M. v. Aetna Health and Life Insurance Company

Background

J.M. was a beneficiary of the Sutter West Bay Medical Group Health and Welfare Plan, an employee-benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). The plan provided coverage for mental-health care, including residential treatment. Aetna Life Insurance Company administered the plan’s mental-health benefits.

J.M. received residential treatment at Innercept. Plaintiffs submitted claims for that treatment, but Aetna denied them because Innercept was not accredited by Aetna or by a national agency, commission, or committee. Plaintiffs alleged that the plan did not require this accreditation. Aetna affirmed the denial on appeal and did not provide requested documents concerning the denial and appeal. Bruce M. allegedly paid for J.M.’s treatment from his own funds.

Plaintiffs brought claims under ERISA sections 502(a)(1)(B) and 502(a)(3), codified at 29 U.S.C. § 1132(a)(1)(B) and (a)(3), for improper denial of benefits and breach of fiduciary duty. Aetna and the plan moved to dismiss under Federal Rules of Civil Procedure 12(b)(1), which concerns federal jurisdiction, and 12(b)(6), which concerns whether a complaint states a legally sufficient claim.

J.M.’s Standing

The defendants argued that J.M. lacked constitutional standing because she had not personally paid for the treatment or incurred a debt. The court rejected that argument. It held that the alleged denial of benefits itself could constitute a concrete injury, regardless of whether J.M. was indebted or had personally paid money. The court therefore concluded that J.M. had standing to pursue both her denial-of-benefits claim and her fiduciary-duty claim.

The court separately considered J.M.’s requested equitable relief. It rejected the challenge to disgorgement and surcharge because those remedies were not prospective. But it held that J.M. lacked standing to seek the remaining future-looking relief because Aetna’s agreement to provide coverage through the plan had ended on December 31, 2021, and Aetna had no ongoing role in the coverage offered to the plan’s employees and beneficiaries. The court therefore dismissed J.M.’s claims for prospective relief.

Bruce M.’s Authorization to Sue

ERISA limits who may bring civil actions under its enforcement provisions. The court noted that a claim for benefits may be brought by a participant or beneficiary, while a fiduciary-duty claim may also be brought by a fiduciary.

Bruce M. conceded that he was not a plan participant, beneficiary, or fiduciary. Plaintiffs argued that his position was analogous to that of a healthcare provider that receives an assignment of a beneficiary’s right to reimbursement. The court rejected that argument because Bruce M. did not provide J.M.’s healthcare and did not allege that he held a valid assignment. The court concluded that Bruce M. was not authorized to bring his claims.

Claim Sufficiency

The court denied Aetna’s request to consider documents that Aetna identified as the governing plan documents. Plaintiffs disputed those documents’ authenticity, so the court would not consider them at the motion-to-dismiss stage.

The court also held that J.M. adequately stated a claim for improper denial of benefits. The complaint alleged that the plan covered medically necessary mental-health services, including residential treatment, that Innercept qualified as a residential treatment facility, and that J.M.’s treatment was medically necessary.

The court further held that J.M. adequately stated a claim for breach of fiduciary duty. Plaintiffs alleged that Aetna acted in its own financial interest, interpreted the plan to minimize benefits, failed to provide requested documents and a reasonable explanation for the denial, and relied on a credentialing requirement that was not in the plan. The court concluded that these allegations were sufficient at the pleading stage.

Disposition

The court granted the defendants’ motions to dismiss in part and denied them in part. It granted the motions as to Bruce M.’s claims and J.M.’s claims for prospective relief. Bruce M.’s claims were dismissed without leave to amend because the court found that amendment would be futile. The court denied the motions as to all other claims, allowing J.M.’s remaining claims to proceed.