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Kenseth v. Dean Health Plan

Courts Continue to Give Meaning to Equitable Relief Available Under ERISA:  The recent decision of Kenseth v. Dean Health Plan, decided June 13, 2013, is the latest decision from a Circuit Court to give meaning to the equitable relief that may be available to an ERISA participant for a breach of fiduciary duty.  In Kenseth, the plan participant requested an opinion from the Defendant’s employee whether an expensive procedure would be covered.  After receiving assurance that it would be covered, the plaintiff went ahead with the surgery.  Later, the plan denied coverage and the plaintiff faced a $70,000 bill from the hospital.  If the plan had paid for the procedure, however, the hospital could have only billed approximately half for the procedure under its contract with the plan.  Importantly, the hospital and the plan had a financial overlapping interest.  Accordingly, the Seventh Circuit concluded that “Kenseth may thus bring a claim for make-whole damages against the plan fiduciary. This is true even if the plan’s language unambiguously supports the fiduciary’s decision to deny coverage.”

Hopefully, this decision and other recently decided cases will provide ERISA plaintiffs with additional remedies and claims to assert against insurance companies that breach their fiduciary duties to the insured. For instance, other recent cases include Amara v. Cigna Corp., 2012 WL 6649587, *8 (D. Conn. Dec. 20, 2012) (trustees may be surcharged where they have not personally profited from the breach, in situations where they negligently or knowingly permit third parties to benefit from the trust property); Koehler v. Aetna Health, Inc., 683 F.3d 182, 189 (5th

Cir. 2012) (even if the plan’s language unambiguously supports the administrator’s decision, a beneficiary may still seek to hold the administrator to conflicting terms in the plan summary through a breach of fiduciary claim under section 1132(a)(3)); CGI Techs. & SolutionsInc. v. Rose, 683 F.3d 1113, 1121 (9th Cir. 2012) (under Cigna, a district court, sitting as a court of equity in a section 1132(a)(3) action, need not honor the express terms of an ERISA plan where traditional notions of equitable relief so require).

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