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Seventh Circuit Expands Damages Available To Employees Given Wrong Benefits Information

The Seventh Circuit recently handed down an expansive ruling
that increases the ability of employees to seek damages against benefit plan
fiduciaries under ERISA.  The ruling had
three components: 1) that an employee can seek “make-whole” money damages if the
employer breached its fiduciary duty in misrepresenting the scope of health
benefits available, 2) that a breach of fiduciary duty claim can be supported
even if it is only based on conflicting language in a plan summary section, and
3) that the plan fiduciary has a duty to provide complete information whenever
a beneficiary inquires about insurance coverage.

In the case, the plaintiff asked whether a type of surgery
would be covered under her health plan, and was verbally told that it would be
covered.  After her claim for coverage
was then denied, she filed suit against her health insurer, asserting a breach
of fiduciary duty.  The district court originally
dismissed her complaint on the ground that compensatory damages were not an
equitable remedy under the ERISA statute.

The Seventh Circuit reversed, noting that after the Supreme
Court’s decision in Cigna v. Amara
the relief available for a breach of fiduciary duty claim can include monetary
damages.  It primarily held that because
the plan summary was ambiguous, gave the beneficiary no way to authoritatively
determine what procedures were covered, and invited beneficiaries to call to
determine what procedures were covered, there was an actionable claim for a
breach of fiduciary duty.  As stated by
BNA:  “Through Kenseth v. Dean Health Plan, Inc.,
employees who can show that the terms of the plan were not clear, and that they
were told coverage would be available and then were denied coverage after
treatment may now be able to collect monetary relief on their claim.”

I also wanted to touch on the recent news regarding a “living
wage.”  Across the country fast food workers
are demanding a living wage of $15 an hour, up from the $7.25 minimum wage that
many are currently earning.  Some have
estimated that this increase could be recouped simply by minimally raising the
price of a number of basic items on the menus of many stores.
  Here in the District, the DC Council recently
passed a living wage bill that will force large retailers to pay 50% over the
city’s minimum wage.  Walmart has
protested the bill, claiming that it will pull out of plans to bring three
stores into the District
.  It remains to
be seen how the strikes this week will impact future legislation to raise the
minimum wage.