.
In West Virginia, courts are required to “construe the contract
made by the parties, not to make a contract for them, or to alter
the contract they have made so as to conform it to the court’s
notion of the contract they should have made in view of the
subject-matter

and

the

surrounding

facts

and

circumstances.”

Bischoff v. Francesa, 56 S.E.2d 865, 870 (W. Va. 1949).
Here, there is no dispute that, at the time it terminated
Cowger’s LTD benefits, SAMBA was entitled to reimbursement of its
overpayment.

Likewise, there is no dispute that Cowger failed to

repay that amount in accordance with SAMBA’s repayment plan offer,
or its subsequent demands.
RA,

SAMBA

possessed

the

Thus, applying provision four of the
discretionary

authority

to

terminate

Cowger’s LTD benefits when she failed to reimburse SAMBA in
December, 2008.

9

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
Moreover, SAMBA’s decision to exercise its authority and
terminate Cowger’s LTD benefits was not contrary to law.

Cowger

concedes that the LTD Plan is a “welfare plan” within the meaning
of § 1002(1). By statute, welfare plans are not subject to vesting
requirements under ERISA, and “plan sponsors are generally free
under ERISA, for any reason at any time, to adopt, modify, or
terminate welfare plans.”

Curtiss-Wright Corp. v. Schoonejongen,

514 U.S. 73, 78 (1995); see also § 1051(1); Gable v. Sweetheart Cup
Co.,

Inc.,

35

F.3d

851,

855

(4th

Cir.

1994)

(“[A]

plan

participant’s interest in welfare benefits is not automatically
vested, and employers have a statutory right to ‘amend the terms of
the plan or terminate it entirely.’”) (quoting Biggers v. Wittek
Indus., Inc., 4 F.3d 291, 295 (4th Cir. 1993)).
The unambiguous contract language of the RA and the wellsettled law that welfare plans do not vest and are subject to
sponsor termination provide a sufficient basis for the Court to
grant summary judgment to SAMBA.

As such, it is unnecessary to

address SAMBA’s alternative argument that Cowger’s failure to
exhaust her remedies under the SPD precludes her subsequent claim
to LTD benefits.

10

SPECIAL AGENTS MUTUAL BENEFIT ASSOC. V. COWGER

1:13CV6

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 16] AND DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 18]
IV.
For the reasons discussed, the Court GRANTS SAMBA’s motion for
summary judgment, DENIES Cowger’s motion for summary judgment, and
AWARDS SAMBA the following:
•

$28,127.50;

•

Pre-judgment and post-judgment interest at 14% per annum,
in accordance with provision three of the RA, compounded
monthly on the amount due from January 1, 2009 until the
time this judgment is satisfied in full; and

•

Reasonable

attorneys’

fees

and

costs,

pursuant

to

provision four of the RA and § 1132(g)(1).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this order
to counsel of record and to remove this case from the Court’s
active docket.
DATED: March 18, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

11