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Smithson v. Aetna Life Ins. Co.

United States District Court, E.D. Kentucky, Central Division, Lexington

January 30, 2014

ERIC S. SMITHSON, Plaintiff,
AETNA LIFE INS. CO., Defendant.


DANNY C. REEVES, District Judge.

This matter is pending for consideration of Plaintiff/Counterclaim Defendant Eric S. Smithson's motion to dismiss Defendant Aetna Life Insurance Company's ("Aetna") counterclaim. [Record No. 12] Smithson argues that Aetna's counterclaim should be dismissed in its entirety pursuant to Rule 12(b) of the Federal Rules of Civil Procedure for failure to state a claim and because this Court lacks subject matter jurisdiction. Alternatively, he asks the Court strike the counterclaim pursuant to Rule 12(f) of the Federal Rules of Civil Procedure to the extent it seeks legal remedies. For the reasons discussed below, Smithson's motion will be denied in its entirety.


This matter arises from Smithson's claim for disability benefits. Smithson was a participant in a Long Term Disability Plan ("Plan") with his former employer, United Parcel Service ("UPS"). [Record No. 1-1, p. 1] The Plan was funded by a group policy ("the Policy") issued to UPS by Aetna. [ Id. ] The Policy constitutes an employee welfare benefit plan under the Employee Retirement Income Security Act ("ERISA").

The Plan provides disability benefits for employees who meet the contractual provisions of the Policy, including its definition of disability. [ Id., p. 4] However, the Policy also requires a beneficiary to apply for disability income benefits from other sources, if eligible, and states that any "Other Income Benefits" (including Social Security benefits, workers' compensation, and pension benefits) received by the beneficiary will offset the beneficiary's long-term disability benefits.[1] [Record No. 18-2, pp. 83-84] The Policy further requires a beneficiary to repay to the Plan any overpayment of long-term disability benefits. [ Id. ]

Smithson received monthly long-term disability benefits for twenty-four months under the Policy. [Record No. 1-1, p. 6] However, on September 6, 2012, Aetna notified Smithson that his benefits would end on September 19, 2012. [ Id. ] On March 8, 2013, Smithson was approved for Social Security Disability benefits. Five days later, he received notice that he had been approved to receive disability benefit payments under an employee pension plan.[2] [ Id. ] Smithson alleges that Aetna breached the Policy when it denied his request for long-term disability benefits after September 19, 2012. [Record No. 1-1, p. 1]

Defendants UPS[3] and Aetna removed the action to this Court on October 24, 2013, based on federal question jurisdiction under ERISA. [Record No. 1] Aetna counterclaimed, alleging that Smithson was overpaid long-term disability benefits under the Policy from September 9, 2010, to September 19, 2012, because of his receipt of other disability benefits.[4] [Record No. 11] Aetna seeks "reimbursement, restitution, constructive trust, and/or equitable liens to recover the amount of the overpayment, as well as any offsets against any future benefits, if any, and/or any other appropriate equitable and/or legal relief" until Smithson satisfies the overpayment amount. [Record No. 11, p. 14]


A federal court must have subject matter jurisdiction over every claim it hears because its jurisdiction cannot be forfeited or waived. U.S. Const. art. III § 2; Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). Federal courts have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from a party. Id. at 514. If a federal court concludes that it lacks subject matter jurisdiction, it must dismiss the complaint in its entirety. Id.

Further, when evaluating a motion to dismiss under Rule 12(b)(6), the Court must determine whether the complaint alleges "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). Although the complaint need not contain "detailed factual allegations" to survive a motion to dismiss, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks and alteration omitted).


A. Subject Matter Jurisdiction - ERISA

Under the civil enforcement section of ERISA, the fiduciary of an employee welfare benefit plan may bring a civil action: "(A) to enjoin any act or practice which violates any provision of the subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3); see 29 U.S.C. § 1002(21)(A) (defining "fiduciary"). "[T]o invoke the authority to sue under § 1132(a)(3)(B), a fiduciary must be seeking a category of relief that would have typically been available in equity and not simply an award of compensatory damages." Gilchrest v. Unum Life Ins. Co. of Am., 255 F.Appx. 38, 44 (6th Cir. 2007).

Smithson contends that the Court lacks subject matter jurisdiction under ERISA because Aetna is requesting legal remedies rather than equitable relief. He also argues that Aetna's counterclaim fails to identify a specific fund from which it seeks reimbursement, prohibiting Aetna from requesting relief under ERISA. [Record No. 12-1, p. 11] Smithson relies on Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002), in support of his proposition that the counterclaim is legal in nature and improper under ERISA. In making this argument, Smithson mischaracterizes Knudson and ignores subsequent caselaw including authority from ...

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