At the summary judgment stage of the case, the district court dismissed James’s denial-of-benefits and breach-of-fiduciary-duty claims, but awarded him minimal statutory damages against the health plan administrator. James has appealed.
We hold that the district court properly granted summary judgment on James’s denial-of-benefits and breach-of-fiduciary-duty claims, but incorrectly calculated James’s statutory damages award.
Killian v. Concert Health Plan, 2012 U.S. App. LEXIS 7880 (7th Cir. Ill. Apr. 19, 2012)
The dispute in this Seventh Circuit case arose out of the group health plan’s refusal to out-of-network charges of $80,000. The Plaintiff claimed that there was no adequate proof in the record that the providers were out-of-network, and furthermore that, even if they were, the Defendants breached their fiduciary duty to inform him of that material fact.
The denial of benefits issue did result in a grudging remand to ascertain network status (as an accommodation to the dissenting judge) but appeared a rather futile avenue of relief. The breach of fiduciary duty issue was more interesting.
The Court framed the issue in this way:
James argues that Concert and Royal Management breached their fiduciary duties in two ways: first, by not providing Susan with an SPD; and second, by failing to apprise James that Rush University Hospital was not in Susan’s network despite James’s two phone calls to Concert on April 7, 2006. In short, James alleges that Concert and Royal Management breached their fiduciary duties by failing to make required disclosures.
The Defendants conceded they were fiduciaries and the Court found that the failure to provide an SPD was a breach of fiduciary duty. The Court observed that:
Concert and Royal Management have both conceded that they were plan fiduciaries under ERISA. See 29 U.S.C. §§ 1002(21)(A) (defining a plan fiduciary), 1105(a) (setting forth liability of a co-fiduciary). Additionally, it is evident from the record that the Killians incurred harm, namely, the approximately $80,000 in medical bills owed by Susan’s estate. This then leaves us to ponder the questions of whether Concert and Royal Management breached a fiduciary duty owed to Susan, and, if so, whether such a breach caused the harm.
And that is where the wheels fell off the Plaintiff’s case. The Court found sufficient doubt in the purpose and substance of telephone conversations between the Plaintiff and the customer service representatives as well as the counterfactual of what would the Plaintiff have done even were the providers out of network to eliminate the causal connection between breach and harm.
Yet James must still show that this breach of fiduciary duty caused Susan’s harm. Concert and Royal Management claim their breach did not harm Susan because she would have sought treatment from Dr. Bonomi, Dr. Barnes, and Rush University Hospital even if she had received an SPD. Clearly Susan made an appointment at Rush University Hospital and with Dr. Bonomi several days before checking in at the hospital on April 7, 2006. Dr. Bonomi referred her to Dr. Barnes who quickly diagnosed a death-threatening brain tumor and operated on her soon thereafter. As noted earlier, James concedes that he and Susan would have sought a second opinion from Dr. Bonomi regardless of whether he was in Susan’s network. Further, he concedes that he made the appointment and checked in at Rush University Hospital without first attempting to determine whether that facility was in Susan’s network. Based on this record, a reasonable fact finder could only conclude that James and Susan would have sought treatment from the doctors at Rush University Hospital regardless of whether Susan had been issued an SPD. Thus, James has not created a triable issue of fact over whether Concert and Royal Management’s failure to provide an SPD caused his harm.
James next argues that he was harmed as a result of his reliance on the two phone conversations he had with Concert representatives on April 7, 2006. Specifically, James contends that the failure of the Concert representatives to tell him that Rush University Hospital was out of Susan’s network caused his harm. For the purposes of this appeal, we are assuming that James did not waive this argument, yet he still cannot succeed on the merits.
The district court concluded that James called Concert only to report that Susan was being admitted to Rush University Hospital—not to confirm coverage. James disputes this conclusion on appeal, pointing to his testimony wherein he avers that he called two different toll-free numbers on Susan’s insurance card. Because one of the numbers listed on Susan’s card is a number used to determine a provider’s network participation, James argues that a fact finder could infer that he called to confirm that Rush University Hospital was a member of Susan’s network.
The Court ruled for the Defendants, concluding that:
This case is an example of an instance where plan documents are clear and the fiduciary has exercised appropriate oversight over its agents. The plan documents clearly and unambiguously state the name of Susan’s network. Further, the plan documents are clear on both the necessity of and means by which a beneficiary can determine whether a provider is within his or her network. Our dissenting colleague acknowledges as much. (Dissent Op. at 42-43.) As noted above, Susan’s Employee Benefits Summary, Certificate of Insurance, and insurance card identified her network as the PHCS Open Access network. Although she did not have a provider list, those documents warned Susan that she should seek treatment from her preferred providers “to avoid reduced benefit payments.” And the phone numbers on her insurance card gave her instructions on how “[t]o determine [p]rovider participation.” Thus, the Killians had available to them clear instructions by which they could have determined whether Dr. Barnes, Dr. Bonomi, or Rush University Hospital were within the PHCS Open Access network.
Note: The Court appeared heavily influenced by its supposition that the medical treatment would have been sought anyway. The Court’s reliance on telephone numbers and instructions on an insurance card when the plan administrator had admittedly issued no summary plan description or list of network providers may seem at odds with the judiciary’s usual insistence on plan documents in resolution of ERISA disputes.