In Kenseth v. Dean Health Plan, Inc., the 7th U.S. Circuit Court of Appeals found that the plaintiff had the right to sue the defendant for breach of fiduciary duties to recover damages due to a misrepresentation by employers over health benefits coverage. While early rulings had been in favor of the defendant, the court said recent case law had expanded the relief available for fiduciary breach under the Employment Retirement Income Security Act (ERISA). The court cited the Supreme Court ruling in Cigna Corp. v. Amara.
Originally in Kenseth, the court found that under ERISA Section 1132(a)(3), the plaintiff was not entitled to “equitable relief” since the scope of the section did not cover the “make-whole relief” the plaintiff was seeking. In other words, it did not cover monetary compensation. However, the implications of Cigna made this earlier finding moot, since this section of ERISA was found to “allow a participant, beneficiary or fiduciary to obtain other appropriate equitable relief to redress violations of parts of ERISA or the terms of the plan.” In further citing Cigna, the court said that since “monetary compensation is not automatically considered legal rather than equitable,” the plaintiff now had recourse under this section of ERISA.
“Under Cigna, [the plaintiff] may seek make-whole money damages as an equitable remedy under [ERISA] Section 1132(a)(3) if she can in fact demonstrate that Dean breached its fiduciary duty…and that the breach caused…damages,” the court opinion said
While the court ruled that the plaintiff has the right to seek redress under ERISA, it remanded the case back to the district court to address the question of fiduciary breach and harm caused to the plaintiff, as well as what form any equitable relief should take.
The plaintiff in this case is Deborah Kenseth, who participated in an ERISA-covered health care plan through her employer. The defendant is Dean Health Plan, Inc., who insured and administered the plan. Kenseth underwent surgery, which was covered, and later underwent a procedure to correct side effects of that surgery. Though the second procedure was authorized by Dean Health Plan, Inc., her claim to have the surgery paid for was denied. Left with more than $77,000 in medical bills, she filed suit, saying a customer service representative at Dean’s call center had confirmed that the procedure was covered and that in later denying her claim, Dean had violated its fiduciary duties under ERISA.
In 2011, Secretary of Labor Hilda Solis asked, in an amicus brief, that the 7th U.S. Circuit Court of Appeals overturn an earlier decision that upheld Dean could refuse to pay for Kenseth’s surgery despite having authorized it (see “Solis Again Uses CIGNA Decision in Brief for Plan Participant”).
In 2010, the 7th Circuit found Dean had violated its fiduciary responsibilities under ERISA by not warning those who contacted its call center that the coverage determinations from the customer service representatives could not be relied upon as final (see “HMO Found Liable for Coverage Information Gap”).
The full text of the opinion can be found here.