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No. 17-1744 

UNITED STATES COURT OF APPEALS 

FOR THE EIGHTH CIRCUIT 

 LOUIS J. PETERSON, D.C., 

Plaintiffs-Appellees, 

v. 

 UNITEDHEALTH GROUP INC., 

 Defendants-Appellants. 

On Appeal from the United States District Court 

for the District of Minnesota 

BRIEF FOR THE SECRETARY OF LABOR AS AMICUS CURIAE 

 IN SUPPORT OF PLAINTIFFS-APPELLEES 

NICHOLAS C. GEALE THOMAS TSO 

Acting Solicitor of Labor Counsel for Appellate and Special Litigation 

G. WILLIAM SCOTT SUSANNA BENSON 

Associate Solicitor Senior Attorney 

for Plan Benefits Security Office of the Solicitor 

Plans Benefits Security Division 

U.S. Department of Labor 

200 Constitution Ave., N.W., N-4611 

Washington, D.C. 20210 

(202) 693-5682 
 TABLE OF CONTENTS
 

TABLE OF AUTHORITIES ................................................................................... iii 

QUESTION PRESENTED ........................................................................................1 

THE SECRETARY'S INTEREST .............................................................................1 

STATEMENT OF THE CASE..................................................................................2 

A. Factual Background .......................................................................................2 

B. Procedural History .........................................................................................5 

SUMMARY OF THE ARGUMENT ........................................................................6 

ARGUMENT.............................................................................................................8 

United Acted Unreasonably In Interpreting The Plan Documents To Permit 

Cross-Plan Offsetting Because The Practice Violates ERISA. .................................8 

A. Standard of Review ........................................................................................8 

B. United's Practice Of Cross-Plan Offsetting Violates ERISA ........................9 

C. Department of Labor Advisory Opinions Support The Conclusion that 

United's Practice of Cross-Plan Offsetting Violates ERISA .......................16 

D. United's Defense of Cross-Plan Offsetting Is Meritless ..............................17 

1. United's Cites Inapposite Authorities ....................................................17 

2. United's Purported Justifications Cannot Override ERISA...................19

a. United's Violations Are Not a Permissible "Conflict-of-Interest" ..20

i 
 

 

 

TABLE OF CONTENTS-(continued): 

b. Alleged "Overall" Benefits to its Customers Cannot Justify 

Violations........................................................................................21 

c. Failure to Contest Overpayment Is Irrelevant ................................22 

3. Plans Cannot Consent to United's Practice of Cross-Plan Offsetting 

 Through "Negative Consent" ................................................................24 

CONCLUSION ........................................................................................................28 

CERTIFICATE OF COMPLIANCE 

CERTIFICATE OF SERVICE 

ii 
TABLE OF AUTHORITIES 

Federal Cases: 

32nd St. Surgery Ctr., LLC v. Right Choice Managed Care, 

820 F.3d 950 (8th Cir. 2016) ......................................................................... 11, 23 

Access Mediquip LLC v. UnitedHealthcare Ins. Co., 

662 F.3d 376 (5th Cir. 2011) reinstated, 

698 F.3d 229 (5th Cir. 2012)(en banc) ................................................................. 23 

Auer v. Robbins, 

519 U.S. 452 (1997) ....................................................................................... 24 n.5 

Barnhart v. UNUM Life Ins. Co. of Am., 

179 F.3d 583 (8th Cir. 1999) ................................................................................ 19 

Boyle v. Anderson,
 

68 F.3d 1093 (8th Cir. 1995) .................................................................................. 2 

Braden v. Wal-Mart Stores, Inc., 

588 F.3d 585 (8th Cir. 2009) ......................................................................... 10, 20 

Brown v. BlueCross BlueShield of Tenn., Inc., 

827 F.3d 543 (6th Cir. 2016) ......................................................................... 16 n.3 

Central States, Se & Sw Areas Pension Fund,
 

472 U.S. 559 (1985) ......................................................................................... 9, 18 

Chao v. Merino, 

452 F.3d 174 (2d Cir. 2006) ................................................................................. 12 

Cutaiar v. Marshall, 

590 F.2d 523 (1979) ....................................................................................... 10, 20 

iii 
Federal Cases-(continued): 

Eisenrich v. Minn. Retail Meat Cutters & Food Handlers Pension Plan, 

574 F.3d 644 (8th Cir. 2009) ....................................................................... 8, 9, 21 

Fifth Third Bancorp v. Dudenhoeffer, 

134 S. Ct. 2459 (2014) ..................................................................................... 9, 25 

Finley v. Special Agents Mutual Benefits Assoc., 

957 F.2d 617 (8th Cir. 1992) ......................................................................... 5, 6, 9 

Leigh v. Engle, 

727 F.2d 113 (7th Cir. 1984) ......................................................................... 20, 22 

Lone Star OB/GYN Assocs. v. Aetna Health Inc., 

579 F.3d 525 (5th Cir. 2009) ......................................................................... 16 n.3 

Louis J. Peterson v. UnitedHealth Group, 

Nos. 14-CV-2101, 15-CV-3064, --- F.Supp.3d ----, 2017 WL 991043 

(D. Minn. 2017) ............................................................................................ passim 

McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna Inc., 

857 F.3d 141 (2d Cir. 2017) ................................................................................. 23 

Metro. Life Ins. Co. v. Glenn, 

554 U.S. 105 (2008) ....................................................................................... 18, 21 

Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 

388 F.3d 393 (3d Cir. 2004) .......................................................................... 16 n.3 

Pegram v. Herdrich, 

530 U.S. 211 (2000) ....................................................................................... 10, 20 

iv 
Federal Cases-(continued): 

Pilger v. Sweeney, 

725 F.3d 922 (8th Cir. 2013) ......................................................................... 18, 19 

Quality Infusion Care, Inc. v. Health Care Serv. Corp., 

628 F.3d 725 (5th Cir. 2010) ......................................................................... 17, 18 

Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 

541 U.S. 1 (2004) .................................................................................................. 17 

Schoedinger v. United Healthcare of Midwest, Inc., 

557 F.3d 872 (8th Cir. 2009) .................................................................................. 3 

Sec'y of Labor v. Fitzsimmons, 

805 F.2d 682 (7th Cir. 1986) (en banc) .................................................................. 1 

Shea v. Esensten, 

107 F.3d 625 (8th Cir. 1997) ......................................................................... 12, 20 

Standard Ins. Co. v. Saklad, 

127 F.3d 1179 (9th Cir. 1997) ....................................................................... 14, 15 

Wirth v. Aetna U.S. Healthcare, 

469 F.3d 305 (3d Cir. 2006) ................................................................................. 12 

Federal Statutes: 

Employee Retirement Income Security Act of 1974, (Title I), 

 as amended, 29 U.S.C. 1001 et seq.: 

 Section 2, 29 U.S.C. 1001 ....................................................................................... 1 

Section 403(c)(1), 29 U.S.C. § 1103(c)(1) ........................................ 16, 17, 17 n.4 

v 
Federal Statutes-(continued): 

Section 404, 29 U.S.C. § 1104 ....................................................... 9, 10, 17 n.4, 24 

Section 404(a)(1), 29 U.S.C. § 1104(a)(1) ...........................................................16 

Section 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A) ................................... 16, 17, 22 

Section 404(a)(1)(A)(i), 29 U.S.C. § 1104(a)(1)(A)(i) .........................................10 

Section 404(a)(1)(A)(ii), 29 U.S.C. § 1104(a)(1)(A)(ii) ......................................10 

Section 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D) ........................................... 9, 22 

Section 405(a)(3), 29 U.S.C. § 1105(a)(3) ...........................................................25 

Section 406, 29 U.S.C. § 1106 ......................................................................... 9, 10 

Section 406(b)(1), 29 U.S.C. § 1106(b)(1) .................................. 10, 10 n.2, 11, 13 

Section 406(b)(2), 29 U.S.C. § 1106(b)(2)........................................ 10, 10 n.2, 13 

Section 410(a), 29 U.S.C. § 1110(a)................................................................ 9, 25 

Miscellaneous: 

 Dep't of Labor, Ofc of Pension and Welfare Benefits Programs (ERISA), 

Advisory Op. 77-34A, 1977 WL 5397 (April 4, 1977) ........................................16 

Dep't of Labor, Ofc of Pension and Welfare Benefits Programs (ERISA), 

Advisory Op. 81-62A 1981 WL 17785 (July 21, 1981) ................................ 16, 17 

Dep't of Labor, Ofc of Pension and Welfare Benefits Programs (ERISA), 

Advisory Op. 97-16A, 1997 WL 277979 (May 22, 1997)............................ 24, 26 

vi 
Miscellaneous-(continued): 

Dep't of Labor, Ofc of Pension and Welfare Benefits Programs (ERISA), 

Advisory Op. 2001-02A, 2001 WL 429857 (Feb. 15, 2001) ...............................25 

Dep't of Labor, Ofc of Pension and Welfare Benefits Programs (ERISA), 

 Advisory Op. 2003-09A, 2003 WL 21514170 (June 25, 2003) .............. 24, 25, 26 

vii 
QUESTION PRESENTED 

UnitedHealth Group ("United") is one of the world’s largest health insurers. 

It adjudicated and paid health claims for plans governed by the Employee 

Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et. seq.. At 

times, United believed it overpaid a healthcare provider for services rendered to a 

plan participant. United could have pursued the provider directly to recoup the 

alleged overpayment. Instead, United took the payment it admits was due to the 

same provider for services rendered to a different plan participant in a different 

plan and kept it for itself, rather than pay the provider as required by the plan. That 

practice deprived this second participant of benefits to which he was entitled and 

exposed him to potential liability to the provider for the services rendered. This 

practice is described as "cross-plan offsetting." 

The question certified for interlocutory appeal is: 

Whether United acted reasonably in interpreting ERISA-covered plans to 

permit cross-plan offsetting? 

THE SECRETARY'S INTEREST 

The Secretary of Labor bears primary responsibility for interpreting and 

enforcing Title I of ERISA. Sec'y of Labor v. Fitzsimmons, 805 F.2d 682, 698 

(7th Cir. 1986) (en banc). In this capacity, he has a strong interest in ensuring that 
                                                            

 

courts correctly and uniformly interpret ERISA and give appropriate deference to 

the Department of Labor's relevant interpretive guidance. 

STATEMENT OF THE CASE 

A. Factual Background1 

Plaintiffs Dr. Louis Peterson and Riverview Health Institute ("Plaintiffs") 

are out-of-network providers who provided services to patients insured by ERISAcovered health plans administered by United. United Br. 2. United administers 

fully-insured health plans, for which United collects insurance premiums from the 

employer's plans and then uses its own funds to pay claims. It also administers 

self-insured plans, for which United uses the funds drawn from the employer 

which sponsors the plan and the sponsor's employees to pay claims. Louis J. 

Peterson v. UnitedHealth Group, Nos. 14-CV-2101, 15-CV-3064, --- F.Supp.3d ---

-, 2017 WL 991043 at *1 (D. Minn. 2017); see, e.g., Boyle v. Anderson, 68 F.3d 

1093, 1097 (8th Cir. 1995) ("The [self-insured] plans are funded through 

contributions by the covered workers and their employers."). In both 

arrangements, United is responsible for adjudicating benefit claims and many 

aspects of the plan's administration. Peterson, 2017 WL 991043 at *1. It is 

undisputed that United is an ERISA fiduciary to both the self-insured and fullyinsured plans. United Br. 31 (acknowledging it was granted broad discretion over 

1 These facts are derived from the District Court Opinion and undisputed facts in 

the record. 

2
 
plan administration); United Br. 29 (requesting deference as a fiduciary). Fullyinsured plans account for 22 percent of United's claim payments, the remainder 

come from self-insured plans. Peterson, 2017 WL 991043 at *1. 

United's health insurance plans generally cover both in-network and out-ofnetwork healthcare providers. United Br. 2. In contrast to in-network providers, 

out-of-network providers do not have a pre-existing contractual relationship with 

any employer-sponsored health plan or United; their relationship with the 

employer-sponsored health plan or United is through the patient who is a plan 

participant. Id.; see, e.g., Schoedinger v. United Healthcare of Midwest, Inc., 557 

F.3d 872, 874-75 (8th Cir. 2009) (describing "out-of-network" relationship). The 

patient-participants assign their rights to benefits under the health plan to the outof-network providers so that the providers may pursue reimbursement for their 

services directly from the health plan. Peterson, 2017 WL 991043 at *3. Both 

Plaintiffs are pursuing claims as assignees of the ERISA plan participants. 

Separate Appendix of Appellants (SAPX), Vol. 1 pp. 205-213, 214-230. The 

Plaintiff-providers filed their assigned claims with United. Peterson, 2017 WL 

991043, at *3. United paid the claims but later determined that it had overpaid the 

providers. United Br. 2. Instead of seeking recoupment of the alleged 

overpayments directly from Plaintiff-providers, United engaged in "cross-plan 

offsetting," a practice it started in 2007. Peterson, 2017 WL 991043 at *4. 

3
 
In this case, United recouped the alleged overpayment to a provider by 

withholding a payment due to the same provider for services rendered to a different 

plan participant in a different ERISA-covered plan and keeping it for itself. Id. To 

recoup this overpayment using a subsequent payment admittedly due to the 

provider from a self-insured plan, United transferred to itself the funds from the 

self-insured plan due to the provider and did not pay the provider. Those funds 

typically consisted of contributions from the plan sponsors, i.e., the employers, and 

their employees. Id. To recoup the overpayment using a subsequent payment to 

the provider from a fully-insured plan, United simply kept the money it would 

have paid to the provider. Id. 

The parties refer to the plans that overpaid the provider as "A plans." Id. 

The plans United used to recoup overpayments through withheld or diverted plan 

payments are "B plans." Id. None of these plans explicitly authorized cross-plan 

offsetting. Id. at *6. The district court noted that "[i]n this litigation, every Plan 

A—that is, every plan that made overpayments—was fully insured . . . . 

Conversely, the majority of the Plan Bs -- that is, the majority of plans from which 

the overpayments were recovered -- were self-insured. . . . In other words, every 

one of the cross-plan offsets at issue in this litigation put money in United's pocket, 

and most of that money came out of the pockets of the sponsors of self-insured 

plans." Id. at *4. In effect, for the offsets at issue, United withheld payments from 

4
 
self-insured plans (typically funded by the plan sponsor and its employees) and 

diverted those payments to reimburse itself for overpayments United alleges it 

made from its own account on behalf of fully-insured plans. As a result, the Plan 

B participants were denied benefits from Plan B to which United admitted they 

were entitled and the participants were exposed to liability to the provider for the 

services rendered. 

B. Procedural History 

Riverview Health Institute and Dr. Peterson filed separate suits against 

United as assignees of their patients, alleging that United violated its fiduciary 

duties under ERISA and the terms of their patients' plans by engaging in cross-plan 

offsetting. Plaintiffs contend that United breached its fiduciary duty of loyalty and 

illegally diverted plan assets to itself. Peterson, 2017 WL 991043 at *3. The two 

cases were consolidated. 

The district court found that United did not reasonably interpret the Plan Bs 

to permit cross-plan offsetting. Peterson, 2017 WL 991043 at *10. The court 

applied the factors outlined in Finley v. Special Agents Mutual Benefits 

Association, 957 F.2d 617 (8th Cir. 1992), to determine the reasonableness of 

United's interpretation. The Finley factors are: "[(1)] whether [the] interpretation is 

consistent with the goals of the Plan, [(2)] whether [the] interpretation renders any 

language in the Plan meaningless or internally inconsistent, [(3)] whether [the 

5
 
 

plan] interpretation conflicts with the substantive or procedural requirements of the 

ERISA statute, [(4)] whether [the administrator] has interpreted the relevant plan 

language consistently; and [(5)] whether the interpretation is contrary to the clear 

language of the Plan." 957 F.2d at 621. 

After applying these factors, the court found that (1) "most of the plans 

contain specific overpayment and recovery language that would be rendered 

meaningless" if the plans were interpreted to permit cross-plan offsetting, a 

practice not discussed in the plans; (2) United had not consistently interpreted any 

plan language to permit cross-plan offsetting but only looked for authority in the 

plan language after it got sued; and (3) cross-plan offsetting raised "serious 

concerns under ERISA, especially in this situation, where United administers all of 

the plans but insured only some of the plans." Peterson, 2017 WL 991043 at *10. 

Based on these factors, the court found United's plan interpretation unreasonable, 

and the practice of cross-plan offsetting not authorized by the plan documents. Id. 

This Court granted the petition for interlocutory appeal. Id. at *11-12; 

Order, 04/06/2017. The Secretary argues in this brief that United's cross-plan 

offsetting violates ERISA. 

SUMMARY OF THE ARGUMENT 

1. United's practice of cross-plan offsetting violated United's fiduciary 

duties under ERISA to act exclusively in the plan participants' interests and to 

6
 
provide participants their plan benefits and was self-dealing prohibited by ERISA. 

United denied benefits to participants and exposed them to the risk of personal 

financial liability and harm. When United refused to pay legitimate claims on 

behalf of the participants of one plan ("Plan B") in order to recoup overpayments 

on behalf of different participants in a separate plan ("Plan A"), United burdened 

the participants in Plan B with the obligation to pay for services that should be 

covered by their plan. United's conduct harmed the Plan B participants to further 

the interests of unrelated participants in other plans. Moreover, these transactions 

were structured by United to allow United to profit by recouping its own alleged 

overpayments for its fully-insured plans that are funded through its own accounts 

with payments from self-insured plans that are funded by plan sponsors and their 

employees. United failed to act in the exclusive interests of Plan B participants or 

for the purpose of providing them benefits as required by ERISA and engaged in 

self-dealing transactions explicitly prohibited by ERISA. 

2. United's defenses are meritless. United cites inapposite case-law and 

regulatory guidance, while ignoring case-law and guidance that found similar 

transactions violated ERISA's fiduciary duties and were prohibited by ERISA. 

United also asserts three justifications: (a) United's conflict-of-interest is 

permitted; (b) the practice is easier for United to recoup overpayment and, 

7
 
 

therefore, benefits its customers; and (c) United obtained "negative consent" from 

the plans for this practice. Each defense fails. 

a. While a conflict-of-interest is permissible under ERISA in some 

circumstances, United was not just conflicted, but acted on interests adverse to the 

plan and its participants in clear violation of ERISA. 

b. United fails to refute the district court's conclusion that participants 

are exposed to an unjustified risk of financial liability. United’s speculation about 

benefits to its customers as a whole does not justify United's violation of its 

statutory duties to protect individual plan participants from a risk of harm just to 

recoup its unrelated overpayments. 

c. No consent can absolve United of its statutory obligation to satisfy 

its fiduciary duties. United mistakenly relies on regulatory guidance that concerns 

"negative consent" in distinctly different circumstances concerning entities that are 

not fiduciaries. 

ARGUMENT 

United Unreasonably Interpreted the Plan Documents to Permit Cross-Plan 

Offsetting Because the Practice Violates ERISA 

A. Standard Of Review 

Whether a fiduciary's interpretation of the plan document is contrary to 

ERISA is reviewed de novo. Eisenrich v. Minn.Retail Meat Cutters & Food 

Handlers Pension Plan, 574 F.3d 644, 648 (8th Cir. 2009). "Because the Plan may 

8
 
  

not disregard federal law, any decision that is 'erroneous as a matter of law' is an 

abuse of discretion and cannot stand." Id. "Although we must defer to the Plan's 

reasonable interpretation of the Plan itself, we owe no deference to the Plan's 

interpretation of controlling law." Id. This standard governs the review and 

outcome in this case; there is no need to rely on the Finley factors. 

This de novo standard of review is especially appropriate because ERISA 

does not permit a fiduciary to adhere to interpretations of plan documents that 

violate ERISA and renders void any plan provision that relieves a fiduciary of his 

responsibilities. See ERISA sections 404(a)(1)(D) and 410(a), 29 U.S.C. §§ 

1104(a)(1)(D) and 1110(a) ; see also Fifth Third Bancorp v. Dudenhoeffer, 134 S. 

Ct. 2459, 2468-469 (2014); Central States, Se. & Sw. Areas Pension Fund, 472 

U.S. 559, 568 (1985) ("trust documents cannot excuse trustees from their duties 

under ERISA"). If a practice violates ERISA, the "reasonableness" of a fiduciary's 

plan interpretation is irrelevant. 

B. United's Practice Of Cross-Plan Offsetting Violates ERISA 

United violated its duty of loyalty under ERISA section 404 and engaged in 

a prohibited transaction in violation of ERISA section 406 by cross-plan offsetting. 

As a fiduciary, United has a duty to "discharge [its] duties with respect to a plan 

solely in the interest of the participants and beneficiaries and--(A) for the exclusive 

purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) 

9
 
                                                            

defraying the reasonable expenses of administering the plan." ERISA section 

404(a)(1)(A)(i), (ii), 29 U.S.C. § 1104(a)(1)(A)(i), (ii) (emphasis added). This is 

known as ERISA's fiduciary duty of loyalty. See generally Pegram v. Herdrich, 

530 U.S. 211, 224–25 (2000) (describing this duty as derived from the 

"fundamental" duty of loyalty in trust law). United bears this fiduciary duty not 

just to a plan but also to each plan participant. ERISA 404(a)(1)(A)(i), 29 U.S.C. § 

1104(a)(1)(A)(i). ERISA also prohibits a plan fiduciary from dealing with the 

assets of the plan in the fiduciary's own interest and from acting in any capacity on 

behalf of a party whose interest is adverse to those of the plan or plan participants 

in transactions with the plan. ERISA § 406(b)(1)-(2), 29 U.S.C. § 1106(b)(1)-(2);2 

see also Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 602 (8th Cir. 2009) 

(applying ERISA Sections 404 and 406). In short, a fiduciary cannot represent 

both sides in a transaction between a plan and another party, including another plan 

to which he is a fiduciary. 29 U.S.C. § 1106(b)(2). As the Third Circuit explained 

in Cutaiar v. Marshall, 590 F.2d 523, 530 (1979), in discussing a fiduciary that 

acted on behalf of two plans in a transaction with each other, section 406(b)(2) 

requires that a plan "must be administered without regard for the interest of any 

2

 "A fiduciary with respect to a plan shall not -- (1) deal with the assets of the plan 

in his own interest or for his own account, (2) in his individual or in any other 

capacity act in any transaction involving the plan on behalf of a party (or represent 

a party) whose interests are adverse to the interests of the plan or the interests of its 

participants or beneficiaries." 29 U.S.C. § 1106(b)(1)-(2). 

10
 
other plan." (emphasis added). "Fiduciaries acting on both sides of a . . . 

transaction cannot negotiate the best terms for either plan. . . . each plan deserves 

more than a balancing of interests. Each plan must be represented by trustees who 

are free to exert the maximum economic power manifested by their fund whenever 

they are negotiating a commercial transaction." Id. Furthermore, ERISA also 

strictly prohibits a fiduciary from dealing in these transactions in its own interests. 

29 U.S.C. § 1106(b)(1). Based on the clear statutory text, United's practice of 

cross-plan offsetting violated these fundamental protections. 

As the district court found, United's practice exposed the Plan B participant, 

whose medical bills were not paid because of an offset, to financial liability for 

healthcare costs that should have been covered by his plan, because the out-ofnetwork provider could "balance bill" the participant for costs left unpaid by Plan 

B when United diverted the Plan B's payment to itself. Peterson, 2017 WL 991043 

at *8; 32nd St. Surgery Ctr., LLC v. Right Choice Managed Care, 820 F.3d 950, 

956 (8th Cir. 2016) (describing "balance billing"). United does not dispute this 

fact, conceding that out-of-network providers like Plaintiffs may "balance bill" 

their patients as a result of United's cross-offsetting practice. United Br. 40. 

United presents no legal or factual reason the district court's conclusion that 

United's practice imposes this risk of harm on participants is erroneous. Id. The 

participant's risk of not receiving benefits due and then incurring the risk of 

11
 
financial liability for covered services is clearly a harm United must prevent as a 

fiduciary. See Shea v. Esensten, 107 F.3d 625, 628 (8th Cir. 1997) (fiduciary has a 

duty to protect participant from a known risk of harm); see also Chao v. Merino, 

452 F.3d 174, 182 (2d Cir. 2006) ("If a fiduciary was aware of a risk to the fund, 

he may be held liable for failing to investigate fully the means of protecting the 

fund from that risk."). This specific harm has been recognized by other courts. 

See Wirth v. Aetna U.S. Healthcare, 469 F.3d 305, 309 (3d Cir. 2006) (recognizing 

that benefits are not fully paid to the beneficiary when the plan seeks 

reimbursement because they are "under something of a cloud"). Likewise, the Plan 

Bs, funded by sponsoring employers and employees, have an interest to ensure that 

their plan participants' benefits are truly paid and that the participants are not under 

a cloud of liability for medical bills that are undisputedly covered by Plan Bs. 

In addition to this risk of harm and the plan's interest in protecting its 

participants, the district court also identified an underlying conflict of interest 

when claims administrators like United administer both fully and self-insured 

plans. Peterson, 2017 WL 991043 at *8. "As the single biggest payor of claims [, 

because it pays more claims than the individual self-insured plans], United's 

personal stake in cross-plan offsetting dwarfs that of any self-insured plan. An 

administrator in this circumstance [, United] has every incentive to be aggressive 

about looking for overpayments from its own fully insured plans (which 

12
 
overpayments can be recovered from self-insured plans) and less aggressive about 

looking for overpayments from self-insured plans (which overpayments might be 

received from fully insured plans)." Id. To recover overpayments made by fullyinsured plans from self-insured plans, United withholds the payment to providers 

from the self-insured plans and diverts them to reimburse United's overpayment on 

behalf of a fully-insured plan to that same provider; in the process, a payment from 

an employer funding the self-insured plan is diverted to United as reimbursement 

for United's overpayment made from its own pockets. United thereby deals with 

self-insured plans in its own interests. United acts as the "judge, jury, and 

executioner" for its own claim to recoup alleged overpayments. Peterson, 2017 

WL 991043 at *3. United does not dispute that the potential for bias exists, but it 

disputes its impact and extent and claims it took steps to mitigate potential bias. 

United Br. 43-44. By executing these transactions, United committed a 

prototypical self-dealing transaction in violation of the duty of loyalty and ERISA's 

prohibited transaction provisions at section 406(b)(1) and (2) as these transactions 

are adverse to the self-insured plans and their participants while also benefiting 

United as their fiduciary. 

In fact, United benefited from all the overpayment recoupments. Peterson, 

2017 WL 991043 at *4. All 60 Plan As that allegedly overpaid service providers 

were fully-insured plans, plans for which United made the original benefit payment 

13
 
from its own accounts. Id. In the overwhelming majority of the cross-plan offsets 

at issue, the relevant Plan B was a self-insured plan, so the recoupments came from 

funds contributed by a plan sponsor or its employees and were intended to go to 

the provider but were diverted to reimburse United's alleged overpayment to the 

provider for services to a Plan A participant. Id. In other words, "every one of the 

cross-plan offsets at issue in this litigation put money in United's pocket, and most 

of that money came out of the pockets of the sponsors of self-insured plans." Id. 

United's internal documents confirm this intent. Id. The district court stated that 

United's September 2004 internal documents "gush" that the new cross-plan offset 

system "[a]llows recovery of fully insured overpayments on self-funded claim 

payments!" Id. at 4. The court also referenced United's August 2004 presentation, 

which stated, "[c]rossing policies for bulk recovery helps recover FI [fully insured] 

dollars faster." Id. Finally, the court quoted a United 2005 chart showing 

emphatically a "[f]ully insured o/p recovery on a [self insured] payment!" Id. The 

evidence of United benefitting from these offset transactions by design only 

confirms its violations of the duty of loyalty and the prohibited transaction 

provisions as United plainly represented plans in transactions to further its own 

self-interest. 

An analogous case in the Ninth Circuit reinforces this conclusion. Standard 

Ins. Co. v. Saklad, 127 F.3d 1179, 1182 (9th Cir. 1997). In Saklad, a disability 

14
 
 

                                                            

insurer issued a lump-sum settlement to a claimant in 1984. Id. at 1180. Two 

years later, the insurer discovered that the claim was fraudulent when it received 

another disability claim from the same person, who was now employed at a 

different company. Id. The second disability claim was legitimate, but the insurer 

obtained a judgment against the employee for the prior fraudulent claim and sought 

to setoff the payments under the first plan against any obligations owed to the 

claimant under the second disability plan. Id. The court found that while the 

insurer was a fiduciary of both plans "and the insurer of the benefits under both, 

the fact remain[ed] that each plan is a separate entity." Id. at 1181. The court held 

that setoff was illegal because "[a]n ERISA fiduciary cannot refuse to pay a 

beneficiary of a plan by using a setoff from a wholly separate source of debt, be 

that an ordinary debt or a debt to a wholly separate ERISA plan." Id. at 1182. This 

decision is analogous to this case because it barred offsets that benefit the insurer 

of one plan at the expense of a participant of another and supports the district 

court's analysis. 

In conclusion, United violated its fiduciary duties and committed prohibited 

transactions when it imposed on innocent participants a financial risk and potential 

harm in order to recoup an alleged, unrelated overpayment for another plan.3 

3 Offsetting for in-network providers is distinguishable, because in-network 

providers typically have contractual relationships with the plans and insurers, 

removing any plan or participant interest in disputes over their payment amounts, 

15
 
                                                                                                                                                                                               

C. Department of Labor Advisory Opinions Support the Conclusion 

that United's Practice of Cross-Plan Offsetting Violates ERISA 

The Department of Labor issued two Advisory Opinions ("AOs") that 

support the conclusion that United's cross-plan offsetting is prohibited by ERISA. 

AO 77-34, 1977 WL 5397, and AO 81-62A, 1981 WL 17785. AO 77-34 

considered the question of whether a fiduciary could reduce benefits under one 

plan to remedy a participant's failure to repay overpayments from a sister plan. 

The Department stated that such conduct violated both ERISA sections 403(c)(1) 

and 404(a)(1), [29 U.S.C. § 1103(c)(1) and 1104(a)(1)] reasoning that "problems 

relating to another plan have no relevance to the plan in question." AO 77-34. The 

Department explained that "if the plan pays amounts to another plan to reimburse 

the other plan for erroneous payments . . . , such reimbursement would not 

constitute a use of plan assets for the exclusive purpose of providing benefits to 

participants in the plan . . . . Therefore, such payment would contravene the 

requirements of section 404(a)(1)(A) and section 403(c)(1) of ERISA [exclusive 

which are paid pursuant to those in-network contracts. See, e.g., Brown v. 

BlueCross BlueShield of Tenn., Inc., 827 F.3d 543, 549 (6th Cir. 2016); Lone Star 

OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 530-31 (5th Cir. 2009); 

Pascack Valley Hosp. Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 

388 F.3d 393 (3d Cir. 2004). In these situations, the plan participants are not 

subject to financial risk because these contracts typically bar balance billing. Id. 

16
 
 

                                                            

purpose provisions]."4 Likewise, Advisory Opinion 81-62A considered whether 

funds from more than one benefit plan may be commingled. In response, the 

Department cautioned that "if assets of more than one employee benefit plan are 

held in a common vehicle, a separate accounting of the interest of each plan in 

such vehicle must be maintained in order to avoid using the assets of one such plan 

to pay benefits to participants and beneficiaries of another such plan in 

contravention of section 403(c)(1) and 404(a)(1)(A)." United does not dispute the 

district court's characterization of the analogous facts in this case: "In stark terms, 

cross-plan offsetting involves using assets from one plan to satisfy debt allegedly 

owed to a separate plan," Peterson, 2017 WL 991043 at *7. Thus, based on 

analogous facts, the Department has interpreted ERISA to forbid a fiduciary to 

multiple plans from using one plan to pay or recoup benefits for another, and this 

Court should accord Skidmore deference to the Advisory Opinions. Raymond B. 

Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 18 (2004). 

D. United's Defense Of Cross-Plan Offsetting Is Meritless 

1. United Cites Inapposite Authorities 

United mistakenly relies heavily on Quality Infusion Care, Inc. v. Health 

Care Service Corp., 628 F.3d 725 (5th Cir. 2010). United Br. 32-33. In that case, 

4

 Like ERISA section 404, ERISA section 403(c)(1), 29 U.S.C. § 1103(c)(1), 

requires that plan assets "shall be held for the exclusive purposes of providing 

benefits to participants in the plan and their beneficiaries and defraying reasonable 

expenses of administering the plan." 

17
 
 

the Fifth Circuit did not decide or even consider whether this practice violates 

ERISA. Instead, the court considered only the "narrow legal dispute" as to 

whether the practice was permitted under state contract law. Quality Infusion 

Care, 628 F.3d at 726-28. The court concluded that under the terms of each plan, 

the insurer had a contractual right to deduct the overpayment amount paid to a 

provider on a patient's claim from the amount it owes that same provider for a 

subsequent claim against one of the other two plans. Id. at 728. The court found 

that "no language in any of the three plans required [the insurer] to confine its 

contractual set off rights to deductions from subsequent benefit payments to the 

same patient under the same plans." Id. at 730. As the district court correctly 

observed in the present case, "whatever the merits of the Fifth Circuit's approach, it 

is not the approach of the Eighth Circuit," which requires courts to consider the 

fiduciary duties imposed by ERISA when interpreting ERISA plan provisions. 

Peterson, 2017 WL 991043 at *9; see also Central States, 472 U.S. at 568; 

Eisenrich, 574 F.3d at 648; see generally Metro. Life Ins. Co. v. Glenn, 554 U.S. 

105, 115 (2008) ("ERISA imposes higher-than-marketplace quality standards on 

insurers"). 

United also incorrectly relies on Pilger v. Sweeney, 725 F.3d 922 (8th Cir. 

2013), which permitted same-plan offsets with respect to the same participant, but 

this decision does not extend to cross-plan offsets for different participants. In 

18
 
Pilger, this Court allowed a pension fund to recoup overpayments mistakenly paid 

to retired participants by withholding future payments to those same participants of 

the same plan. 725 F.3d at 924. As the district court stated, Pilger dealt with 

offsets involving "not only the same plan, but the same beneficiaries." Peterson, 

2017 WL 991043 at *9. Although the pension plan contained no language 

expressly permitting the recoupment through withholding, this Court held that the 

fund was authorized by "the broad language granting Defendants discretion to take 

remedial action on behalf of the [plan]." Pilger, 725 F.3d at 926. In sum, Pilger 

only addressed the plan's relationship to a specific participant. The rationale in 

Pilger rested on the plan's ability to ensure each participant does not receive more 

than the share of plan benefits he deserves. "Fiduciary obligations extend 

primarily to the plan as it relates to all beneficiaries, not just to individual 

claimants." Barnhart v. UNUM Life Ins. Co. of Am., 179 F.3d 583, 589 (8th Cir. 

1999). This principle clearly does not apply here where a plan participant is 

deprived of the benefits to which he is entitled in order to reimburse an 

overpayment for a different plan and a different participant. 

2. United's Purported Justifications Cannot Override ERISA 

 United also raises other meritless justifications: (a) United's conduct in the 

cross-plan offset program arose from a permissible conflict-of-interest; (b) United's 

19
 
program benefits its customers overall; and (c) United’s conduct is justified 

because no party contested its overpayment claims. 

a. United's Violations Are Not a Permissible "Conflict-of- 

 Interest" 

 United is correct that ERISA permits conflicts of interest in some 

circumstances, but the pertinent question here is how the fiduciary acts in light of 

this conflict, not whether a conflict exists. See Pegram, 530 U.S. at 225 ("ERISA 

does require, however, that the fiduciary with two hats wear only one at a time, and 

wear the fiduciary hat when making fiduciary decisions."). The answer to that 

question in ERISA is clear. "The central issue is the independence of the plan 

fiduciaries who must always be able to act solely for the benefit of those whose 

funds are entrusted to them." Leigh v. Engle, 727 F.2d 113, 132 n.29 (7th Cir. 

1984) (emphasis added). Fiduciaries must take practical actions to avoid acting on 

interests adverse to the plan. 

United's actions fit within well-established ERISA cases where a conflicted 

fiduciary violated ERISA by acting on behalf of its own or other interests to the 

detriment of the plan or its plan participants. See, e.g., Shea, 107 F.3d at 628; 

Braden, 588 F.3d at 598; Cutaiar, 590 F.2d at 530. As in those cases, United 

executed transactions for the plans it administered in which United represented 

both sides of the transactions and chose to harm the plan and participants by 

20
 
exposing participants to a risk of financial liability while reaping benefits from 

those transactions. 

United incorrectly relies on Glenn, which addressed how a structural conflict 

of interest affects the judicial deference accorded to conflicted fiduciaries who 

interpret plan documents. 554 U.S. at 115. Glenn is irrelevant here, where United 

has acted in violation of ERISA by executing transactions against the plan and 

participants' interests and depriving participants of their benefits to further United's 

own interests. Obviously, no deference is accorded to the fiduciary defending an 

action that is itself a clear violation. E.g., Eisenrich, 574 F.3d at 648 ("Whether the 

Plan's decision is erroneous as a matter of law is a question we review de novo."). 

b. Alleged "Overall" Benefits To Its Customers Cannot Justify 

 Violations 

United also argues that cross-plan offsetting benefits all customers, United 

Br. 42, and therefore the practice must benefit each plan and its participants. 

Neither facts nor logic support this conclusion, as the district court found. United 

cannot show that no plans or participants were burdened with a risk of harm by this 

practice, see Peterson, 2017 WL 991043 at n.5 (discussing the absence of 

evidence). Nor is such a result likely as nothing in United's description of its 

cross-plan off-setting program ensures each plan or participant is guaranteed to 

only benefit from the practice. Cf. United Br. 17-18. United's obligation under 

ERISA is to keep an "eye single" to the plans’ and participants' interests in all 

21
 
fiduciary actions and plan transactions and to provide participants the benefits 

promised in the plan documents. Leigh, 727 F.2d at 123; 29 U.S.C. § 

1104(a)(1)(A) and (D). Instead of ensuring that United provides benefits to 

participants, United deprives plan participants of their benefits on behalf of other 

plans in order to reap a financial benefit for itself. As the district court concluded, 

the evidence presented establishes United as the true beneficiary from the crossplan offset practice, Peterson, 2017 WL 991043 at *4. 

c. Failure to Contest Overpayment Is Irrelevant 

United also contends on appeal that because neither the provider or the Plan 

A patient-participant disputed United's claim that it made an overpayment, United 

is justified in recovering an overpayment from the provider's subsequent Plan B 

patient-participant, see United Br. 10-12; see also Peterson, 2017 WL 991043 at 

*6, fn. 8. United misses the point. United cannot burden an innocent participant 

with debt due to an overpayment United made on behalf of a different participant 

in a different plan for its own self-interest. United’s ERISA violations cannot be 

absolved simply by instituting some mechanism to protest overpayments. 

Specifically, the provider's or his Plan A patient's alleged failure to dispute 

the overpayment has no bearing on the risk of harm imposed on the Plan B patient 

from whom the overpayment amount is taken, because that Plan B patient cannot 

force the provider or the Plan A patient to dispute the overpayment. Moreover, as 

22
 
United admits, overpayments could be caused by United's own "administrative 

mistakes," United Br. 10, making it unfair for providers or patients to bear the 

harm from those alleged mistakes by placing the burden on the provider or patient 

to challenge these "mistakes" while also imposing on the providers' subsequent 

patients the risk of financial liability and harm for these mistakes. Id. 

Furthermore, even assuming cross-plan offsetting was permitted, no 

mechanism actually exists for the Plan B participants to challenge an overpayment 

made on behalf of different participants in Plan A. Absent any contractual 

relationship with out-of-network providers, United has no legal basis to require 

providers to pursue administrative remedies to dispute the overpayment claims 

and, in some circumstances, providers may seek remedies under state law to 

resolve the disputes. Cf. Access Mediquip LLC v. UnitedHealthcare Ins. Co., 662 

F.3d 376, 386 (5th Cir. 2011) (alleged right to payment by out-of-network provider 

did not depend on the terms of the ERISA plan but on oral promises), reinstated, 

698 F.3d 229 (5th Cir. 2012) (en banc); McCulloch Orthopaedic Surgical Servs., 

PLLC v. Aetna Inc., 857 F.3d 141, 150 (2d Cir. 2017) (same). United is also free 

to contract with frequent out-of-network providers to address these specific issues, 

by insulating the patient and his plan from these disputes similar to in-network 

providers. See 32nd St. Surgery Ctr., LLC, 820 F.3d at 956 ("ancillary contracts"); 

supra note 3. United did not do so here. 

23
 
 

                                                            

3. Plans Cannot Consent To United's Practice Of Cross-Plan 

Offsetting Through "Negative Consent" 

United argues that cross-plan offsetting is permitted because the plan 

sponsor or "relevant fiduciary decision-maker" provided "negative consent" to the 

practice through a 2007 letter. United Br. 45. In support of this "negative consent" 

argument, United relies on three Department of Labor Advisory Opinions, Nos. 

2003-09A, 2001-02A, and 1997-16A, which, for reasons discussed below, are 

inapposite. Moreover, United fails to address more pertinent Advisory Opinions, 

discussed supra at Section C. 

United's reliance on the "negative consent" Opinions is incorrect for several 

reasons.5

 First, whether a plan sponsor or other fiduciary consented to cross-plan 

offsetting is immaterial here, where United's practice at issue violates ERISA. 

Negative consent can be relied on in certain instances concerning otherwise 

legitimate transactions as explained below, but cannot be relied upon to allow an 

ERISA violation to stand. Therefore, United cannot use the Department's 

Advisory Opinions to absolve it from fiduciary responsibility for a claims payment 

practice that violates ERISA. As a fiduciary, United will always have the 

responsibility not to commit fiduciary breaches even if another fiduciary permitted 

the conduct whether by direct or negative consent. See 29 U.S.C. §§ 1104 (listing 

5 Courts accord heightened deference to agencies when they interpret their own 

guidance even in amicus briefs. Cf. Auer v. Robbins, 519 U.S. 452, 462-63 

(1997). 

24
 
fiduciary obligations required by statute), 1105(a)(3) (co-fiduciary liability for 

failure to remedy a known breach by another fiduciary); 1110(a) (with irrelevant 

exceptions, "any provision in an agreement or instrument which purports to relieve 

a fiduciary from responsibility . . . for any . . . duty under this part shall be void as 

against public policy"). As we noted earlier, if plan documents cannot permit 

fiduciary breaches, see Dudenhoeffer, 134 S. Ct. at 2468, it would make no sense if 

fiduciaries could obtain consent to commit such breaches. 

Second, the Advisory Opinions on "negative consent" concern the narrow 

context where a non-fiduciary service provider seeks confirmation that reliance on 

"negative consent" in activating an investment default option on behalf of the plan 

will not render the service provider a fiduciary with respect to that decision. For 

example, in Advisory Opinion 2001-02A, a service provider to a 401(k) pension 

plan asked the Department whether it would become a fiduciary if it implemented 

a "default option" after presenting the "option" to plan administrators in two letters 

and the administrator did not reply. The Department agreed that the service 

provider would not be serving as a fiduciary for activating that option "as long as 

the plan fiduciary actually chooses the default allocation." AO 2001-02A. The 

Department noted that "whether a fiduciary actually chooses the default allocation 

is an inherently factual question." Id.; see also AOs, 2003‐09A (applying the 

principle to bundled service arrangement where service provider offers proprietary 

25
 
mutual funds along with other services but does not become a fiduciary if the 

provider discloses the options and obtains negative consent); 1997‐16A (applying 

the principle to a reallocation of assets or investment menus). According to these 

Opinions, the service providers under the facts in those opinions could rely on 

negative consent for those limited purposes only if the provider (1) disclosed all 

material information, (2) gave the plan sponsor a reasonable time to consider 

whether to opt out of the new menu, and (3) remained neutral and took care to 

ensure that each client's decision was truly his own. AOs. 97-16A, 2003-09A. 

This case presents an entirely different situation. Here, United is already a 

fiduciary who must adhere to his ERISA duties. United cannot absolve 

responsibility for its violations by pointing to its clients' negative consent. Thus, 

the Advisory Opinions are irrelevant. 

The Department agrees with the district court that even assuming the 

Advisory Opinions were relevant, the evidence showed that United did not meet 

the conditions required by the Advisory Opinions for negative consent to be 

effective. United "did not fully and accurately disclose all material information to 

its clients. Some clients may not have received any information about cross-plan 

offsetting, and those who did get information were not told that United itself would 

be the largest single beneficiary of the cross-plan offsetting system that it was 

proposing." Peterson, 2017 WL 991043 at *10 (emphasis in original). When 

26
 
United did present some information on its cross-plan offsetting practice, United 

"certainly did not remain neutral and take care to ensure that each client's decision 

was truly its own; instead, United 'strongly encouraged' its clients to participate in 

cross-plan offsetting." Id. 

Full disclosure and consent cannot excuse the violation here because neither 

a fiduciary, a plan sponsor, nor anyone else can consent to ERISA violations and 

harm participants. It is difficult to imagine how an effective disclosure regime 

would work, even if ERISA permitted United's cross-plan offsetting process, 

which it does not. Hypothetically, if United wanted to provide its clients 

meaningful disclosure of its cross-plan offsetting practice, United would have to 

reveal the risk of harm to plan participants. United would have to disclose that the 

practice exposes plan participants to risks of personal financial liability for their 

covered medical claims because United may have to recoup overpayments, 

sometimes caused by its own mistake, made to a provider on behalf of a different 

participant in a different plan. United would also have to disclose that plan 

participants cannot predict whether a medical claim will be paid in full, because a 

claim may be subject to a random and retroactive offset unrelated to them, their 

plan, or their covered medical claim. Nothing in the record identifies any such 

disclosure by United. 

CONCLUSION 

27
 
For the foregoing reasons, the Secretary requests that this Court affirm the 

district court's ruling that United's plan interpretations were unreasonable and its 

cross-plan offsetting practice, as described in this case, violates ERISA. 

Respectfully submitted, 

NICHOLAS C. GEALE 

Acting Solicitor of Labor 

G. WILLIAM SCOTT 

Associate Solicitor 

for Plan Benefits Security 

THOMAS TSO 

Counsel for Appellate Litigation 

_/S/ Susanna Benson____ 

SUSANNA BENSON 

Senior Attorney 

Plans Benefits Security Division 

Office of the Solicitor 

U.S. Department of Labor 

200 Constitution Ave., N.W., N-4611 

Washington, DC 20210 

(202) 693-5682 

28
 
 

CERTIFICATE OF COMPLIANCE 

Pursuant to Fed. R. App. P. 29(d) and 32(a)(7)(B)-(C), I certify that this amicus 

brief uses a mono-spaced typeface of 14 characters per inch and contains 6,475 

words. 

Dated: September 5, 2017 

/s/ Susanna Benson 

SUSANNA BENSON 

Senior Attorney 

United States Department of Labor 

Plan Benefits Security Division 

200 Constitution Ave., N.W., N-4611 

Washington, D.C. 20210 
 

CERTIFICATE OF SERVICE 

I hereby certify that on this 5th day of September, 2017, I electronically filed the 

foregoing Brief of the Secretary, United States Department of Labor, as Amicus 

Curiae, in Support of Plaintiffs-Appellants, with the Clerk of the Court for the 

United States Court of Appeals for the Eighth Circuit by using the CM/ECF 

system. I certify that all participants in this case are registered CM/ECF users and 

that service will be accomplished by the CM/ECF system. 

/s/ Susanna Benson 

SUSANNA BENSON 

Senior Attorney 

United States Department of Labor 

Plan Benefits Security Division 

200 Constitution Ave., N.W., N-4611 

Washington, D.C. 20210 
CERTIFICATE OF SERVICE 

I hereby certify that on this 13th day of September, 2017, I sent 10 paper copies of 

the foregoing Brief of the Secretary, United States Department of Labor, as 

Amicus Curiae, in Support of Plaintiffs-Appellants, to the Clerk of the Court for 

the United States Court of Appeals for the Eighth Circuit. I also served a paper 

copy on each party separately represented. 

/s/ Susanna Benson 

SUSANNA BENSON 

Senior Attorney 

United States Department of Labor 

Plan Benefits Security Division 

200 Constitution Ave., N.W., N-4611 

Washington, D.C. 20210