13th Jun 2013

Law360, New York

A woman who sued Dean Health Plan Inc. under the Employee Retirement Income Security Act after being stuck with a $77,974 medical bill can seek monetary compensation in light of the U.S. Supreme Court’s 2011 Cigna Corp. v. Amara decision, the Seventh Circuit said Thursday.

A three-judge panel revived Deborah Kenseth’s ERISA breach of fiduciary duty suit against insurance services company Dean Health, vacating a trial court decision that granted Dean Health summary judgment and concluded that Kenseth couldn’t be awarded the relief she was after even if she proved a breach.

When the high court issued Cigna v. Amara, a few months after the lower court ruling, it clarified the scope of relief available for a breach of fiduciary duty under ERISA and substantially changed the understanding of what is available to plaintiffs under the section
of the law Kenseth invoked, which provides for “appropriate equitable relief,” Thursday’s
opinion said.

“Kenseth has argued for make-whole relief in the form of monetary compensation for a breach of fiduciary duty from the start of this litigation. We now know that, in appropriate circumstances, that relief is available under section 1132(a)(3),” said the Seventh Circuit.

The Seventh Circuit said that if Kenseth could demonstrate a breach of fiduciary duty and show that the breach caused her damages, she could seek an appropriate equitable remedy that included money damages.

But Thursday’s ruling sent the case back for the lower court to assess whether Dean had breached its fiduciary duty, what if any harm the breach may have caused and what equitable relief ought to look like given the circumstances of this particular case.

Thursday’s decision marked the second time the Seventh Circuit had ruled on Kenseth’s case, which was originally filed in state court and later removed to Wisconsin federal court in Jan. 2008. The lower court tossed the case in July of that year but the Seventh Circuit subsequently vacated and remanded for further proceedings on the breach of fiduciary duty claim. The trial court threw out the case again in Feb. 2011.

A doctor recommended gastric bypass surgery for Kenseth in 2005 to deal with complications from a previous surgery in 1987, Thursday’s opinion said, adding that at the time of the second surgery Kenseth worked for Highsmith Inc., which used Dean Health to provide health insurance benefits to its workers.

Kenseth said she was told by a Dean Health customer service representative that her surgery would be covered and all she had to pay was a $300 deductible. But Dean ended up denying coverage for the surgery and all associated services, and Kenseth eventually got a bill for nearly $78,000, the opinion said.

When the trial court tossed Kenseth’s case the second time around, it said that her request

for defendant to ‘hold her harmless for the cost of her surgery and treatment’ is a thinly disguised request for compensatory damages that may not be awarded.”

The U.S. Department of Labor also got involved in the case, lodging a June 2011 brief at the Seventh Circuit arguing that post-Cigna, there’s no doubt that onteary remedies are available against breaching fiduciaries.

Dean said in a July 2011 brief that the high court’s Cigna ruling did not “warrant wholesale rejection of this court’s directives of the limited scope” of appropriate equitable relief.

Attorneys for both sides declined to comment on the case on Thursday.

Kenseth is represented at the Seventh Circuit by Lisa Goldman and Bruce Davey of Davey & Goldman.

Dean is represented by Catherine Rottier of Boardman Suhr Curry & Field LLP. The panel was comprised of Circuit Judges Daniel A. Manion, Ilana Diamond Rovner and John Daniel Tinder.

The case is Deborah Kenseth v. Dean Health Plan Inc., case number 1101560 in the U.S.
Court of Appeals for the Seventh Circuit.

–Editing by Stephen Berg.

Original Article Here.

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