Oneto v. Watson

Background

Roy J. Oneto was a former employee of Cakebread Cellars, Inc. and participated in the company’s self-funded employee welfare benefit plan. Cigna Health and Life Insurance Company and Cigna Health Management, Inc. administered medical benefits under the plan. The plan excluded experimental, investigational, and unproven procedures, and gave Cigna discretionary authority to interpret plan terms, make factual determinations, and review benefit denials.

Oneto underwent an initial surgery in October 2020 to treat Zenker’s Diverticulum, a pouch in the throat caused by a herniation of esophageal muscles. Because he continued to have difficulty swallowing and part of the pouch remained, he considered another surgery scheduled for December 14, 2020. On December 11, 2020, Cigna Medical Director Melvin Watson denied prior authorization after determining that the proposed procedure met the plan’s exclusion for experimental, investigational, and unproven procedures. After a discussion with Oneto’s treating physician, Watson reconsidered the decision and approved the surgery on December 15, 2020. Oneto alleged that he did not proceed with the surgery because coverage had not been assured before the scheduled date. He later underwent the surgery in August 2021 after obtaining coverage through a different employer.

The court had previously dismissed Oneto’s claims against Dr. Watson and dismissed two other causes of action as preempted by ERISA. The remaining claims alleged that Cigna breached fiduciary duties and failed to perform duties under the plan.

Motions and Standard of Review

The parties filed cross motions for judgment on the remaining claims. They disagreed about whether the court should apply Federal Rule of Civil Procedure 52 or Rule 56. The court explained that the plan expressly delegated discretionary authority to Cigna. Under the applicable Ninth Circuit standard, the court therefore reviewed Cigna’s benefit decision for abuse of discretion and limited its review to the administrative record. The court rejected Oneto’s arguments that traditional summary-judgment standards should apply.

Standing and Requested Relief

Cigna argued that Oneto could not obtain relief under the Employee Retirement Income Security Act. To establish constitutional standing, a plaintiff must show an actual or imminent injury, a connection between the injury and the challenged conduct, and a likelihood that a favorable court decision would remedy the injury. The court focused on the third requirement: whether Oneto’s claimed injury was redressable.

Oneto sought equitable surcharge under 29 U.S.C. § 1132(a)(3)(B). The court described surcharge as monetary compensation for a loss caused by a trustee’s breach of duty or as relief preventing unjust enrichment. Oneto sought $73,061.30, representing the value of the surgery he did not receive after Cigna’s initial denial. But the administrative record did not show that Oneto paid that amount; the opinion states that his subsequent employer covered the eventual surgery.

Oneto alternatively sought $6,000 for amounts he said he paid under his subsequent insurance, including a deductible and an out-of-pocket maximum. The court found no evidence of those payments in the administrative record. He also sought compensation for physical suffering during the eight months before his eventual surgery, but the court found no evidence of that harm in the record either.

Because the record did not support an award of the requested make-whole relief, the court concluded that Oneto’s alleged harms were not redressable by a favorable ruling. It therefore held that he lacked standing and could not invoke the court’s jurisdiction. The court did not reach Cigna’s other arguments or the merits of whether Cigna breached its ERISA duties.

Disposition

The court dismissed Oneto’s remaining ERISA claims, granted Cigna’s motion for judgment, and denied Oneto’s motion for judgment.