In MONY Life Insurance Co. v. Perez, the Eleventh Circuit Court of Appeals set aside a jury verdict in favor of MONY Life Insurance Co. on its unjust enrichment claim against policyholder Bernard Perez, holding that an insurer cannot bring a claim for unjust enrichment when there is an express insurance contract covering the same subject matter.
The lawsuit stems from a coverage dispute between MONY and Perez concerning benefits under a disability insurance contract. In 2011, Perez was diagnosed with squamous cell carcinoma and underwent radiation, during which time Perez began collecting income replacement disability benefits from MONY. However, MONY later concluded that Perez was untruthful in his submissions of various information related to his disability, as well as his financial condition. More specifically, MONY claimed that over an extended period, Perez collected full, basic monthly income premised on false claims that he sustained lingering health issues that affected his ability to work. MONY believed that Perez substantially understated the number of hours he worked, overstated the nature of his ailments, failed to disclose the sale and formation of his ophthalmology practices, submitted false business expenses, and artificially increased his reported earning loss, all in order to increase his monthly disability payments.
After Perez rejected MONY’s requests to conduct a financial audit, MONY ceased issuing disability payments and filed suit against Perez in the Middle District of Florida, asserting claims for declaratory relief, unjust enrichment, and restitution. Perez, in turn, counterclaimed for breach of contract, statutory bad faith, fraud, and a violation of the Employee Retirement Income Security Act (ERISA). The case advanced to a nine-day jury trial, during which extensive evidence established Perez’s deceitful conduct. The trial concluded with a jury verdict in favor of MONY on its unjust enrichment claim, and against Perez on his breach of contract counterclaim. The district court also granted MONY judgment as a matter of law on Perez’s fraud counterclaim. Perez appealed, claiming, among other things, that the district court erred in permitting MONY’s unjust enrichment claim since there was an express contract between the parties covering the same subject matter.
On appeal, the Eleventh Circuit reviewed controlling Florida jurisprudence holding that a plaintiff cannot recover pursuant to an equitable theory, such as unjust enrichment or quantum meruit, if an express contract exists that covers the same underlying matter that is the subject of the plaintiff’s request for equitable relief. Relying on that precedent, the court determined that MONY’s unjust enrichment claim covered the same subject matter as Perez’s insurance policy and thus necessarily failed as a matter of Florida law. The court pointed to allegations in MONY’s complaint, including reference to Perez being “unjustly enriched by the receipt of money from MONY resulting from his claims for Residual Income Loss benefits for periods in which he was not entitled to those benefits under the terms of the Policy,” as clear evidence that the basis of MONY’s claim was Perez’s improper receipt of disability benefits by submitting untruthful claims under his insurance contract. In other words, the court found, MONY’s claim was fundamentally based on a breach of the insurance contract’s terms that “[u]pon receipt of acceptable proof of loss, [MONY] will pay all benefits due [to Perez] at the end of each month while the benefit period continues.”
Importantly, the Eleventh Circuit noted that MONY (and insurers generally) would not have been without a remedy in this situation had MONY contracted differently and/or sued under a different theory of recovery. The court highlighted that “the fact that the insurance contract … does not contain a clawback provision allowing for the disgorgement of overpayments made to Perez does not alter Florida’s law on this basic point.” The court noted that MONY could have either (1) included a clawback provision in its insurance contract allowing it to recoup sums paid to policyholders in certain circumstances and/or 2) filed suit in tort for fraud or misrepresentation against Perez, rather than seeking equitable relief only. MONY did neither. Ultimately, the court vacated the judgment awarding $448,930.077 to MONY and, in doing so, eliminated MONY’s ability to seek recoupment of payments to Perez, notwithstanding his misconduct.
