Health Insurance Carriers Must Also Be Careful In What They Tell Plan Participants

by Stinson Leonard Street - Employee Benefits & Compensation

I blogged recently warning employers to be careful when enrolling employees in plan benefits because the employer could be responsible to pay life insurance or disability benefits if an employee who is improperly enrolled incurs a claim. The increased liability comes from the recent Supreme Court decision, Cigna v. Amara,  allowing certain types of money damages to be considered equitable relief under ERISA, thereby opening the door to increased damage awards to harmed plan participants.

A recent Seventh Circuit decision involving health plan benefits is another example of this phenomena. The case involved an employee covered under a health plan who had had bariatric surgery 18 years earlier. She was experiencing some complications and an additional surgery was viewed as the best, although not the only, procedure to relieve her symptoms. Because she was not certain that her plan would cover the benefit, she called the plan’s call center as directed by her summary plan description for questions about coverage. She was told that the procedure would be covered. After she had the procedure, the plan refused to pay the claims, concluding that the procedure should not have been covered because the plan did not cover complications of bariatric surgery. Although these complications were arising 18 years after the initial surgery, they were nevertheless complications not covered under the plan. The health plan said that it was not bound by the statements made by the call center employee and denied coverage.

The claims were incurred in 2005 and the law suit has been moving through the court system for a number of years. The case had not been finally resolved by 2011 when the Amara case was decided. The employee added claims for relief based on the Supreme Court decision and the Seventh Circuit allowed those claims to proceed. The court concluded that it may be possible for the employee to prove that the health plan had violated a fiduciary duty to give true and accurate information about plan coverage. It appeared that the only advice the plan gave to participants who had questions was to contact the call center. The summary plan description did not say that participants should not rely on call center information nor did the summary plan description give any indication regarding how to receive a definitive answer to a coverage question.

The district court had granted summary judgment to the health plan. The Seventh Circuit reversed that decision and remanded the case to the district court for a trial to develop the facts further as to whether the health plan breached a fiduciary duty and whether that breach harmed the participant. The trial would also address the damages issue.

Among other arguments, the health plan contended that the employee would have chosen to have the procedure done in any case and so was not harmed by the fact that the plan did not pay for it. The employee, of course, claimed that she would not have undergone the procedure but would have continued with other alternatives that helped alleviate her symptoms although not as effectively. The court noted that the cost to her of the procedure without plan coverage was $77,000 while if it had been covered by the plan, with the discounts available for in-network plan providers, the cost would have been $35,000. According to the court, if the employee had known that the plan would not cover the procedure she at least could have negotiated a reduced rate if she had decided to proceed without coverage.

Like the case in my recent blog post, this case too will be worth watching. If the law develops to allow plan participants to be paid damages for improper coverage determinations, such mistakes may become more costly for plan sponsors.  Sponsors and insurance carriers must take care in making and communicating coverage decisions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stinson Leonard Street - Employee Benefits & Compensation | Attorney Advertising

Written by:

Stinson Leonard Street - Employee Benefits & Compensation

Stinson Leonard Street - Employee Benefits & Compensation on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.