Great-West Life and Annuity Ins. v. Knudson

In 1992, a car accident rendered Janette Knudson a quadriplegic. At that time, Knudson was covered by the Health and Welfare Plan for Employees and Dependents of Earth Systems, Inc. (the Plan), which covered $411,157.11 of her medical expenses, most of which were paid by Great-West Life & Annuity Insurance Co. The Plan contains a reimbursement provision, which gives it the right to recover from a beneficiary any payment for benefits paid by the Plan that the beneficiary is entitled to recover from a third party. After Knudson filed a state-court tort action to recover from the manufacturer of her car and others, she negotiated a settlement that earmarked $13,828.70 to satisfy Great-West's reimbursement claim. Great-West then filed an action under the Employee Retirement Income Security Act of 1974 (ERISA) to enforce the Plan's reimbursement provision by requiring Knudson to pay the Plan $411,157.11 of any proceeds recovered from third parties. The District Court granted Knudson summary judgment. In affirming, the Court of Appeals held that that judicially decreed reimbursement for payments made to a beneficiary of an insurance plan by a third party is not equitable relief authorized by ERISA.