ERISA – Cooperating With Plan Administrator

Attorneys handling ERISA claims will tell you the difficulties of ERISA claims and the ways to make sure those difficulties do not ruin the claim. A 2014, 5th Circuit Court of Appeals case needs to be read to see ways of avoiding some of the difficulties. The style of the case is, Hollingshead v. Aetna Health Inc.
This case reached the 5th Circuit Court of Appeals after the U.S. District Court dismissed the plaintiff’s putative class action complaint for failure to state a claim for violations of the Employee Retirement Income Security Act.
Through his employer, plaintiff Joe Hollingshead participated in a self-funded ERISA benefit plan with Aetna as the Plain’s claims administrator. The Plan included a number of coordination of benefits provisions, indicating how benefits would be paid in the event that Plan participants had medical coverage from more than one source. Under the Plan, certain sources of insurance coverage were considered “primary,” while other sources were considered “secondary.” In the event that the Plan was secondary, its benefits were to be determined after those of the primary plan. Practically, this meant that benefits under the Plan could be reduced. In fact, the Plan contained a provision explaining that failure to provide Aetna with necessary information and documentation could cause payment of benefits to be delayed or even denied. Under the Plan, no-fault auto insurance was considered primary.
Hollingshead’s son was the designated beneficiary under the Plan. After his son was seriously injured in a car accident, Hollingshead submitted numerous medical claims to Aetna. In accordance with the Plan, Aetna requested information from Hollingshead regarding the applicability of any no-fault insurance coverage and postponed processing his claims. Hollingshead never provided this information. Instead, he filed a putative class action against Aetna and asserted claims under ERISA, Section 502(a)(1)(B), 29 U.S.C., Section 1132(a)(1)(B), and ERISA, Section 502(a)(3), 29 U.S.C., Section 1132(a)(3). Aetna moved to dismiss, and Hollingshead amended his complaint to allege that Aetna violated ERISA by “immediately” denying his medical claims instead of denying them upon Hollingshead’s failure to provide the requested information. The district court ultimately dismissed Hollingshead’s ERISA claims for failure to state a claim. The 5th Circuit affirmed.
As the court explained, Hollingshead failed to state a claim under ERISA, Section 502(a)(1)(B) because the materials attached to his first amended complaint established that Aetna acted in accordance with the express terms of the Plan. Under the Plan, Aetna was required to request no-fault coverage information before adjudicating a claim. Aetna did just that, but Hollingshead never provided the requested information.
The court further held that Holliingshead failed to state a claim for breach of fiduciary duty in violation of ERISA, Section 502(a)(3) because Hollingshead had “adequate redress … through his right to bring suit pursuant to section 1132(a)(1).” The fact that Hollingshead could not prevail on his section 1132(a)(1) claim did not make his alternate claim viable. Finally, the court upheld the district court’s denial of Hollingshead’s motion for leave to file a second amended complaint. According to the court, Hollingshead’s proposed additions to his complaint were “futile and frivolous,” particularly his attempt to add a state-law claim given ERISA’s clear preemptive effect.