Cynthia Larson v. United Healthcare Insurance Co
723 F.3d 905
| 7th Cir. | 2013Background
- Plaintiffs (employees insured under employer-sponsored plans) sue six insurers, alleging the insurers require copayments for chiropractic visits that effectively shift costs to insureds.
- Suit invokes ERISA § 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)) for recovery of benefits and § 502(a)(3)/§ 1104 for breach of fiduciary duty; relief sought includes declaratory relief, refund of past copays, and equitable relief.
- Complaint alleges insurers decide eligibility and benefits and pay claims under the plans; plaintiffs contend Wisconsin Stat. § 632.87(3)(a) forbids chiropractic copays because the statute mandates equal coverage for chiropractic services when physician services are covered.
- District court dismissed: held insurers were improper defendants on the benefits claim and that setting copay terms is not a fiduciary act; plaintiffs appealed.
- Seventh Circuit affirmed in part and reversed in part: insurers may be proper defendants on a § 1132(a)(1)(B) benefits claim when they are the obligor and decide claims, but the fiduciary-duty claim fails because setting policy content (copays) is not a fiduciary act; also held § 632.87(3)(a) unambiguously does not prohibit chiropractic copays.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper defendant for § 1132(a)(1)(B) benefits claim | Insurers are proper defendants because they decide claims and pay benefits | Benefits suits must ordinarily be brought against the plan (not insurer) | Insurers can be sued under § 1132(a)(1)(B) when they are the obligor and control eligibility/benefits decisions |
| Fiduciary-duty claim under § 1132(a)(3) | Insurers breached fiduciary duty by issuing and failing to eliminate illegal copay provisions | Setting policy terms (copays) is not a fiduciary act | Dismissed: setting plan content (copayment terms) is not a fiduciary act under Pegram |
| Meaning of Wis. Stat. § 632.87(3)(a) | The statute forbids any chiropractic copay because copays shift costs to insureds | Statute requires equal coverage but does not prohibit copays | Statute is unambiguous and does not prohibit chiropractic copayments |
| Unequal-copay theory (raised on appeal) | In the alternative, insurers charge unequal copays violating the statute | Argument not raised below; defendants argue waived | Court treats this argument as new and waived; cannot be considered on appeal |
Key Cases Cited
- Pegram v. Herdrich, 530 U.S. 211 (2000) (decisions about plan content are not fiduciary acts)
- UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358 (1999) (state insurance mandates become plan terms under ERISA)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (overview of ERISA remedial scheme)
- Kennedy v. Plan Admin. for DuPont Sav. & Invest. Plan, 555 U.S. 285 (2009) (plan-document rule and interpreting plan terms)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (benefit determinations implicate fiduciary responsibilities)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (trust-law principles inform ERISA interpretation)
- Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (insurer is proper § 1132(a)(1)(B) defendant when obligor and claims decisionmaker)
- Leister v. Dovetail, Inc., 546 F.3d 875 (7th Cir. 2008) (general rule that benefits suits are normally against the plan)
- Feinberg v. RM Acquisition, LLC, 629 F.3d 671 (7th Cir. 2011) (discussion of proper defendants in ERISA benefits suits)