Sereboff v. Mid Atlantic Medical Services

Marlene Sereboff and her husband (defendants) were covered under an employer-sponsored health-insurance plan administered by Mid Atlantic Medical Services, Inc. (Mid Atlantic) (plaintiff). The plan paid for certain covered medical expenses and contained a provision addressing injuries or sickness resulting from the acts of third parties. If the plan provided benefits for harm caused by a third party’s acts, the beneficiary was required to reimburse Mid Atlantic from any funds the beneficiary received through lawsuits or settlements with the third party. Even if the beneficiary did not receive all the claimed damages from the third party, Mid Atlantic’s share of the recovery could not be reduced unless Mid Atlantic agreed to the reduction in writing. The Sereboffs were involved in a car crash, and the plan paid their medical expenses. The couple filed a tort action against several third parties over the crash, seeking damages. Mid Atlantic notified the Sereboffs about its right to the lawsuit’s proceeds in several letters, but after the conclusion of the lawsuit, the Sereboffs’ attorney distributed the funds to the couple, and no money was sent to Mid Atlantic. Mid Atlantic filed suit in federal district court and claimed that the Sereboffs violated the Employee Retirement Income Security Act (ERISA) by failing to reimburse Mid Atlantic from the third-party lawsuit. The Sereboffs asserted that Mid Atlantic’s claim for relief was not equitable under ERISA. The district court found in favor of Mid-Atlantic, and the Sereboffs appealed to the United States Court of Appeals for the Fourth Circuit. The court of appeals affirmed, and the Sereboffs appealed to the United States Supreme Court.