In this case, Ms. Powell did not commingle her funds and made no purchases that diminished in value. Thus, the “conscious wrongdoer” standard has no application. Moreover, in Sereboff the Supreme Court stated, “This rule allowed them to follow a portion of the recovery into the [Sereboff’s] hands as soon as [the settlement fund] was identified, and impose on that portion a constructive trust or equitable lien.” Sereboff, 547 U.S. at 364 (changes in original) (quotations omitted).
Nothing in Sereboff indicates that “conscious wrongdoing” is required for a constructive trust under these circumstances.
Humana Health Plan, Inc. v. Powell, 2009 U.S. Dist. LEXIS 102887 (W.D. Ky. Nov. 5, 2009)
Equitable liens offer avenues of relief to fiduciaries which are distinguishable from the remedy offered by a constructive trust. Read together with a recent federal district decision in a California case, Humana v. Powell provides a valuable overview of these distinctions in the context of a ERISA health plan subrogation dispute.
These distinctions, while thought-provoking, may not entirely hold true in view of Sereboff’s rejection of the “parcel of equitable defenses” asserted in that case as will be pointed out below.