Sereboff v. Mid-Atlantic

SEREBOFF ET UX. v. MID ATLANTIC MEDICAL SERVICES, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT

No. 05-260. Argued March 28, 2006-Decided May 15, 2006

ABSTRACT

Petitioner Sereboffs are beneficiaries under a health insurance plan administered by respondent Mid Atlantic and covered by the Employee Retirement Income Security Act of 1974 (ERISA). The planprovides for payment of covered medical expenses and has an “Acts ofThird Parties” provision. This provision requires a beneficiary who isinjured as a result of an act or omission of a third party to reimburseMid Atlantic for benefits it pays on account of those injuries, if the beneficiary recovers for those injuries from the third party. The Sereboffs were involved in an automobile accident and suffered injuries. The plan paid the couple’s medical expenses. The Sereboffs sought compensatory damages for the accident from third parties in state court. After the Sereboffs settled their tort suit, Mid Atlantic filed suit in District Court under §502(a)(3) of ERISA, seeking to collect from the Sereboffs’ tort recovery the medical expenses it had paidon the Sereboffs’ behalf. The Sereboffs agreed to set aside from their tort recovery a sum equal to the amount Mid Atlantic claimed, and preserve this sum in an investment account pending the outcome of the suit. The court found in Mid Atlantic’s favor and ordered the Sereboffs to turn over the amount set aside. The Fourth Circuit affirmed in relevant part, and observed that the Courts of Appeals aredivided on the question whether §502(a)(3) authorizes recovery inthese circumstances. This Court granted review to resolve this disagreement.

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