Solis said the decision by the U.S. District Court for the Western District of Wisconsin that the Employee Retirement Income Security Act (ERISA) provides no make-whole monetary remedy for a fiduciary breach that harms a participant, is “misplaced.” The U.S. Supreme Court’s decision in CIGNA Corp. v. Amara, which was decided after the district court’s decision, holds that the make-whole remedy of surcharge, as well as other equitable remedies such as estoppel and reformation, are available under section 502(a)(3) against fiduciaries who have breached their duties under ERISA.
Solis asked the 9th U.S. Circuit Court of Appeals to reverse the district court’s decision.
She explained that the CIGNA defendant’s status as an ERISA fiduciary provided the critical distinction between CIGNA and previous Supreme Court cases involving non-fiduciaries where equitable monetary relief was not awarded. The error of the district court and of most federal circuits was in applying to fiduciaries a body of law that related only to non-fiduciaries.” With that error corrected by CIGNA, remedial law under ERISA is now congruent with the statute’s purposes and with the overwhelming weight of equitable jurisprudence predating ERISA. Thus, CIGNA has dramatically changed the legal landscape, and the holding of the district court below and the law of this and most other federal circuits on this question of remedies for a fiduciary breach have been effectively overruled,” the brief stated.
Deborah Kenseth participated in an ERISA-covered health care plan sponsored by her employer, which Dean Health Plan Inc. insured and administered. Although Dean pre-authorized Kenseth’s surgery to correct the ill effects of a prior gastric bypass, it denied her claim for benefits after she had the surgery, citing a plan provision that excludes surgery for morbid obesity and complications resulting from such surgery.
Kenseth claims that Dean violated its duties as an ERISA fiduciary when it erroneously pre-authorized her surgery and left her liable for over $77,000 in medical bills, mostly owed to providers employed by or affiliated with Dean Health Systems, the parent company of Dean. Kenseth filed suit under ERISA section 502(a)(3) for "appropriate equitable relief" to remedy this violation. The district court ruled in favor of Dean.
The 9th Circuit held on appeal that the "facts support a finding that Dean breached its fiduciary duty to Kenseth by providing her with a summary of her insurance benefits that was less than clear as to coverage for her surgery, by inviting her to call its customer service representative with questions about coverage but failing to inform her that whatever the customer service representative told her did not bind Dean, and by failing to advise her what alternative channel she could pursue in order to obtain a definitive determination of coverage in advance of her surgery." On remand, the district court again entered summary judgment for Dean, this time on the ground that the court "cannot grant plaintiff the relief she seeks regardless whether a breach occurred." The court held that the make-whole monetary recovery Kenseth seeks is legal and not "equitable relief" that a court may award under section 502(a)(3) of ERISA,
The case is before the 9th Circuit for a second time.
The amicus brief is here.
Solis has used the recent CIGNA decision to support plaintiffs in other similar cases (see "Solis Files Brief with U.S. Court of Appeals in McCravy Case").