_____________ No. 96-1773ND

_____________ Young America, Inc., * * Appellee, * Appeal from the United States * District Court for the District v. * of North Dakota. * Union Central Life Insurance * Company, * * Appellant. *

_____________ Submitted: November 21, 1996 Filed: November 29, 1996

_____________ Before FAGG, WOLLMAN, and HANSEN, Circuit Judges.

_____________ FAGG, Circuit Judge.

In 1981, Manhattan Life Insurance Company sold a group term lif e insurance policy to a business owned by the Fink family, Young America , Inc. As part of Young America's welfare benefit package, the policy i s governed by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001

- 1461 (1994) (ERISA). Corporate officers Selma and Robin Fink were intende d insureds under the po licy. In 1988, Union Central Life Insurance Company purchased Manhattan Life. Union Central notified Young America that the Manh attan Life policy was terminated, Union Central had issued a ne w policy, and eligibility requirements remained the same.
After the 1991 death of Stanley Fink, Young America's chief exe cutive officer and Selma Fink's spouse, Union Central refused to pay lif e insurance benefits because Stanley was not an active, full-time employee at the time of his death. Union Central asserts

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that both the Manhattan Life and Union Central policies required active, full-time employment in addition to status as a corporate officer. Th e Union Central policy states, "[N]o corporate officer or director will be eligible [for life insurance] solely due to his or her title. . . . All of these persons must be active full-time employees to be eligible. " Similarly, the Manhattan Life policy only insured "individuals" who were "actively perform[ing] . . . services . . . on a full-time basis consistin g of at least a 5-day week of at least 30 total hours at [Young America's] regular place of business." In an earlier laws uit, we held Union Central did not abuse its discretion in denying benefits for Stanley Fink. Fink v. Union Central Life Ins. Co. , 94 F.3d 489, 491 (8th Cir. 1996).

Young Ame rica later requested the return of premiums paid on behalf of Selma and Robin Fink, claiming Young America had paid the premiums unde r the mist aken belief that Selma and Robin were eligible insureds a s
co rporate officers regardless of whether they were active, full-tim e employees. Union Central canceled the policy in 1994, and offered t o refund one year's pre miums. Young America rejected the offer and brought this action seeking recovery of all the premiums paid between 1981 an d 1994. Union Central moved for summary judgment, contending Young America cannot recover more than one year's premiums under the policy's one-year limit on premium refunds for erroneous continuat ion of insurance on living person s. Before Young America responded, the district court grante d summary judgment to Young America, holding Young America was entitled to
recover premiums under the federal common law of ERISA. The district cour t concluded the insurance policy's one-year limit on refunds was arbitrary and capricious and ordered Union Central to refund all premiums paid b y Young America between 1981 and 1994. Union Cent ral appeals. We affirm in part and remand in part.
At the outset, we agree with the district court that an

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employer has a federal common law action for restitution of mistakenly mad e payments to an ERISA plan. See UIU Severance Pay Trust Fund v. Local Unio n No. 18-U , 998 F.2d 509, 512-13 (7th Cir. 1993); Whitworth Bros. Storage Co

. v. Central States, S.E. & S.W. Areas Pension Fund , 982 F.2d 1006, 1016 (6t h Cir. 1993); Jamail, Inc. v. Carpenters Dist. Cou ncil , 954 F.2d 299, 304-05 (5th Cir. 1992); Kwatcher v. Massachusetts Serv. Employees Pension Fund , 879 F.2d 957, 966-67 (1st Cir. 1989); Plucinski v. I.A.M. Nat'l Pensio n Fund , 875 F.2d 1052, 1053, 1057-58 (3d Cir. 1989); Dumac Forestry Servs., Inc. v. International B'hood of Elec. Workers , 8 14 F.2d 79, 82-83 (2d Cir. 19 87). This principle encompasses restitution of insurance premium s mista kenly paid for employees who are not eligible for insurance. Se e Construction Indus. Retirement Fund v. Kasper Tr ucking, Inc. , 10 F.3d 465, 467 (7th Cir. 1993). Restitution is granted when the remedy is equitable under the circumstances. See UIU Severance Pay Trust Fund , 998 F.2d at 51 3 (listing factors).

Uni on Central contends the district court improperly found tha t restitu tion is appropriate in this case. Union Central complains th e distri ct court failed to make specific findings about certain equitabl e factors: whether laches bars the claim for a refund, whether the Finks wer e attemp ting to defraud the insurance fund by obtaining insurance fo r ineligible persons, and whether a refund would harm the insurance fund's actuarial soundness.

We reject Union Central's contention. The district court examine d the situation and dec ided the undisputed facts in the record supported an award refunding mistaken premium payments to Young America. There is no genuine issue of material fact about whether Young America paid premiums for life insurance coverage under the mistaken b elief that Selma and Robin Fink were eligible insureds. Union Central did not dispute that Youn g Amer ica was mistaken about eligibility, or that Selma and Robin wer e ineligible when Union Central canceled the policy. Indeed, Union Central

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offered to refund one year of premiums paid to insure Selma and Robin Fink

. We agree with the district court that Young America is entitled t o restitution.
The appropriate amount of restitution is unclear, however. Acc ording to U nion Central, "[I]t appears that [Selma and Robin] were eligibl e insureds at some point between 1981 and 1994" as active, full-tim e employees, and thus, Young America should not re ceive a refund of premiums paid during the time Selma and Robin were actually insured. This may be correct. In its statement of material facts supporting its summar y judgment motion, Union Central asserts Selma and Robin are former full-tim e employees of Young Am erica. The record shows that at one time, Robin was emplo yed as an assistant manager at Young America, and Selma was Youn g America's buyer for s everal years during the 1980's. The record does not reflect whether these jobs involved more than thirty hours of work per wee k
or satisfied the other requirements of active, full-time employment. We simply cannot tell whether Selma and Robin were actually insured anytime between 1981 and 1994. The district court apparently did not consider thi s possibility, so we re mand for resolution of this issue. Premiums for any periods of coverage were not mistakenly paid and should not be refunded. See Construction Indus. Retirement Fund , 10 F.3d at 467 (despite lack of clai ms, restitution of health insurance premiums inappropriate becaus e employees received coverage).

Union Central also contends the district court committed error i n finding the plan's one-year limit on premium recovery is arbitrary an d cap ricious. The limiting provision states, "If a person's insurance i s continu ed in error beyond the date it should have terminated, . . . th e Insurer will declare it void and premiums paid on or after that date will be refunded. However, refund is limited to a period of 12 consecutiv e months f or a living person." If Selma and Robin Fink were not active , full-time employees o f Young America at any time, the limit may not apply

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because Selma and Robin were never insured in the first place, and thus, their insurance was not "continued in error." If Selma and Robin were onc e insured but later became ineligible because they no longer worked ful l time, Union Central would be unjustly enriched if allowed to retain th e mistakenly paid premiums. See Whitworth Bros. Storage Co. , 982 F.2d a t 1013. Further, Young America's policy was in effect for several year s without any limit on refunds, then the limit was added in 1990 and applied retroactively. See Jamail , 954 F.2d at 305-06. We agree with the distric t court that under the circumstances of this case, Union Central's one-year limit on premium refunds is arbitrary and capric ious. See Whitworth Bros. Storage Co. , 982 F.2d at 1013; Jamail , 954 F.2d at 305-06.

In sum, we affirm the district court's holding that the common la w of ERISA provides an employer with an action for a refund of mistakenl y paid insurance premiums, and that a refund to Young America is equitable in this case. We remand for further proceedings on the amount of Youn g America's refund.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.