Sandra Peters v. Aetna Incorporated
2 F.4th 199
| 4th Cir. | 2021Background
- Mars, Inc. maintained a self-funded employee health plan; Aetna served as claims administrator under a Master Services Agreement (MSA).
- Aetna subcontracted chiropractic/physical-therapy services to Optum; Aetna and Optum allegedly used a “dummy” CPT code to bundle Optum’s administrative fee into provider claims so the Plan/participants bore that fee via coinsurance/deductible calculations.
- Participant Sandra Peters paid coinsurance/deductible amounts on Optum-related claims, sued under ERISA seeking restitution (individual and Plan), surcharge, disgorgement, declaratory and injunctive relief, and sought class certification; district court denied certification and granted summary judgment to Aetna and Optum.
- On appeal the Fourth Circuit addressed Article III standing, the proper measure of loss for restitution (applying Donovan), whether Aetna/Optum were ERISA fiduciaries or parties in interest, and whether class certification was improperly denied.
- Court ruled: affirmed dismissal of Peters’ individual restitution claim (no net financial loss under Donovan), reversed summary judgment as to equitable remedies (surcharge, disgorgement, declaratory/injunctive relief) and Optum’s potential liability as a party in interest, vacated and remanded Plan restitution and class-certification issues for further proceedings.
Issues
| Issue | Plaintiff's Argument (Peters) | Defendant's Argument (Aetna/Optum) | Held |
|---|---|---|---|
| Article III standing for restitution and equitable relief | Peters paid excess on certain claims because Optum’s admin fee was included in bundled rates; that is an injury-in-fact | Appellees: any discrete overpayments are offset by aggregate savings across the year, so no injury | Standing: Peters has standing to press restitution (for now) because discrete claim overcharges show injury-in-fact; even absent personal loss, she has standing for surcharge/disgorgement/injunctive relief under Pender/Amara doctrines |
| Measure of damages for restitution (individual v. Plan) | Restitution should return amounts overcharged on specific claims | Aetna: aggregate-year comparison shows Peters suffered net gain; district court’s hypothetical (no Aetna–Optum relationship) analysis was wrong | On the merits, apply Donovan: compare what was actually paid with what would have been paid excluding Optum’s admin fee, offset gains/losses across the plan year. Applying Donovan, Peters individually suffered no net loss (affirmed); Plan-level restitution unresolved (vacated/remanded) |
| Whether Aetna acted as an ERISA fiduciary and breached duties (misleading EOBs, burying fees) | Aetna functioned as a fiduciary when it directed Plan assets and administered claims and breached duties by (1) labeling Optum as provider, (2) using dummy CPT codes, (3) misrepresenting amounts billed, and (4) shifting Optum fees to Plan/participants | Aetna: merely subcontracting/establishing a network and performing ordinary claims administration; no fiduciary conduct when negotiating networks or settling rates | Reversed summary judgment: factual disputes exist that could allow a reasonable factfinder to find Aetna a functional fiduciary and to conclude breaches occurred; equitable remedies (surcharge/disgorgement/injunctive/declaratory) survive summary judgment |
| Optum liability: fiduciary or party in interest engaged in prohibited transactions | Optum participated in scheme, knew of dummy-code strategy, benefited from admin fees; thus liable at least as a party in interest | Optum: purely administrative subcontractor with no discretion over Plan assets or plan terms; no pre-existing party-in-interest status | Optum is not shown to be a functional fiduciary on summary judgment, but a reasonable factfinder could find Optum a party in interest aware of and participating in prohibited transactions — summary judgment reversed as to party-in-interest liability |
| Class certification (ascertainability & commonality) | Class members identifiable from Aetna/Optum data; common legal/factual questions (fiduciary status, misrepresentations, liability) support class treatment for equitable relief | Defendants: individualized inquiries into deductible/coinsurance/outcomes and some members benefited, so commonality/ascertainability fail | District court abused discretion by denying class certification without addressing surviving equitable claims; vacated and remanded for reassessment of Rule 23 requirements consistent with this opinion |
Key Cases Cited
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (ERISA § 502(a)(1) principles and fiduciary duties)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (equitable remedies under ERISA § 502(a)(3) and limits on detrimental-reliance requirements)
- Donovan v. Bierwirth, 754 F.2d 1049 (2d Cir. 1985) (measure of loss for fiduciary breach: compare actual plan results to counterfactual and offset gains/losses)
- Pender v. Bank of Am. Corp., 788 F.3d 354 (4th Cir. 2015) (standing for disgorgement claims under ERISA does not require personal financial loss)
- Hi–Lex Controls, Inc. v. Blue Cross Blue Shield of Mich., 751 F.3d 740 (6th Cir. 2014) (third‑party administrator exercised control over plan assets and could be a functional fiduciary)
- Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356 (2006) (standards for equitable restitution/identifiable plan assets)
- Harris Trust & Sav. Bank v. Salomon Smith Barney, 530 U.S. 238 (2000) (party‑in‑interest liability and knowledge requirement for prohibited transactions)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (commonality requirement for class certification)