Larson v. United Healthcare Ins. Co.

Decision Date26 July 2013
Docket NumberNo. 12–1256.,12–1256.
Citation723 F.3d 905
PartiesCynthia LARSON, et al., Plaintiffs–Appellants, v. UNITED HEALTHCARE INSURANCE COMPANY, et al., Defendants–Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

OPINION TEXT STARTS HERE

Charles J. Crueger (argued), Erin K. Dickinson, Attorneys, Hansen, Riederer, Dickinson, Crueger, Milwaukee, WI, Amy M. Grace, Grace Legal LLC, Kansas City, MO, for PlaintiffsAppellants.

Stephen P. Lucke (argued), Glenn M. Salvo, Attorneys, Dorsey & Whitney, Minneapolis,MN, James Alan Friedman, Attorney, Godfrey & Kahn S.C., Gordon Davenport, III (argued), Jodi K. Fox, Attorneys, Foley & Lardner LLP, Madison, WI, Ralph A. Weber, Attorney, and Amelia L. McCarthy, Gass Weber Mullins LLC, Terry E. Nilles, Von Briesen & Roper, S.C., Milwaukee, WI, for DefendantsAppellees.

Before WOOD, SYKES, and TINDER, Circuit Judges.

SYKES, Circuit Judge.

This proposed class action alleges that six major health-insurance companies are violating Wisconsin law by requiring copayments for chiropractic care. The state insurance code prohibits health insurers from excluding coverage for chiropractic services if their policies cover the diagnosis and treatment of the same condition by a physician or osteopath. SeeWis. Stat. § 632.87(3)(a). The insurance policies at issue here provide this coverage, although like other healthcare services, the chiropractic coverage is subject to copayment requirements. The plaintiffs contend that section 632.87(3)(a) prohibits insurers from imposing any copayments on chiropractic care because copays in effect shift most or all of the cost of the care to the insured.

Because the plaintiffs are insured through employer-based health plans, the complaint seeks relief under two provisions of the Employee Retirement Income Security Act (ERISA): § 502(a)(1)(B), for recovery of benefits due, see29 U.S.C. § 1132(a)(1)(B); and § 502(a)(3), for breach of fiduciary duty, see id. §§ 1132(a)(3), 1104. The district court dismissed the complaint, holding that insurance companies are not proper defendants on an ERISA claim for benefits and the practice of requiring chiropractic copays is not a fiduciary act.

We affirm, although on somewhat different reasoning. Many of our cases say that an ERISA claim to recover benefits due under an employee-benefits plan normally should be brought against the plan. That's the general rule, but nothing in ERISA categorically precludes a benefits claim against an insurance company. Here, the complaint alleges that the insurers decide all claims questions and owe the benefits; on these allegations the insurers are proper defendants on the § 1132(a)(1)(B) claim. The complaint fails to state a claim for breach of fiduciary duty, however. Setting policy terms, including copayment requirements, determines the content of the policy, and “decisions about the content of a plan are not themselves fiduciary acts.” Pegram v. Herdrich, 530 U.S. 211, 226, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000).

Although the benefits claim was properly lodged against the insurers, it fails on the merits. Section 632.87(3)(a) is unambiguous and does not prohibit chiropractic copays. The plaintiffs argue in the alternative that the insurers impose unequal copayments in violation of the statute. This claim is new on appeal and is therefore waived.

I. Background

The case comes to us from a dismissal for failure to state a claim, seeFed.R.Civ.P. 12(b)(6), so we take the facts from the complaint, accept them as true, and draw reasonable inferences in favor of the plaintiffs. McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 879 (7th Cir.2012). Cynthia Larson and the other named plaintiffs are insured under employer-sponsored healthcare plans underwritten by the six defendant insurance companies.1 The insurers determine all eligibility and benefits questions and pay the plaintiffs' claims.

The plaintiffs regularly undergo chiropractic treatments, a common healthcare service that years ago was not routinely covered in health-insurance policies. For more than 25 years, however, Wisconsin has required health insurers operating within the state to cover chiropractic care on an equal basis as other forms of medical care for the same condition. More specifically, in 1987 the Wisconsin legislature adopted a statute banning insurance companies from excluding coverage for chiropractic services if their policies covered the treatment of the same condition by a physician or osteopath:

(a) No policy, plan or contract may exclude coverage for diagnosis and treatment of a condition or complaint by a licensed chiropractor within the scope of the chiropractor's professional license, if the policy, plan or contract covers diagnosis and treatment of the condition or complaint by a licensed physician or osteopath....

Wis. Stat. § 632.87(3)(a). The statute continues as follows:

This paragraph does not:

1. Prohibit the application of deductibles or coinsurance provisions to chiropractic and physician charges on an equal basis.

2. Prohibit the application of cost containment or quality assurance measures to chiropractic services in a manner that is consistent with cost containment or quality assurance measures generally applicable to physician services and that is consistent with this section.

Id.

The complaint alleges that although the insurers provide chiropractic coverage in their policies, the coverage comes with strings attached—copayment requirements—and because chiropractic care is relatively inexpensive, the required copayments often approach or exceed the cost of the treatment. 2 The practice of requiring copays, the complaint alleges, effectively shifts all or most of the cost of chiropractic care to the patient. The legal premise of the suit is that section 632.87(3)(a) prohibits health insurers from including any chiropractic copays in their policies.

The complaint invokes two of ERISA's remedial provisions: § 1132(a)(1)(B), which gives participants and beneficiaries a cause of action to recover benefits due under the terms of an employee-benefits plan; and § 1132(a)(3), which in tandem with § 1104 gives participants and beneficiaries a cause of action for breach of fiduciary duty. The plaintiffs seek multiple forms of relief: a declaration that the practice of requiring chiropractic copayments violates section 632.87(3)(a) and voiding all copayment terms in the defendants' policies; damages for benefits due based on past illegal copayments paid; and equitable relief in the form of “a surcharge resulting from [d]efendants' breach of fiduciary duty and to prevent the [d]efendants' unjust enrichment.”

The insurers separately moved to dismiss for failure to state a claim, seeFed.R.Civ.P. 12(b)(6), together waging a broad-spectrum attack on the complaint. The defense motions had the following arguments in common: (1) section 632.87(3)(a) does not prohibit the practice of imposing copayments for chiropractic care; (2) insurance companies are not proper defendants in a benefits claim under § 1132(a)(1)(B); (3) the plaintiffs may not use § 1132(a)(1)(B) as a vehicle for reforming a plan or policy to comply with state law; (4) setting copayment requirements is not a fiduciary act; (5) if the conduct was fiduciary in nature, then charging copayments was prudent and breached no fiduciary duty; (6) the claims are barred by Wisconsin's “voluntary payment” doctrine; and (7) the plaintiffs failed to exhaust their administrative remedies.

The district court sensibly began with the second and fourth arguments, which address whether plan participants and beneficiaries can sue their insurance companies at all under § 1132(a)(1)(B) and § 1132(a)(3). The judge agreed with the insurers on both points. Regarding the claim for benefits due, the judge noted a long line of cases from this court holding that an ERISA claim for benefits due under an employee-benefit plan ordinarily should be brought against the plan. See, e.g., Feinberg v. RM Acquisition, LLC, 629 F.3d 671, 673 (7th Cir.2011); Leister v. Dovetail, Inc., 546 F.3d 875, 879 (7th Cir.2008); Mote v. Aetna Life Ins. Co., 502 F.3d 601, 610–11 (7th Cir.2007); Blickenstaff v. R.R. Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669, 674 (7th Cir.2004); Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir.1996). Relying on this authority, the judge held that the plaintiffs cannot sue the health insurers under § 1132(a)(1)(B). Regarding the claim for breach of fiduciary duty, the judge held that the insurers were not acting as fiduciaries when they set their policy terms, including the chiropractic copay requirements. These rulings disposed of the entire case, so the judge dismissed the complaint without addressing the defendants' alternative arguments. This appeal followed.

II. Discussion

ERISA “provides ‘a panoply of remedial devices' for participants and beneficiaries of [employer-provided] benefit plans.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 108, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)). This case focuses on two: the cause of action to recover and clarify plan benefits, see29 U.S.C. § 1132(a)(1)(B), and the cause of action for breach of fiduciary duty, see id. § 1132(a)(3) (establishing the cause of action) & § 1104 (describing the content and scope of fiduciary duty). Although the plaintiffs seek multiple forms of relief—a declaration of rights, damages in the form of overpaid copays, and equitable relief—their complaint is structured around these two causes of action. Because the court dismissed the complaint for failure to state a claim, seeFed.R.Civ.P. 12(b)(6), our review is de novo, McReynolds, 694 F.3d at 879.3

A. Section 1132(a)(1)(B) Claim for Benefits Due

Among other remedies, ERISA's civil-enforcement section provides that [a] civil action may be brought ... by a participant or beneficiary ......

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