Hockenstein v. Cigna Health and Life Insurance Company

Background

Jeremy Hockenstein, a beneficiary of an employee welfare benefit plan, filed a proposed class action against Cigna Health and Life Insurance Company under the Employee Retirement Income Security Act of 1974 (ERISA). He alleged that Cigna, which processed healthcare claims and acted as a plan fiduciary, failed to fully reimburse four COVID-19 tests obtained by Hockenstein and two dependents. Hockenstein also alleged that Cigna gave inconsistent or inaccurate explanations for the partial reimbursements and failed to conduct a full and fair review of his appeals.

The plan’s summary description stated that the employer, The Educational Alliance, was both the plan and the plan administrator. It also stated that the plan administrator delegated authority to Cigna to interpret and apply plan terms, determine benefit payments, and conduct reviews of appealed claim denials. The summary description did not specifically include COVID-19 testing benefits. Hockenstein alleged that federal COVID-19 legislation nevertheless required full reimbursement for the tests.

Hockenstein asserted three counts under ERISA § 502(a)(1)(B) and § 502(a)(3). Count I alleged failure to fully reimburse the COVID-19 testing costs. Count II challenged the adequacy of Cigna’s explanations of benefits. Count III alleged that Cigna failed to conduct a full and fair review of the appeals. Cigna moved to dismiss only the claims under § 502(a)(3); it did not move to dismiss the claims under § 502(a)(1)(B).

Count I: Reimbursement claim

The court denied Cigna’s motion to dismiss the § 502(a)(3) claim in Count I. Cigna argued that equitable relief under § 502(a)(3) was improper because Hockenstein could seek the same relief under § 502(a)(1)(B), which allows a participant or beneficiary to recover benefits due under the plan. The court rejected that argument at this stage because the plan did not include COVID-19 testing coverage, and the alleged reimbursement obligation instead came from the federal COVID-19 statutes. The court reasoned that § 502(a)(1)(B) is limited to enforcing the plan as written and therefore did not provide a basis for the particular relief Hockenstein sought.

Cigna also argued that the requested reimbursement was impermissible monetary damages rather than equitable relief. The court disagreed for purposes of the motion to dismiss. It held that Hockenstein sufficiently alleged a breach of Cigna’s fiduciary duties and that the requested injunctions, reformation, and monetary compensation for losses allegedly resulting from that breach could constitute available equitable relief under § 502(a)(3). The court emphasized that dismissing the requested injunctive relief at that stage would be premature.

Counts II and III: Notices and appeals

The court granted Cigna’s motion to dismiss the § 502(a)(3) claims in Counts II and III. Those counts sought accurate explanations for benefit denials and a full and fair review of the appeals. The court explained that a § 502(a)(3) claim based on ERISA § 503 requires both an underlying ERISA violation and appropriate equitable relief. The usual equitable remedy for an alleged § 503 violation is a return of the matter to the plan administrator for further review.

Here, Hockenstein sought reprocessing that would compel Cigna to reimburse him, but Cigna was not the plan administrator. The Educational Alliance was identified as both the plan and the plan administrator. Because Cigna was neither, the court concluded that Hockenstein could not plausibly allege an underlying § 503 violation against Cigna. The court therefore dismissed the § 502(a)(3) claims in Counts II and III.

Leave to amend and disposition

The court denied leave to amend. It concluded that amendment would be futile because Hockenstein could not plausibly allege that Cigna was the plan or the plan administrator. The court’s final disposition was that Cigna’s motion to dismiss the § 502(a)(3) claim in Count I was denied, while Cigna’s motion to dismiss the § 502(a)(3) claims in Counts II and III was granted. The opinion also directed the parties to appear for a telephone conference.