UNUM Life Ins. Co. of Am. v. Toomey: Court Holds that ERISA-Covered Disability Plan is Entitled to Reimbursement of Overpayments under the Federal Common Law Doctrine of Unjust Enrichment.

J. Matthew Stephens¹

The United States District Court for the District of New Jersey decided UNUM Life Ins. Co. of Am. v. Toomey, No. 03-938 (FSH), 2005 U.S. Dist. LEXIS 20037 (D.N.J September 7, 2005), on September 7, 2005.

The issue in Toomey was whether the ERISA-covered disability plan, which initially paid its covered-member long-term disability payments, was entitled to reimbursement from the covered-member’s subsequent award of social security disability benefits received from the Social Security Administration.

With regard to this issue, the Court granted summary judgment in favor of the disability plan for the full amount of the benefits it paid to the covered-member. In doing so, the Court considered the terms of the disability plan, which provided that the covered-member would reimburse the plan for such overpayments, and relied upon the federal common law doctrine of unjust enrichment for ERISA-covered plans, stating that “Defendant’s acceptance of disability benefits from Plaintiff without reimbursing Plaintiff for other disability benefits received results in ‘double recovery’.”

Toomey is an important decision for ERISA-covered disability plans because it clarifies the plan’s equitable rights to reimbursement.

[1]J. Matthew Stephens is a senior associate in the Memphis, Tennessee law firm of Lawrence & Russell, LLP, and represents employers, health plans, disability plans and insurers in healthcare and disability subrogation and employment matters in state and federal courts throughout the United States. He can be reached at matts@lawrencerussell.com.