A federal court in New York appears to have issued the first published decision addressing alleged violations of the enhanced benefit claim procedures arising out of the Affordable Care Act (ACA). The new procedures contain various participant-friendly provisions, such as the right to external review, that alter ERISA’s existing benefit claim procedures for non-grandfathered welfare plans. The court dismissed the claims for failure to name the right defendant, but in so ruling made statements as to the appropriate treatment of ERISA’s remedial provisions to enforce ACA claims that are likely to provoke further scrutiny.
In New York State Psychiatric Assoc., Inc. v. UnitedHealth Group, 2013 WL 5878897 (S.D.N.Y. Oct. 31, 2013), a diverse group of plaintiffs sued UnitedHealth, the claims administrator that exercised its discretion to deny coverage for mental health benefits on behalf of several different self-funded welfare plans. Plaintiffs alleged, among other violations, that UnitedHealth breached its fiduciary duties by failing to follow the new review procedures detailed in the Department of Labor’s interim final regulations for benefit claims under ACA. The court dismissed the ACA claims because it found that only “group health plans” or entities “providing health insurance coverage in connection with group health plans” are liable under ACA and plaintiffs failed to name the underlying plans or the plan administrators as defendants. Courts in other jurisdictions, however, may have allowed the case to proceed against the claims administrator under these circumstances. See https://www.erisapracticecenter.com/2013/11/25/plan-administrator-vs-claims-administrator-who-is-the-proper-defendant-in-erisa-claim-for-benefits/.
In its ruling, the court noted that ERISA § 715, 29 U.S.C. § 1185d, incorporated by reference ACA’s expanded protections for plan participants during the administrative review process, and assumed that ERISA’s remedial provisions would allow participants to enforce their ACA rights. The court thus appeared to suggest that, if brought against a proper defendant, a participant could bring a claim under ERISA § 502(a)(1)(B) to conform a plan’s benefit claim procedures with ACA’s requirements. This aspect of the court’s decision is in tension with Amara v. Cigna, 131 S. Ct. 1866 (2011), where the Supreme Court stated that Section 502(a)(1)(B) is limited to enforcing benefit plan terms as written, and that claims for additional relief based on alleged violations of ERISA’s disclosure provisions must satisfy the causation and harm conditions for equitable relief under Section 502(a)(3). It remains to be seen whether the reasoning in this decision will be trumpeted by plaintiffs and more widely adopted by other courts. In any event, we can expect defendants to rely on Amara to challenge enforcement of ACA under Section 502(a)(1)(B) of ERISA.