Killian v. Concert Health Plan, 680 F.3d 749

Background

Royal Management Corp administered Susan Killian's ERISA health-plan; Concert Health Plan Insurance Company served as claims reviewer and fiduciary with discretion to interpret the plan and deny benefits.
Susan enrolled in the PHCS Open Access network via plan option S035, which advised using SELECT providers to avoid reduced benefits and to verify provider participation.
Susan was diagnosed with metastatic brain cancer, underwent Rush University Hospital treatment with Dr. Bonomi and Dr. Barnes, and later died; out-of-network treatment costs totaled about $80,000.
James Killian, as independent administrator of Susan's estate, sought denial-of-benefits, breach-of-fiduciary-duty relief, and statutory damages for failing to provide plan documents; the district court granted summary judgment on denial-of-benefits and breach-of-fiduciary-duty, and awarded limited statutory damages.
The district court held Concert’s denial rational and found no fiduciary breach based on SPD and provider-network disclosure, but concluded potential statutory penalties warranted further briefing.
This Seventh Circuit decision affirms in part, reverses in part, and remands for further proceedings on statutory-penalty calculations and potential stipulations regarding network status of Rush University Hospital and associated providers.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether denial of benefits was arbitrary and capricious	Killian argues denial lacked rational support given uncertain in-network status.	CHPIC/Royal Management contends denial was rational based on out-of-network treatment and record support.	Denial upheld; decision not arbitrary and capricious.
Whether failure to provide an SPD breached fiduciary duty and caused harm	Killian alleges failure to provide SPD harmed Susan by obscuring network information.	Defendants contend no causation or harm shown; SPD absence did not cause tangible damage.	Breach found; but harm not shown on record; remanded for equitable-relief consideration while upholding summary judgment on harm.
Whether failure to inform about out-of-network status during two phone calls breached fiduciary duty	Killian claims CHPIC should have told Mrs. Killian’s representatives that Rush was out-of-network during calls.	Majority; no actionable information was provided; no duty triggered by ministerial advice absent clear notice of predicaments.	Not a breach of fiduciary duty as to the two calls; no liability established on this record.
Whether statutory penalties for failure to provide SPD and/or group policy were properly calculated	Killian sought penalties for both SPD and group-policy nonproduction over defined periods.	District court erred in calculation; Midland remand needed to recompute with correct dates and two-claim structure.	Remanded for recalculation; district court should address both SPD and group-policy-penalty claims separately.

Key Cases Cited

Kenseth v. Dean Health Plan, Inc., 610 F.3d 452 (7th Cir. 2010) (duty to disclose and the effect of clear plan documents; ministerial agents can misadvise)
Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574 (7th Cir. 2000) (duty to inform; lack of clarity in plan documents can lead to liability)
Hess v. Reg-Ellen Mach. Tool Corp., 423 F.3d 653 (7th Cir. 2005) (arbitrary-and-capricious review of benefits decisions)
Semien v. Life Ins. Co. of N. Am., 436 F.3d 805 (7th Cir. 2006) (scope of deferential review and rational support standard)
Carter v. Pension Plan of A. Finkl & Sons Co. for Eligible Office Emps., 654 F.3d 719 (7th Cir. 2011) (arbitrary-and-capricious review; rational support in record)
Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (Supreme Court 2002) (ERISA equitable-relief remedy scope and causation principles)