In Kenseth v. Dean Health Plan, Inc., 722 F.3d 869 (7th Cir. 2013), Ms. Kenseth had gastric band surgery in 1987. Eighteen years later, Kenseth’s physician recommended a second operation to address the severe acid reflux and other serious health problems that had arisen since the gastric band surgery. The medical policy specifically excluded treatment for morbid obesity; however, when Ms. Kenseth called to get approval for the second surgery, a customer service representative told Kenseth over the phone that the medical plan would cover the procedure subject to a $300 co-payment. Subsequently, all of the medical claims related to the second surgery, totaling approximately $78,0000, were denied by the health plan as being related to morbid obesity.
The Court was troubled by the health plan leading Kenseth to believe that the second procedure would be covered when Kenseth called for certification and then denying the claims after the surgery. The Court explained that fiduciaries have a duty to disclose material information to plan participants, which includes a duty not to mislead and an affirmative duty to communicate material facts affecting the interests of plan participants. Although negligence of the individual in supplying advice is not actionable as a breach of fiduciary duty, a fiduciary may be liable for failing to take reasonable steps in furtherance of an insured’s right to accurate and complete information.
The court in Kenseth reversed the district court opinion noting that where the defendant, by encouraging plan participants to call for coverage information before undergoing procedures, by telling plaintiff that defendant would pay for the procedure, and by not alerting plaintiff that she could not rely on the advice she received, lulled plaintiff into believing that defendant would cover the costs of the procedure…and where plaintiff did not obtain alternate coverage because she believe she was covered, plaintiff could seek make-whole money damages as an equitable remedy under § 502(a)(3) if the administrator’s breach of fiduciary duty caused her damages. The Court seemed most bothered by the fact that there was no warning in the medical plan to plan participants that they could not rely upon the advice given to them by the customer service representatives nor was there any clear explanation given as to how a plan participant could obtain a definitive answer on whether a particular procedure would be covered. The Seventh Circuit ended up remanding the case to the district court to determine whether there was a breach of fiduciary duty, whether the breach was the cause of any harm to plaintiff, and what form of equitable relief was appropriate in light of circumstances of case.
Another medical claim case from the Seventh Circuit, Killian v. Concert Health Plan, 742F.3d 651 (7th Cir. 2013), involved another denied surgery that was approved before the surgery was performed but then denied after the surgery was over and after the plaintiff had incurred $80,000 in medical bills. In the Killian case, the plaintiff’s wife had been diagnosed with lung cancer which had spread to her brain. At first, physicians said they could not operate on Mrs. Killian but then she then sought a second opinion from an out-of-network provider who told her that she had to have surgery or die in five days.
Prior to the surgery, the husband called a “provider participation” number on his insurance card and explained that Killian had to be admitted and undergo surgery or she would die in five days. He was told to “go ahead with whatever had to be done” and call back later. The husband called back the same day using the “customer service,” number which was the same as the “utilization review” number. The husband said he was trying to get confirmation that his wife was going to be admitted, and the representative said “okay” but did not tell Mr. Killian whether the service was covered or if there would be any limits to coverage. The claims were later denied when it was discovered that the surgery was performed at an out-of-nework medical center. The medical plan was not clear on which medical providers were in-network and which ones were not.
The Court in Killian noted that an ERISA fiduciary has a duty to provide complete and accurate information, even if beneficiary does not specifically inquire about a particular topic, which is triggered when a beneficiary makes the fiduciary aware of the beneficiary’s status and situation. Relying on the Kenseth case, the Seventh Circuit reversed the grant of summary judgment on the breach of fiduciary duty claim with respect to husband’s telephone call inquiries and remanded to the district court to permit the trier of fact to determine: (1) whether the telephone calls put Concert on adequate notice, thus giving rise to a duty to disclose material information related to the Killians’ situation, (2) whether Concert breached this duty and (3) whether the breach harmed the husband. In a footnote, the Seventh Circuit instructed that the district court also must address the type of remedies available under ERISA, which provides equitable relief for a breach of fiduciary duty, and citing to