In Rose v. PSA Airlines, Inc., the Fourth Circuit Court of Appeals ruled that a self-funded group health plan may be sued for monetary damages for failure to approve a medical procedure for a plan participant.
Facts and Law. A plan participant was informed by his doctors that he had a heart condition called myocarditis and needed a heart transplant. The doctors agreed to proceed with surgery as soon as his benefits claim was approved by the plan.
The plan denied his request for coverage, asserting that the treatment was experimental and later because he did not meet certain alcohol-abuse criteria. The terms of the plan, however, contained no such criteria.
The participant then sought an “expedited” external claims review. Although federal law requires “expedited” reviews to be completed within 72 hours, the plan treated his review as a “standard” review to be completed within 45 days. The participant died during this 45-day review period.
The participant’s mother then sued the plan on behalf of his estate, seeking monetary relief under two provisions of ERISA. The first provision allows a beneficiary to bring suit “to recover benefits due…under the terms of the plan, or to clarify [the] right to future benefits.” The second provision allows a beneficiary to sue “to enjoin any act or practice which violates [ERISA] or the terms of the plan,” or “to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce [ERISA] or the terms of the plan.”
The district court dismissed both claims saying that under the first claim, money was not one of the “benefits” that the participant was owed “under the terms of his plan.” With regards to the second claim, the lower court held that the requested monetary relief was too similar to the requested monetary damages and was thus not “equitable.”
Fourth Circuit. The Fourth Circuit agreed with the district court’s determination that the first claim must fail because ERISA says a person may sue either “to recover benefits due to him under the terms of his plan” (i.e., seek reimbursement—“recovery”—of out-of-pocket expenses), or “to enforce his rights under the terms of the plan.” The Court observed that the estate “does not seek to recover a benefit under the terms of the Plan,” and noted ERISA “does not authorize a plaintiff to seek the monetary cost of a benefit that was never provided.”
With regards to the second claim, the Court stated, “The key question that we must answer is whether the relief that [the mother] seeks—the monetary cost of the surgery that her son was wrongfully denied—qualifies as ‘equitable relief’ under [ERISA].” It then noted that the plaintiff alleges the plan had been “unjustly enriched” by keeping the money the plan should have paid to the participant’s doctors.
The Court ruled that to receive equity relief “the plaintiff must (1) identify certain property or money ‘belonging in good conscience’ to [the participant], and (2) that property must ‘clearly be traced to particular funds or property in the defendant’s possession.’”
The Court then stated that, “A plaintiff alleging unjust enrichment can get a monetary remedy under ERISA only if she seeks specific funds that are wrongfully in the defendant’s possession and rightfully belong to the estate. Courts cannot award relief that amounts to personal liability paid from the defendant’s general assets to make the plaintiff whole.”
Ultimately, the Court concluded that ERISA authorized the plaintiff to seek “equitable relief.” It explained that while monetary relief awarded to compensate for a plaintiff’s loss does not qualify as equitable, “relief awarded under an unjust-enrichment theory may indeed qualify.” Based on the foregoing, the Fourth Circuit remanded the matter to the district court to determine whether the plaintiff can plausibly allege an equitable claim.