Kenseth v. Dean Health Plan Inc.

Citation50 Employee Benefits Cas. 2001,784 F.Supp.2d 1081
Decision Date14 February 2011
Docket NumberNo. 08–cv–1–bbc.,08–cv–1–bbc.
PartiesDeborah A. KENSETH, Plaintiff,v.DEAN HEALTH PLAN, INC., Defendant.
CourtUnited States District Courts. 7th Circuit. Western District of Wisconsin

OPINION TEXT STARTS HERE

Lisa Claire Goldman, Lawton & Cates, S.C., Madison, WI, for Plaintiff.Richard Lee Schmidt, Catherine M. Rottier, Boardman, Suhr, Curry & Field LLP, Madison, WI, for Defendant.

OPINION AND ORDER

BARBARA B. CRABB, District Judge.

This case brought under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001–1461, and state law is on remand from the Court of Appeals for the Seventh Circuit. Kenseth v. Dean Health Plan, 610 F.3d 452 (7th Cir.2010). The court of appeals affirmed the dismissal of plaintiff Deborah Kenseth's claim under state law and her claim for equitable estoppel, but it reversed the dismissal of her claim for breach of fiduciary duty. The court “remand[ed] for a determination as to whether Kenseth is seeking any form of equitable relief that is authorized by 29 U.S.C. § 1132(a)(3) and, if so, for further proceedings on that claim as are consistent with this opinion.” Id. at 483. The parties have filed new motions for summary judgment, which are ready for decision.

The facts of the case are set forth in the appellate opinion as well as in this court's first summary judgment opinion, Kenseth v. Dean Health Plan, Inc., 568 F.Supp.2d 1013 (W.D.Wis.2008), so a full recitation is not necessary. However, I will provide a brief overview of the case for context.

In 1987, plaintiff had gastric bands placed around her stomach to help her lose weight. Years later she needed to have the bands removed after she began experiencing acid reflux that was damaging her esophagus. By that time, she had changed employers and had a different health plan through defendant. In 2005, she called defendant's customer service number and was told that her health insurance would cover the procedure. However, after plaintiff underwent surgery, defendant denied plaintiff's claim under a provision that precluded coverage for procedures related to obesity. The court of appeals concluded that these facts supported a claim for breach of fiduciary duty under ERISA:

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.

Kenseth, 610 F.3d at 456.

In her summary judgment brief, plaintiff argues that this court may decide as a matter of law that defendant breached its fiduciary duty to her. (The court of appeals did not resolve that question because plaintiff had not filed her own motion for summary judgment.) In addition, she has identified various remedies in her second amended complaint that she says fall within the meaning of “appropriate equitable relief” under § 1132(a)(3). In particular, she asks the court to order defendant to amend its policies and procedures in various ways to prevent a similar problem from recurring in the future. Am. Cpt. ¶¶ 68a–68f, dkt. # 59. The rest of her requests involve payment or collection of her medical expenses. Id. at ¶¶ 68g–68m. Finally, she asks for an award of attorney fees under 29 U.S.C. § 1132(g)(1). The Secretary of the Department of Labor has filed an amicus brief in favor of plaintiff, arguing that appropriate equitable relief includes “make-whole monetary recoveries and disgorgement of ill-gotten gains.” Amicus Br., dkt. # 73, at 6.

I need not resolve the question whether any factual issues remain on plaintiff's breach of fiduciary duty claim because I cannot grant plaintiff the relief she seeks regardless whether a breach occurred. The court of appeals expressed skepticism in its opinion regarding the likelihood that plaintiff was seeking appropriate equitable relief and neither plaintiff nor the Secretary has shown the court's tentative conclusion to be misguided. Plaintiff's request for defendant to “hold her harmless for the cost of her surgery and treatment” is a thinly-disguised request for compensatory damages that may not be awarded under § 1132(a)(3). Although plaintiff's requests for policy changes are properly classified as equitable, they are not justiciable because plaintiff is no longer a participant in one of defendant's plans and she has pointed to no evidence suggesting that this fact will change in the foreseeable future. Finally, plaintiff has not shown that she is entitled to an award of attorney fees under § 1132(g)(1). Accordingly, I am granting defendant's motion for summary judgment.

Plaintiff may see this as a harsh result. Defendant has refused to provide her any relief after lulling her into believing that she had coverage for an expensive operation, only to reverse course after the procedure was performed, leaving her with a stack of medical bills. Many might be surprised to learn that defendant has no legal duty to make things right under those circumstances.

It is certainly unfortunate that the parties have not found a way to settle this matter out of court. Plaintiff's medical expenses likely create a great hardship for her, but the amount it would have cost defendant to approve plaintiff's claim (approximately $35,000) is almost certainly less than the amount that defendant has expended in litigation. However, regardless of the reasons for defendant's conduct, I am not free to ignore the distinction between equitable and legal relief that Congress and the Supreme Court have made in § 1132(a)(3).

OPINION
A. Appropriate Equitable Relief

The threshold question is whether plaintiff has requested any relief that is authorized by 29 U.S.C. § 1132(a)(3), which the parties agree is the only relevant remedial provision in this case. That section authorizes a lawsuit “by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” The court of appeals stated in this case that plaintiff must be “able to identify a form of equitable relief that is appropriate to the facts of this case. If she cannot, then she will have failed to make out a claim on which relief may be granted, and the claim may be dismissed on that basis.” Kenseth, 610 F.3d at 483.

In addressing this matter, I must acknowledge that I am not writing on a blank slate. The court of appeals did not definitively resolve the question whether plaintiff had asked for “appropriate equitable relief” because the parties did not raise it, but the court did discuss the matter at length. The court began with a summary of the law, noting that “compensatory damages and other forms of legal relief are beyond the scope of the relief authorized” and that appropriate equitable relief might include injunctions or mandamus. Id. at 482.

The court stated that restitution “can be either legal or equitable in nature.” Id. The “classic example” of restitution as an equitable remedy occurs when “the defendant has wrongfully obtained or withheld the plaintiff's money or property, and a constructive trust or equitable lien is imposed to ensure that the defendant disgorges his ill-gotten gain and the plaintiff receives that to which he is entitled.” Id. However, the court noted that plaintiff “has not alleged, and there is no evidence in the record suggesting, that [defendant] is holding money or property that rightfully belongs to her.” Id.

The court noted allegations in the complaint suggesting that plaintiff believed she was entitled to damages caused by the wrongful denial of benefits. Id. However, plaintiff chose not to pursue a “denial-of-benefits claim” under § 1132(a)(1)(B), presumably because of “the broad discretion that [defendant] enjoys in construing the terms of the Certificate, which in turn would necessitate a showing that its decision to deny [plaintiff]'s claim was arbitrary and capricious.” Id. at 483. The court reminded plaintiff that she “may not obtain comparable relief” to a denial-of-benefits claim “under the guise of a claim for breach of fiduciary duty.” Id.

The court concluded with its preliminary assessment of the relief plaintiff requests:

The relief that Kenseth truly seems to seek is relief that is legal rather than equitable in nature. Her complaint, for example, alleges that she has suffered a pecuniary loss and other consequential damages as a result of Dean's actions. R. 8 ¶¶ 32–33. This would be consistent with our earlier discussion of the ways in which a jury might find that Kenseth was harmed by Dean's alleged breach of fiduciary duty. Supra at 481. But this is the sort of make-whole relief that is not typically equitable in nature and is thus beyond the scope of relief that a court may award pursuant to section 1132(a)(3).

Id.

It is not entirely clear how this court should treat the discussion of the court of appeals. The discussion is dicta and therefore not binding, but it is “considered dicta,” which generally “provides the best, though not an infallible, guide to what the law is, and it will ordinarily be the duty of a lower court to be guided by it.” Reich v. Continental Casualty Co., 33 F.3d 754, 757 (7th Cir.1994). It is clear from its discussion that the court of appeals has strong doubts about the availability of appropriate equitable relief in this case. Thus, it is plaintiff's burden to show that the court “overlooked some point that might have altered its view.” Id. Plaintiff has failed to do this.

1. Medical expenses

Unfortunately, pl...

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