Commercial – ERISA claims against Aetna revived

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Where the record showed that Aetna exercised discretionary authority or control over the management of a plan so as to potentially make it a fiduciary, and evidence suggested Aetna breached its fiduciary duties by not disclosing fees, a policyholder’s surcharge, disgorgement, declaratory and injunctive relief claims were revived.

Background

In June 2015, Sandra Peters filed a class action complaint against appellees, alleging violations of the Employee Retirement Income Security Act, or ERISA. Peters alleged that appellees breached their fiduciary duties to her and the plan based on Aetna’s arrangement to have the plan and its participants pay Optum’s administrative fee via the bundled rate.

The district court denied class certification. Subsequently, the district court concluded that neither Aetna nor Optum were operating as fiduciaries when engaging in the actions at the heart of Peters’ complaint, and granted appellees’ motions for summary judgment.

Standing

Appellees assert that Peters did not suffer a financial loss and therefore cannot show injury to pursue the relief requested. However, the court is satisfied that, at a minimum, Peters demonstrates a financial injury sufficient to establish standing so as to proceed with her restitution claim. And she could still seek surcharge, disgorgement and declaratory and injunctive relief.

Restitution

Peters’ claim for restitution requires financial loss in order to establish compensable injury on the merits. The measure of loss applicable in an ERISA trust circumstance like this case requires a comparison of what Peters or the plan would have paid had Peters’ claims excluded Optum’s administrative fee with what they actually paid on those claims. Considering the applicable formula and offsetting Peters’ losses with the gains she experienced on all her healthcare claims under the plan, she suffered no direct financial injury from appellees’ actions.

However the record is silent as to what gain or loss the plan incurred utilizing the framework for the restitution claim. As such, it is appropriate to vacate the district court’s grant of summary judgment on this claim and remand the matter to the district court to develop a fuller record of the relevant financial facts, if necessary, and determine the plan’s financial injury for restitution purposes, if any, in the first instance.

Remaining ERISA claims

Turning to Peters’ request for surcharge, disgorgement and declaratory and injunctive relief, Peters has produced sufficient evidence to create genuine disputes of material fact so as to survive the motions for summary judgment.

First, the record contains sufficient evidence to permit a reasonable factfinder to conclude that Aetna acted as a functional fiduciary by “[exercising] … discretionary authority or discretionary control respecting management of [the plan]” and had “discretionary authority or discretionary responsibility in the administration of [the plan].”

The district court’s grant of summary judgment in favor of Aetna was also improper because a reasonable factfinder could conclude that Aetna breached its duties based on the following four actions regarding the EOBs: (1) referring to Optum, and not the actual health care provider, as the “provider” of the medical services; (2) using “dummy codes” that did not represent actual medical services; (3) misrepresenting the “amount billed” as including Optum’s administrative fee and (4) describing the Optum rate, which included its administrative fee, as the amount that the plan and its participants, like Peters, owed for their claim.

Turning to Optum, Peters has failed to show that Optum was operating as a functional fiduciary. However the district court improperly concluded at the summary judgment stage that Optum could not be held liable under the related theory that it was a party in interest engaged in prohibited transactions. Specifically, based on the totality of the record, a reasonable factfinder could determine that Optum “had actual or constructive knowledge of the circumstances that rendered [the bundled rate framework] unlawful.”

Class certification

The district court analyzed ascertainability and commonality too rigidly. Specifically, the district court hinged its lack-of-ascertainability determination on its perception of Peters’ theory of financial injury.

However, Peters has withstood summary judgment on claims that support her request for certain equitable forms of relief on behalf of herself and the plan: surcharge, disgorgement and declaratory and injunctive remedies without regard to financial injury. Thus, the district court’s basis for denying class certification as to surcharge, disgorgement and declaratory and injunctive relief was erroneous. And the plan’s entitlement to a remedy of restitution has yet to be determined.

The same harms that would support Peters’ request for equitable relief regarding surcharge, disgorgement and declaratory and injunctive actions may be cognizable and identifiable in the ascertainability context. The court also believes that Peters’ proposed classes may be able to meet the commonality requirement when that requirement is reexamined based on the claims that survive the motions for summary judgment as explained previously.

Affirmed in part, reversed in part, vacated in part and remanded.

Peters v. Aetna Inc. (Lawyers Weekly No. 001-131-21, 71 pp.) (G. Steven Agee, J.) Case No. 19-2085. June 22, 2021. From W.D.N.C. (Martin K. Reidinger, J.) D. Brian Hufford for Appellant. Earl B. Austin III and  Brian D. Boone for Appellees.