: : Disability Insurer Policy Language Does Not Support ERISA Claim for Reimbursement of Overpayments

Provident offers a second theory of liability: equitable lien by agreement. Annual supplemental claims forms, signed and submitted by Messing between 2010 and 2017, contain the following language: “should my claim be overpaid for any reason, it is my obligation to repay any such overpayment.” (See, e.g., ECF No. 38-2, PageID.677 (2010 supplemental claim form).) Equitable liens by agreement have been allowed as a means of recouping overpayment of benefits in the ERISA context. See Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 364-65 (2006)…
Messing v. Provident Life & Ins. Co. (W.D. Mich. July 7, 2021)

In this disability controversy, the plaintiff sued Provident after it terminated his disability payments. The carrier then counterclaimed, to recover previous policy payments, asserting that the plaintiff misrepresented his inability to work as a lawyer.

Citing Bosin v. Liberty Life Assurance Company of Boston, 2007 WL 1101187 (W.D. Mich. Apr. 11, 2007), the carrier argued that its repayment agreements created an equitable lien by agreement. Annual supplemental claims forms, signed and submitted by the plaintiff, contained the following language: “should my claim be overpaid for any reason, it is my obligation to repay any such overpayment.”

While the repayment agreement in Bosin was distinct from the plan, the policy specifically mentioned the repayment agreement and calibrated benefits payments based on whether the beneficiary signed the optional agreement. Specifically, the policy provided that the carrier would reduce the disability benefits unless the insured signed the reimbursement agreement.

By contrast, in the case before the court, “there is no indication that benefits coverage in the policy at issue here was in any way conditioned on Messing signing a repayment agreement.” Therefore, the court held that the carrier could not show an equitable lien by agreement and dismissed its counterclaim.