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In an article published in Law360 on Jan. 20, 2016, Andrew P. Sherrod provides insight on the significance of the ruling in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit. Sherrod says, “The Montanile decision builds upon the Supreme Court’s prior rulings on the scope of ‘appropriate equitable relief’ under ERISA and provides important clarification regarding a fact pattern that is commonly faced by benefit plans and their participants. Montanile is significant because it ruled that even when the plan has an ‘equitable lien by agreement’ pursuant to plan terms or a reimbursement agreement, it still must identify specific funds that are in the participant’s possession or which can be traced to items purchased with funds to which the plan’s equitable lien attached. The plan is not able to recover from the participant’s general assets. Thus, when the participant spends the money received from a third party before the plan can sue to enforce its lien, the plan will not be able to recover. While this ruling may create an unsavory incentive for participants to spend away funds on non-traceable items — food, vacations, etc. — the Supreme Court noted that Congress could have drafted the ERISA provision differently to allow plans more expansive remedies, but did not. This decision will likely result in increased lobbying efforts by ERISA plans and their insurers to expand the remedies available to recover such funds.” For the full article, subscribers may click here.

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