Claim of Improper Disclosure of Personal Info not Preempted by ERISA

February 5, 2008 (PLANSPONSOR.com) - The U. S. District Court for the Eastern District of Missouri has remanded a health plan participant's suit for breach of fiduciary duty back to state court saying the claim is not preempted by the Employee Retirement Income Security Act (ERISA).

U.S. District Judge E. Richard Webber said the question before the court was whether a fiduciary duty not to disclose confidential medical information has an economic impact on ERISA plans. He concluded the impact of disclosing confidential medical information was insufficient to satisfy requirements that the claim be related to administration of an ERISA plan.

Webber determined that health plan participant Eric Streiff’s claim that United Healthcare intentionally and knowingly disclosed private, confidential healthcare information about his wife and him to HR Director Cheryl Hertfelder who sought to obtain personal information for the purpose of publishing it and embarrassing them represented allegations that Hertfelder was “not performing a fiduciary function, but was simply behaving as a rogue administrator, acting entirely outside the scope of its duties under the plan.”

Webber pointed out that ERISA establishes standards of conduct, responsibility, and obligation for fiduciaries, and does not preempt general state laws covering non-fiduciary acts unrelated to an ERISA plan. He also noted that it was not apparent the Streiffs’ claims had anything to do with the administration or processing of benefit claims under the health plan.

The Streiffs said when their medical claims were denied they first sought information about coverage under the plan from Hertfelder, who inquired about the nature of their claims. They said they purposefully did not share the information as it was of an embarrassing nature and Hertfelder was known to gossip. However, when they contacted United Healthcare, the plan’s administrator about coverage, they did share the nature of the claims and United subsequently shared the information with Hertfelder who publicly published the information.

The case is Streiff v. Oblate Service Corp., E.D. Mo., No. 4:07CV01494, 1/31/08.

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