Knieriem v. Group Health Plan, Inc.

• Citation: 434 F.3d 1058
• Decision Date: 19 January 2006
• Docket Number: No. 05-1139.,05-1139.
• Parties: David KNIERIEM, as personal representative of the Estate of Troy Siade, deceased, Appellant, v. GROUP HEALTH PLAN, INC.; Bernard Mansheim, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

434 F.3d 1058

David KNIERIEM, as personal representative of the Estate of Troy Siade, deceased, Appellant, v. GROUP HEALTH PLAN, INC.; Bernard Mansheim, Appellees.

No. 05-1139.

United States Court of Appeals, Eighth Circuit.

Submitted: October 12, 2005.

Filed: January 19, 2006.

David C. Knieriem, argued, Clayton, MO, pro se.

Melissa Z. Baris, argued, St. Louis, MO, for appellee.

Before RILEY, HANSEN, and COLLOTON, Circuit Judges.

RILEY, Circuit Judge.

David Knieriem (Knieriem), as personal representative of the estate of Troy Siade (Siade), appeals the order of the district court¹ dismissing his claim, because the relief sought against Siade's employer-sponsored health care plan was not available under the Employee Retirement Income Security Act of 1974 (ERISA), § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B). We affirm.

I. BACKGROUND

Siade had an employer-sponsored health care plan provided by Group Health Plan, Inc. (GHP). The plan was governed by ERISA. GHP issued the health insurance policy for the plan. In 2001, Siade was diagnosed with non-Hodgkin's lymphoma and sought GHP's pre-approval for an allogeneic stem cell transplant. GHP denied coverage on the basis the procedure was "investigational and unproven" and therefore excluded under the plan's policy.

In April 2004, following GHP's denial of coverage, Siade filed a lawsuit in Missouri state court seeking damages against GHP and Dr. Bernard Mansheim, Chief Medical Officer of Coventry Health Care, GHP's parent company (collectively, GHP). Siade alleged GHP's wrongful denial of coverage amounted to medical malpractice and intentional infliction of emotional distress under Missouri law. GHP removed the case to federal court based on ERISA preemption. The district court denied Siade's motion to remand, finding the state claims were preempted by ERISA, but granted Siade leave to file an amended complaint to plead a claim under ERISA.

In his amended complaint, Siade² requested a jury trial and alleged GHP breached its fiduciary duty by denying coverage. For relief, Siade requested the court "order restitution by defendants to Plaintiff; to award Plaintiff a `surcharge' as that term was used in equity prior to the fusion of law and equity; to provide compensation to Plaintiff for defendants' breach of fiduciary duty; [and] to award attorney's fees." GHP then moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim under ERISA. The district court granted the motion, reasoning "[w]hile Plaintiff has phrased his request as for `restitution' and a `surcharge for breach of a fiduciary duty,' Plaintiff is actually seeking monetary relief, and such relief is not available under ERISA."

On appeal, Knieriem argues the district court erred in dismissing the claim because ERISA allows a monetary award of restitution and a surcharge to the beneficiaries of a decedent when the plan administrator improperly fails to authorize a procedure.

II. DISCUSSION

We review de novo the district court's grant of a motion to dismiss pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint as true and granting every reasonable inference in favor of the nonmovant. MM & S Fin., Inc. v. Nat'l Ass'n of Sec. Dealers, Inc., 364 F.3d 908, 909 (8th Cir.2004) (citing Stone Motor Co. v. GMC, 293 F.3d 456, 464 (8th Cir.2002)). "A motion to dismiss should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts to warrant a grant of relief." Gilmore v. County of Douglas, Neb., 406 F.3d 935, 937 (8th Cir.2005) (citing Carter v. Arkansas, 392 F.3d 965, 968 (8th Cir.2004)).

There is no dispute Siade did not receive the allogeneic stem cell transplant. We will assume, as we must in reviewing a dismissal for failure to state a claim, GHP breached its fiduciary duty by denying coverage for the procedure. The question before us is whether the requested relief is available under ERISA.

Knieriem does not deny the relief requested is money damages. Instead, he contends ERISA's roots in the equitable law of trusts allow for monetary damages in the present case. First, Knieriem argues, as a fiduciary, GHP held the money Siade paid for health benefits in trust. Therefore, recovery is nothing more than the restitution of the funds the fiduciary had an obligation to release. Knieriem's second argument is monetary recovery in the form of a surcharge is available as an equitable remedy when, as here, a trustee has gained personally from wrongful action taken in managing a trust. We disagree.

A. Restitution

As the Supreme Court has oft-iterated, "ERISA is a comprehensive and reticulated statute, the product of a decade of congressional study of the Nation's private employee benefit system." Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (internal quotations omitted). The Court similarly has repeated its reluctance "`to tamper with [the] enforcement scheme' embodied in the statute by extending remedies not specifically authorized by its text." Id. (quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)) (alteration in original). The statute's failure to include certain remedies, as the Court has noted, was not an oversight; rather, "ERISA's carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly." Id. (internal quotations omitted). Vague notions that ERISA's purpose would be defeated if recovery was limited are inadequate to overcome the basic words of the statute. Mertens v. Hewitt Assocs., 508 U.S. 248, 261, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993); Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 943 (8th Cir.1999).

ERISA's civil enforcement provision, found in section 1132, lists six types of civil actions that may be pursued for violations of the statute. See Russell, 473 U.S. at 139-40, 105 S.Ct. 3085. The present case was brought pursuant to section 1132(a)(3), which allows a civil action, "by a participant, beneficiary, or fiduciary . . . (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of . . . the terms of the plan." 29 U.S.C. § 1132(a)(3)(B). This provision allows an individual plan participant to seek equitable remedies for breach of fiduciary duty in his individual capacity. See Varity Corp. v. Howe, 516 U.S. 489, 510-13, 515, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (finding section 1132(a)(3) allows individual actions for equitable relief for breaches of fiduciary duty). Recovery is limited, however, to "classic" equitable remedies, Mertens, 508 U.S. at 257-58, 113 S.Ct. 2063, "such as injunctive, restitutionary, or mandamus relief, and does not extend to compensatory damages," Kerr, 184 F.3d at 943.

Restitution can be equitable or compensatory, and the distinction lies in the origin of the award sought. Id. at 944. "Restitution seeks to punish the wrongdoer by taking his ill-gotten gains, thus, removing his incentive to perform the wrongful act again. Compensatory damages on the other hand focus on the plaintiff's losses and seek to recover in money the value of the harm done to him." Id. (citing 1 Dan B. Dobbs, Law of Remedies § 4.1(1), at 369-71 (2d ed.1993)). Therefore, despite the label attached to the remedy in the present case, we must look to the origin of the relief sought to determine whether it is equitable or compensatory.

Knieriem requests monetary relief for the harm suffered. Knieriem states in his brief, "The relief the estate seeks is the monetary benefit that GHP should have paid for the withheld procedure, including any ancillary profit either GHP or Mansheim made from the denial of the benefit." In his prayer, Knieriem asks for restitution, surcharge, and "compensation to Plaintiff for defendants' breach of fiduciary duty." Knieriem's requested relief is essentially compensatory.

The Supreme Court and this circuit precedent precludes an award of compensatory damages under section 1132(a)(3)(B). See Mertens, 508 U.S. at 258-59, 113 S.Ct. 2063, cited in Kuhl v. Lincoln Nat'l Health Plan of Kansas City, Inc., 999 F.2d 298, 304-05 (8th Cir.1993). In Kuhl, the insurer delayed authorizing a covered surgical procedure while searching for a network hospital to perform the procedure. Id. at 300. By the time the insurer approved surgery, the insured's condition had deteriorated such that surgery was no longer a viable option. The insured died, and his estate filed an action against the insurer in state court alleging, inter alia, medical malpractice and emotional distress. Id. Following removal based on ERISA preemption, the court found plaintiff's state tort claims were preempted. Id. at 301. Pertinent to the case at bar, the court also dismissed a subsequent complaint for breach of fiduciary duty brought pursuant to 29 U.S.C. § 1132(a)(3)(B). Id. Citing circuit and Supreme Court precedent, we said,

We have previously held that monetary damages are not available under section [1132](a)(3)(B)(i). In Novak [v. Andersen Corp.], we . . . held that an award of monetary damages is a legal remedy, not an equitable one. This interpretation has recently been vindicated by the Supreme Court. After an extensive review of the history of equitable remedies and the statutory language of section [1132](a)(3), the Court concluded that damages do not constitute "other equitable relief."

Id. at 304-05 (citing Mertens, 508 U.S. at 258-59, 113 S.Ct. 2063; Novak v. Andersen Corp., 962 F.2d 757, 759, 761 (8th Cir.1992)) (internal citations omitted). We concluded the "claim for monetary damages was not cognizable under section [1132](a)(3)(B)(i)." Id. at 305.

Knieriem argues his case is distinguishable from Kuhl, because in the present case the funds sought were held in trust, are identifiable, and should have...