:: Sixth Circuit Holds Plaintiff’s Attorney Liable To ERISA Plan For Disbursed Settlement Funds

Longaberger’s equitable lien attached to the settlement fund when it was identified and received in July 2004. Indeed, Kolt conceded at the district court’s February 9, 2005, hearing that he “probably” was aware at the time he wrote his August 4, 2004, letter to Longaberger, stating that “Mr. Billiter would like to try to amicabl[y] satisfy his subrogation obligation to [Longaberger],” that the Plan contained language that indicates the Plan has a first priority lien and first priority claim over funds recovered from third parties. . . .

The fact that Kolt chose to disregard Longaberger’s first
priority lien and commingle the settlement funds does not defeat Longaberger’s claim for equitable relief, because under Sereboff, Longaberger was free to follow a portion of the settlement funds into Kolt’s hands. We therefore hold that the Plan sought and was awarded “appropriate equitable relief” from Kolt.

Longaberger Co. v. Kolt, 2009 FED App. 0399P (6th Cir.) (6th Cir. Ohio Nov. 16, 2009)

The Sixth Circuit handed down a momentous ERISA health plan subrogation (reimbursement) case in Longaberger v. Kolt.  Building on a foundation crafted from an excerpt from Sereboff and a form shaped by a recent Seventh Circuit recoupment decision, the Sixth Circuit all but eliminated any defense based upon commingling of funds.