B.P. Amoco Corp. v. Connell: The Middle District of Georgia Holds That Health Plans May Bring Actions in Federal Court Under ERISA Section 502(a)(3) to Obtain Equitable Restitution From Trustee of
a Special Needs Trust

Thomas H. Lawrence¹

Hunter Connell suffered a brain injury at birth. By virtue of his father’s employment with Amoco, Hunter was a dependent participant in Amoco’s ERISA-covered health plan. The Plan paid $64,531.45 because of Hunter’s injuries. The Plan contained a reimbursement provision that required covered persons to reimburse the Plan to the extent of benefits paid when a covered person recovers from another party.

Hunter’s father filed a lawsuit asserting claims of medical malpractice against the allegedly responsible physicians and midwife. The parties settled the matter for $350, 964.00, which was placed into a Special Needs Trust.

The Plan asked the Connells to reimburse the Plan, but they refused. Amoco filed a lawsuit to enforce the Plan’s rights.

To decide the case, the Court noted that a determination of the scope of relief available under Great-West Life v. Knudson was necessary. The Court, following Great-West Life v. Brown, Administrative Committee v. Varco, and Bombardier v. Ferrer, Poirot, held that the Plan was entitled to recover 100% of the benefits paid from the Connells’ other party recovery:

Because the settlement proceeds in this case have not been disbursed and are still intact as the corpus of the special needs trust, Amoco has a right to its share….
B.P. Amoco Corp., 2004 U.S. Dist. LEXIS at *11.

B.P. Amoco is an important decision because it highlights the distinction recognized by the Supreme Court in Great-West Life v. Knudson, which is that a plan fiduciary’s claim is authorized under ERISA if a defendant in the action is in control of the disputed funds and the plan fiduciary is entitled to the funds under the terms of the plan.

[1]Thomas H. Lawrence is a partner in the Memphis, Tennessee law firm of Lawrence & Russell, LLP, and represents employers, health plans, and insurers in healthcare and property and casualty subrogation and other employee benefits and employment matters and related litigation in state and federal courts throughout the United States. He was one of the attorneys who represented Great-West Life in Knudson , and has been counsel of record in many of the otherpost-Knudson decisions that have clarified the scope of relief available under ERISA. He can be reached at toml@lawrencerussell.com.