Opinion ID: 791660
Heading Depth: 2
Heading Rank: 2

Heading: Nechis' Claims Fail on Their Merits

Text: 15 Yet whatever the impact of Nechis' failure to exhaust administrative remedies, summary judgment is still appropriate since, as the district court properly determined, none of her claims are legally cognizable under ERISA. 16
17 Nechis first contends that Oxford and Triad breached their fiduciary obligations imposed by § 404 of ERISA by denying, delaying or mishandling claims for chiropractic care and failing to disclose information to plan participants. Nechis seeks to remedy these practices by asserting a claim under § 502(a)(3) of ERISA, which authorizes civil actions to enjoin any act or practice which violates . . . the terms of the plan, or . . . to obtain other appropriate equitable relief. 29 U.S.C. § 1132(a)(3). On appeal, she argues that the district court improperly disregarded her request for equitable relief and wrongly concluded that restitution was not an available remedy. Nechis renews her demand for injunctive relief, corrective disclosures and reformation, and requests certain forms of equitable restitution. 18 As the district court concluded, Nechis' allegations with respect to disclosure violations and concerning reformation of claims resolution and appeals procedures are unavailing. Oxford has no duty to disclose to plan participants information additional to that required by ERISA; Oxford is not bound to inform participants either that it has adopted cost-containment mechanisms or that it offers financial incentives for cost savings. See Ehlmann v. Kaiser Foundation Health Plan, 198 F.3d 552, 556 (5th Cir.2000) (dismissing plaintiff's argument that a duty to disclose financial incentives was implied by § 404 of ERISA); In re Managed Care Litigation, 150 F.Supp.2d 1330, 1356 (S.D.Fla.2001) (dismissing plaintiff's breach of fiduciary claims based on non-disclosure of cost-containment mechanisms and financial incentives). 19 Nechis merely asserts that Oxford's claims resolution and appeals procedures should be reformed; she does not specify the context of the requested reformation and she does not allege a basis for reformation such as fraud, mutual mistake or terms violative of ERISA. See, e.g., AMEX Assurance Co. v. Caripides, 316 F.3d 154, 161 (2d Cir.2003) (fraud and mutual mistake); DeVito v. Pension Plan of Local 819 I.B.T. Pension Fund, 975 F.Supp. 258, 267 (S.D.N.Y.1997) (reformation of plan that violated ERISA accrual provisions). 20 The equitable relief available under § 502(a)(3) consists of those remedies that were typically available in equity. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (internal citation omitted). On appeal, Nechis claims that injunctive relief would be appropriate to end Oxford's allegedly deceptive practices, to correct its disclosures and to reform its claims resolution procedures. However, injunctive relief is generally appropriate only when there is an inadequate remedy at law and irreparable harm will result if the relief is not granted. The basic requirements to obtain injunctive relief have always been a showing of irreparable harm and the inadequacy of legal remedies. Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 68 (2d Cir.1999). Here, Nechis cannot satisfy the conditions required for injunctive relief; any harm to her can be compensated by money damages, and she could have pursued an alternative and effective remedy under § 502(a)(1)(B) of ERISA to recover the value of benefits wrongly denied. 21 This leaves the question whether restitution is available as an equitable remedy under § 502(a)(3) of ERISA. Although Nechis seeks restitution, the Supreme Court, as the district court noted here, has stated that almost invariably suits seeking to compel the defendant to pay a sum of money to the plaintiff are suits for `money damages.' Great-West, 534 U.S. at 213, 122 S.Ct. 708 (internal quotation omitted). A claim for money due and owing under a contract is quintessentially an action at law. Id. The Supreme Court has delineated what forms of equitable restitution are available under § 502(a)(3), distinguishing permissible forms of equitable restitution such as employment of a constructive trust or of an equitable lien from forms of legal restitution. Id. Thus, a constructive trust or equitable lien is imposed when, in the eyes of equity, a plaintiff is the true owner of funds or property, and the money or property identified as belonging in good conscience to the plaintiff [can] clearly be traced back to particular funds or property in the defendant's possession. Id. For the reasons aptly articulated by the district court, neither form of equitable restitution is involved here; the monies upon which Nechis seeks to impose a trust are premiums paid for health care coverage, which Oxford is under no obligation to segregate and which Nechis does not allege to be segregated in a separate account. Moreover, the language of Nechis' request for relief involves words of contract rather than those of equity, a circumstance that undermines her claim that the district court misconstrued the nature of the relief that she has sought. Since early on, Nechis has complained that she did not receive[ ] the benefit of the bargain and has requested disgorgement of ill-gotten gains and restitution of premiums paid. And she persists in seeking money damages under a theory of unjust enrichment, alleging that ERISA's remedies must be supplemented by the federal common law since the statute does not provide adequate relief in the present circumstances. We decline this invitation to perceive equitable clothing where the requested relief is nakedly contractual. 22
23 Nechis also alleges that Oxford failed to disclose that its decisions on chiropractic coverage were not based solely on medical necessity but instead invoked undisclosed cost-based criteria, that it provided financial incentives to Triad to deny chiropractic claims and that it intentionally and unreasonably delayed payment of covered claims to earn greater interest on premiums. Section 104(b) of ERISA requires that plan administrators provide notification to participants of any material reduction in benefits or services within 60 days of their effective date. 29 U.S.C. § 1024(b)(1)(B). ERISA defines an administrator either as someone who is specifically designated by plan documents or the plan sponsor; if no administrator is designated and no plan sponsor is identified, the administrator is such other person as the Secretary may by regulation prescribe. 29 U.S.C. § 1002(16)(A). When an employee benefit plan is established or maintained by a single employer, the plan sponsor is the employer. 29 U.S.C. § 1002(16)(B)(I). However, as the district court recognized, Nechis concedes that Oxford meets none of these criteria and is therefore not the plan administrator, 4 and therefore does not have the disclosure obligations alleged. 24 For much the same reasons as apply to Oxford, the allegations against Triad fail, whether or not Triad is deemed to be a fiduciary, as Nechis alleges.
25 Finally, the plaintiffs contend that the district court erred in not granting them leave to amend their complaint. We review a denial of leave to amend for abuse of discretion. Koehler v. Bank of Bermuda (New York) Ltd., 209 F.3d 130, 138 (2d Cir.2000). There is no abuse of discretion here; not only does Mady lack standing to sue under ERISA, but Nechis' claims also fail on their merits. We do not see how these deficiencies can be supplied by amendment.