Kenseth v. Dean Health Plan (7th Cir. (Wis.), June 13, 2013)
In this case, an employee was informed by an employer health plan (Dean) that her surgery was approved. Then after the surgery, the plan changed its mind and refused to pay over $77,000 in medical bills. A review of the certificate of insurance was ambiguous on whether there was coverage for the surgical procedure. The certificate also failed to identify a means by which a participant may obtain a determination on a coverage question, and invited participants to call customer service with coverage questions, but did not warn them that they could not rely on any advice they received.
The court found that there was evidence that “Dean did not train customer service representatives to warn callers that they could not rely on the answers they were given by phone in response to coveragerelated questions. Moreover, the evidence indicated that Dean did not train customer service representatives to advise callers like Kenseth how they might obtain definitive advice regarding whether particular medical services would be covered by the policy.” In addition, there was alleged self-dealing in the mix because the hospital where the surgery was performed was owned by a company, which owned five percent of Dean Health Systems, Inc. and had a 47 percent interest in Dean.
On a first trip to the Seventh Circuit, the panel agreed that the one claim that the employee could pursue was an ERISA breach of fiduciary duty claim. But on remand to the district court, the judge held that the employee must lose because there was no form of “appropriate equitable relief.” After the case was dismissed and on appeal, the U.S. Supreme Court holding in Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), came down allowing monetary relief in the form of equitable “surcharge” under ERISA § 502(a)(3).
The Seventh Circuit vacated and remanded the dismissal, sending the case back for a trial. It held under Amara that “appropriate equitable relief” may include “make whole” relief, including the recovery of the medical expenses. Concurring in the judgment, Judge Manion stated that while the case had to be remanded in light of Amara, the panel majority was incorrect to imply that monetary damages were a proper form of relief under ERISA § 502(a)(3): That was not Cigna’s holding. … And ‘surcharge’ is not simply the moniker given to any monetary payment for an equitable harm-if it were, then there would be no need for other equitable remedies, such as restitution, equitable estoppel, or a constructive trust.”