On September 13, 2006, Mr. Tebbetts consulted with a doctor because he was experiencing pain in his abdomen, and the doctor ordered a CT scan of Mr. Tebbetts’ abdomen. The doctor sought pre-approval from Defendants of the CT scan, but Defendants declined coverage. Several days later, Mr. Tebbetts was taken to the hospital where a CT scan and ultrasound revealed that Mr. Tebbetts had a cyst on his pancreas that had caused his spleen to rupture. Mr. Tebbetts’ spleen was surgically removed.

Tebbetts v. Blue Cross Blue Shield of Ala., 2009 U.S. Dist. LEXIS 54505 (M.D. Ala. June 26, 2009)

This unpublished district court opinion addresses two frequent issues in claim denial cases – whether 29 U.S.C. 1132(a)(3) remedies available when (a)(2) claims may have been brought and whether equitable estoppel may apply in an ERISA case.

One of the several unfortunate aspects of 29 U.S.C. 1132(a)(3) often complained about from a policy perspective is the notion that it is unavailable if a claim for benefit case could have been brought instead under (a)(2).  That, coupled with ERISA’s broad preemption of state law and limited equitable remedies even when (a)(3) does apply, limits claimants to a narrow channel of relief.

As Tebbetts illustrates, despite serious consequences of a claim denial, a frequent outcome will be the shunting of the claim back to a simple claim fo benefits case where the argument is simply over the  cost of the denied procedure.  In other words, the contours of a claim for benefits case under (a)(2) define the scope of relief under (a)(3), regardless of how the claims are actually brought.

For example, the Tebbitts court reasoned that:

Congress intended this provision [[1132(a)(3)]to be a “catchall” that would act “as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S. Ct. 1065, 134 L. Ed. 2d 130 (1996). This provision authorizes some individualized claims for breach of fiduciary duty, but under precedents handed down by the Eleventh Circuit Court of Appeals, not where plaintiffs had a cause of action based on the same allegations under § 1132(a)(1)(B) or ERISA’s other more specific remedial provisions. See, e.g., Jones v. Am. Gen. Life & Accident Ins. Co., 370 F.3d 1065, 1073-74 (11th Cir.), reh’g denied, 116 Fed. Appx. 254 (11th Cir. 2004); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1286-88 (11th Cir. 2003); Katz v. Comprehensive Plan of Group Ins., ALLTEL, 197 F.3d 1084, 1088-89 (11th Cir. 1999)  [*11] reh’g denied 209 F.3d 726 (11th Cir. 2000). Accord, Nolte v. BellSouth Corp., No. 1:06-cv-762-WSD, 2007 U.S. Dist. LEXIS 2108, 2007 WL 120842, *3-*7 (N.D. Ga. Jan. 11, 2007).

In light of these cases, it is clear that this Court must determine whether the allegations supporting the § 1132(a)(3) claim were also sufficient to state a cause of action under § 1132(a)(1)(B), regardless of the relief sought. 370 F.3d at 1073. Thus, the fact that Plaintiffs have recast the relief they seek from claims for damages into claims for equitable relief, the Court must focus on whether the factual predicate for their claim could have supported a cause of action under § 1132(a)(1)(B).

The court determined that the plaintiffs could have paid for the scan themselves and filed a claim for benefits.  So, the court reasoned, the plaintiffs just had a garden variety claim denial case under (a)(2).

In the case at hand, it is plain that all of Plaintiffs’ complaints against Defendants arise out of a denial of coverage for a CT scan. Upon that denial, Plaintiffs could have paid for the test themselves and then sought reimbursement through a § 1132(a)(1)(B) action or file such an action seeking a preliminary injunction. They could have filed  suit pursuant to § 1132(a)(1)(B) seeking clarification of their rights to future benefits under the terms of the plan. Plaintiffs elected not to pursue their remedies under § 1132(a)(1)(B), but the remedies were available to them. Because Plaintiffs had an adequate remedy under § 1132(a)(1)(B), they cannot assert a § 1132(a)(3) claim even if their § 1132(a)(1)(B) has been lost. See Ogden, 348 F.3d at 1287; Katz, 197 F.3d at 1089. Thus, Plaintiffs’ claim pursuant to § 1132(a)(3) is due to be DISMISSED.

As I mentioned at the outset, the plaintiffs did have an estoppel argument.  It did not fare any better, however.  The opinion really does not provide much for evaluation of this claim and that may be because there simply weren’t sufficient facts to allege a well-rounded ERISA claim.  At least, that is what the court found, stating:

Defendants contend that Count Two of the Amended Complaint must be dismissed because Plaintiffs have failed to sufficiently plead the necessary facts to support a claim for equitable estoppel. Plaintiffs make no response in opposition to this contention. “This circuit has created a very narrow common law doctrine under ERISA for equitable estoppel.” Katz, 197 F.3d at 1090 (citing Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347 (11th Cir. 1994) and Kane v. Aetna Life Ins., 893 F.2d 1283, 1285-86 (11th Cir.), cert. denied, 498 U.S. 890, 111 S. Ct. 232, 112 L. Ed. 2d 192 (1990)). Such a claim for equitable estoppel under ERISA is “only available when (1) the provisions of the plan  at issue are ambiguous, and (2) representations are made which constitute an oral interpretation of the ambiguity.” Id.

Having reviewed the Amended Complaint, the Court cannot find that Plaintiffs have alleged enough facts to state a claim of equitable estoppel under ERISA to show that relief that is plausible on this claim and they have certainly not presented a complaint which on its face provides the grounds of their entitlement to relief on this claim. Accordingly, the motions to dismiss are due to be GRANTED as to Count Two of the Complaint.

Note:   The plaintiff originally challenged the application of ERISA to the plan, but the court held otherwise.  The coverage was under the ”Medical Association of the State of Alabama Group Health Care Plan” which the plaintiff argued was not an employee benefit plan within the meaning of ERISA.   (”The MASA policy was issued by Defendant Blue Cross Blue Shield (”Blue Cross”) and administered in part by Defendant CareCore National, LLC “).  That was actually a good strategic angle though unavailing on these facts. Eleventh Circuit On (a)(3) – From Jones v. Am. Gen. Life & Accident Ins. Co., 370 F.3d 1065 (11th Cir. Ga. 2004), relied upon by the district court: As we recently explained in  Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284 (11th Cir. 2003), and as Varity itself makes clear, “the central focus of the Varity inquiry involves whether Congress has provided an adequate remedy . . . elsewhere in the ERISA statutory framework.”  Id. at 1288 (internal quotations omitted) (emphasis added); see also  Varity, 516 U.S. at 515, 116 S. Ct. at 1079 (stating inquiry as whether “Congress elsewhere provided adequate relief for a beneficiary’s injury”) (emphasis added). Thus, for purposes of establishing whether the Appellants had stated a claim under Section 502(a)(3), the district court should have considered whether the allegations supporting the Section 502(a)(3) claim were also sufficient to state a cause of action under Section 502(a)(1)(B), regardless of the relief sought, and irrespective of  the Appellants’ allegations supporting their other claims.