Source: http://avym.com/federal-appeals-court-reverses-district-court-rules-unitedhealth-may-be-sued-for-violating-erisa/
Timestamp: 2020-08-14 08:07:01
Document Index: 189407807

Matched Legal Cases: ['§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§502', '§502']

UnitedHealth ERISA lawsuitAVYM
In a significant ruling for providers and patients, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously reversed a district court and ruled that third-party benefits administrator UnitedHealth Group can be sued under the Employment Retirement Income Security Act (ERISA) for violating a federal law requiring equal coverage for mental health treatment.
On August 20, 2015 a panel of judges for the 2nd U.S. Court of Appeals ruled that UnitedHealth Group, as a third-party administrator has “sole and absolute discretion” to deny benefits and makes “final and binding” decisions as to appeals of those denials, for an employee health plan and as such, is not exempt from ERISA, which regulates most employer-provided health benefits.
“We ultimately reject United’s argument that it cannot be sued under [ERISA] in its capacity as a claims administrator,”
Judge Raymond Lohier, Jr., wrote. “Indeed, when a claims administrator exercises total control over claims for benefits under the terms of the plan, that administrator is a logical defendant in the type of suit contemplated by [ERISA]. —- a suit ‘to recover benefits,’ ‘to enforce … rights,’ ‘or to clarify…rights to future benefits under the terms of the plan”.”
According to Judge Lohier,
“United appears to have exercised total control over the CBS Plan’s benefits denial process. It enjoyed “sole and absolute discretion” to deny benefits and make “final and binding” decisions as to appeals of those denials. UnitedHealth’s control over the benefits denial process appears total.”
The case is New York State Psychiatric Association et al v. UnitedHealth Group et al, case number 14-0020 in the U.S. District Court of Appeals for the Second Circuit.
The court goes on to say “And assuming that United’s actions violated Denbo’s rights under ERISA, United is the only entity capable of providing direct relief to Denbo. We therefore hold that where the claims administrator has “sole and absolute discretion” to deny benefits and makes “final and binding” decisions as to appeals of those denials, the claims administrator exercises total control over claims for benefits and is an appropriate defendant in a § 502(a)(1)(B) action for benefits. United is such an administrator and is accordingly an appropriate defendant for Denbo’s claim under § 502(a)(1)(B). Our holding is in accord with six of our sister circuits, which have held that claims administrators may be sued as defendants under § 502(a)(1)(B).”
On the breach of fiduciary duty claim, UnitedHealth Group argued the breach of fiduciary duty claims should be dismissed because adequate remedy was available under the benefits claim but the Second Circuit disagreed, holding that the district court prematurely dismissed these claims on the belief he had adequate relief through other claims.
According to the court, “We disagree with that ground for dismissal, but only because we think that the District Court’s dismissal on this basis was premature.” The court goes on to say, “Here, Denbo’s § 502(a)(3) claims are for breach of fiduciary duty, he has not yet succeeded on his § 502(a)(1)(B) claim, and it is not clear at the motion to‐dismiss stage of the litigation that monetary benefits under § 502(a)(1)(B) alone will provide him a sufficient remedy.
“In other words, it is too early to tell if his claims under § 502(a)(3) are in effect repackaged claims under § 502(a)(1)(B). We therefore hold that the District Court prematurely dismissed Denbo’s claims under § 502(a)(3) on the ground that § 502(a)(1)(B) provides Denbo with adequate relief.”
The circuit vacated the dismissal of a case brought by the New York State Psychiatric Association and an individual patient alleging that UnitedHealth Group, as claims administrator, ran afoul of both the act, known as ERISA, and the Mental Health Parity and Addiction Equity Act of 2008.
Southern District Judge Colleen McMahon had initially dismissed the case, ruling the association had no standing to sue on behalf of its members and that, as a third party administrator of health insurance plans, UnitedHealth could not be sued under ERISA §502(a)(3) for violations of the Parity Act or under ERISA §502(a)(1)(B).
Judges Dennis Jacobs, Debra Ann Livingston and Raymond Lohier reinstated the suit Thursday in New York State Psychiatric Association, Inc. v. UnitedHealth Group, 14-20-cv, following arguments heard on Dec. 15, 2014.
Lohier, writing for the circuit, said the psychiatric association (NYSPA), suing to “prevent interference with their provision of mental health treatment,” has standing because it “plausibly alleged that its claims do not require individualized proof.”
The court remanded the association’s claims for McMahon to consider whether it had stated a plausible claim for relief.