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Conflict Remains among Federal Appellate Circuits Regarding Recovery of Overpayments under ERISA Section 502(a)(3)

The U.S. Supreme Court recently declined to review a decision by the U.S. Court of Appeals for the Second Circuit in Thurber v. Aetna Life Insurance Co., 712 F.3d 654 (2d Cir. 2013), which held that a plan fiduciary was entitled under Section 502(a)(3) of the Employee Retirement Income Security Act of 1974 (?Ç£ERISA?Ç¥) to recover overpayments made to a participant from a short term disability (?Ç£STD?Ç¥) plan subject to ERISA, even though the participant had already spent the overpayments she received from the plan.?á The overpayments in Thurber arose when the participant received ?Ç£other income,?Ç¥ which the STD plan document provided could reduce the amount payable from the plan. ?áThe Second Circuit specifically rejected the reasoning of the Ninth Circuit in Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d 1083, 1093?Çô95 (9th Cir. 2012), which held that overpayments from a disability plan could not be recovered under ERISA ?º 502(a)(3) because ?Ç£fiduciar[ies] must recover from specifically identified funds in the beneficiary?ÇÖs possession.?Ç¥?á The Supreme Court?ÇÖs decision not to review Thurber means that a plan fiduciary?ÇÖs right to recover overpayments under ERISA ?º 502(a)(3) will likely depend on the location where the lawsuit is filed.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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June 2014