Court Finds Cost of Heart Transplant Could Be Appropriate Equitable Remedy

A federal district court has ruled, in Rose vs. PSA Airlines, Inc. Group Insurance Plan, that a decedent’s estate may be entitled to recover the cost of a heart transplant as equitable relief under ERISA. 

Facts. In Rose, a participant in a group health plan was diagnosed with acute heart failure and his attending physicians determined that he needed an immediate heart transplant, placing him number one on their waiting list. Despite the urgent nature of the claim, the plan’s third-party claims administrator (“TPA”) denied coverage based on its determination that the procedure was “experimental or investigational” because its effectiveness had not been established, and the plan did not cover “experimental drugs and medicines.” 

The participant’s treating physicians resubmitted the claim to the plan, and it was again denied on the same basis, with the defendants’ denial letter noting that the participant “will not survive without heart transplant.” The treating physicians requested an external review of the claim denial, which was performed as a standard claim review (i.e., to be decided within 45 days) and not as an expedited review (i.e., within 72 hours). The participant died while awaiting completion of this external review.

The administrator of the participant’s estate filed a lawsuit against the plan and TPA claiming wrongful denial of benefits (under ERISA 502(a)(1)(B)) and equitable relief (under ERISA 502(a)(3)) to remedy certain breaches of fiduciary duty by the defendants in processing the decedent’s claim. In response, the defendants moved to dismiss these claims.

District Court. At trial, the defendants asserted that the estate’s benefits denial claim must be dismissed because ERISA does not allow the recovery of the monetary value of benefits never received by a claimant. The court agreed, and recommended that the estate’s benefit denial claim be dismissed because the decedent had not received the transplant.

The court reached a different conclusion, however, with respect to the estate’s claim for equitable relief to redress the alleged breaches of fiduciary duty by the defendants in processing the decedent’s claim. The defendants had argued that the estate’s claim for equitable relief should be dismissed because it presents “the exact same claim, and demand[s] the same essential relief” as the first claim. Nevertheless, the court agreed with the estate, finding that the claim for equitable relief was in the alternative to the claim for denial of benefits and did not seek duplicative recovery against the defendants.

The court further concluded that the estate’s claim for equitable relief was plausible. In the instant case, if the estate was successful in proving that the defendants had breached their fiduciary duties with the delayed manner of processing the decedent’s urgent claim as he lay dying from heart failure, liability in the amount by which the defendants were enriched (i.e., the cost of the requested heart transplant) could be an available and appropriate remedy. Therefore, the court allowed the estate’s claim for equitable relief to continue.