United States Court of Appeals For the First Circuit
No. 20-1639
N.R., by and through his parents and guardians, S.R. and T.R., individually and on behalf of all others similarly situated, and derivatively on behalf of the Raytheon Health Benefits Plan,
Plaintiff, Appellant,
v.
RAYTHEON COMPANY; RAYTHEON HEALTH BENEFITS PLAN; WILLIAM M. BULL,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Chief Judge, Thompson and Gelpí, Circuit Judges.
Eleanor Hamburger, with whom Richard E. Spoonemore, Sirianni Youtz Spoonemore Hamburger Pllc, Stephen Churchill, and Fair Work P.C. were on brief, for appellant.
James F. Kavanaugh, Jr., with whom Catherine M. DiVita, Johanna L. Matloff, and Conn Kavanaugh Rosenthal Peisch & Ford LLP were on brief, for appellees.
Michael N. Khalil, with whom Kate S. O'Scannlain, Solicitor of Labor, G. William Scott, Associate Solicitor for Plan Benefits Security, and Thomas Tso, Counsel for Appellate and Special Litigation, were on brief, for Eugene Scalia, Secretary of Labor, amicus curiae. Martha Jane Perkins, Daniel Unumb, Abigail Coursolle, and Elizabeth Edwards were on brief for National Health Law Program, Autism Legal Resource Center, LLC, Bazelon Center for Mental Health Law, Center for Health Law & Policy Innovation of Harvard Law School, Center for Public Representation, Disability Rights Education and Defense Fund (DREDF), Health Law Advocates, Inc., National Autism Law Center, and The Kennedy Forum, amici curiae.
January 31, 2022 THOMPSON, Circuit Judge. Plaintiffs S.R. and T.R. are
the parents of N.R., who was four years old at the start of our
story. The family had health insurance through T.R.'s employment
at defendant Raytheon Company. Raytheon enlisted defendant United
Healthcare to administer this health insurance plan (simply called
the "Plan" from here on out) and assigned defendant William Bull
to be the Plan's administrator. Everyone seemed happy with this
arrangement until United Healthcare refused to pay for N.R.'s
speech therapy. After S.R. and T.R. could not get United
Healthcare to change its mind, the family sued for various
violations of the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1001, et seq. The district court dismissed
the case in full, buying into the defendants' representations of
how the Plan works too much for this stage in the litigation. Ever
mindful that all well-pleaded factual allegations in the complaint
are accepted as true when reviewing a motion to dismiss, we affirm
as to Count 1, and reverse and remand as to the remaining counts.
See Ezra Charitable Tr. v. Tyco Int'l, Ltd., 466 F.3d 1, 6 (1st
Cir. 2006) (in addition to accepting well-pleaded factual
allegations in the complaint, we also construe reasonable
inferences in favor of the plaintiffs).
- 3 - I.
Relevant Details of the Plan
The Plan includes a list entitled "Exclusions," and
explains that "[t]he [United Healthcare] plans do not cover any
expenses incurred for services, supplies, medical care, or
treatment relating to, arising out of or given in connection with
[those excluded services.]" Among those excluded expenses are
"[h]abilitative services for maintenance/preventive treatment" and
"speech therapy for non-restorative purposes."
The "Exclusions" list also includes a nested sub-list of
"mental health (including Autism Spectrum Disorder (ASD)
services)/substance-related and addictive disorders services
[that] are not covered[.]" That "mental health" list includes the
following relevant text:
Habilitative services, which are health care services that help a person keep, learn or improve skills and functioning for daily living, such as non-restorative ABA speech therapy[.]
. . .
Intensive behavioral therapies other than Applied Behavior Analysis (ABA) therapy for Autism Spectrum Disorders (ASD)[.]
N.R.'s Treatment and Denial of Coverage
In 2017, a doctor diagnosed N.R. with Autism Spectrum
Disorder ("ASD") and prescribed that N.R. "receive speech therapy
services." And so, N.R. began treatment with a licensed speech
- 4 - pathologist, Ann Kulichik, to treat his ASD, "[m]ixed receptive-
expressive language disorder, [and] phonological disorder." Each
of those diagnoses was recorded and reported to United Healthcare
using its classification number from the International Statistical
Classification of Diseases and Related Health Problems, 10th
Revision (apparently known as the "ICD-10"). ASD, mixed receptive-
expressive language disorder, and phonological disorder are each
classified within the "Mental, Behavioral, and Neurodevelopmental"
section of the ICD-10. The ICD-10 also contains a section for
"Symptoms, Signs and Abnormal Clinical and Laboratory Findings,
Not Elsewhere Classified." Kulichik noted (in documentation
eventually submitted to United Healthcare) that N.R. had several
symptoms that fell within this category, namely: "dysarthria, []
anarthria and dysphagia, oral phase." Those symptoms are not
diagnoses of "either 'mental health' or 'medical/surgical'
conditions."
Kulichik submitted N.R.'s claims for speech therapy to
United Healthcare using a general code that "is used to describe
the delivery of treatment for speech, language, voice,
communication and/or auditory processing disorders." That
treatment code (described as "very comprehensive" by the American
Speech-Language-Hearing Association), is used when speech therapy
is provided to treat a developmental health condition, like ASD,
or a medical condition, like a stroke. Kulichik also submitted at
- 5 - least one claim for N.R.'s speech therapy using a code "for
treatment of swallowing dysfunction and/or oral function for
feeding." Like the more general code, this swallowing and feeding
code can be used when the speech therapy is to treat a
developmental health condition or a medical condition.
United Healthcare denied each of these claims, simply
explaining that "this service is not covered for the diagnosis
listed on the claim" and referring N.R.'s parents to the "[P]lan
documents" for further explanation.
N.R.'s parents appealed these denials through United
Healthcare's internal process. The appeal included several
letters of medical necessity, including letters from Kulichik and
N.R.'s board-certified behavior analyst. N.R.'s parents also
argued that the Plan's exclusion of treatment for N.R.'s ASD
violated the Mental Health Parity and Addition Equity Act (simply
the "Parity Act" after this), an amendment to ERISA aimed at
mitigating disparities between mental health and physical health
insurance coverage (and the subject of much discussion later).
United Healthcare denied this appeal and offered the
following statement from Dr. Samuel Wilmit, a Medical Director at
United Healthcare who specialized in pediatrics:
You are asking for speech therapy. This is for your child. Your child is autistic. Your child does not speak clearly. Your benefit document covers speech therapy if your child lost speech. It is to restore speech that was
- 6 - lost. Your child has not had speech that was lost. Therefore, speech therapy is not covered. The appeal is denied.
The denial did not address the argument that these denials violated
the Parity Act.
N.R.'s parents filed a second-level appeal, again with
documentation about the medical necessity of this treatment and
with a more thorough explanation of their Parity Act argument.
United Healthcare was unmoved. The denial letter included this
statement from Dr. Meenakshi LaCorte, a Medical Director at United
Healthcare who specialized in pediatric neonatology:
I have reviewed the information that was submitted for this appeal. I have also reviewed your benefits. You have requested speech therapy for your child. This therapy is a benefit under your health plan only if your child had speech that was lost. Based on your health plan guidelines, your request is denied.
Again, the denial letter did not mention the Parity Act argument.
After the conclusion of the appeal process, N.R.'s
parents requested all documents and internal communications and
notes upon which United Healthcare relied when it denied coverage
of N.R.'s treatment. The provided documents revealed that United
Healthcare did not conduct a "Medical Necessity Review" and never
attempted to communicate with any of N.R.'s medical providers,
including Kulichik.
- 7 - Also within those documents were the notes from Dr.
Wilmit's review of the first appeal. Dr. Wilmit concluded that
N.R.'s "speech or nonverbal communication function" was not
"previously intact" and, therefore, the Plan does not cover speech
therapy. Dr. Wilmit's notes and United Healthcare's records,
generally, did not reflect the source for the conclusion that N.R.
had no "previously intact" speech or other communication. In the
complaint, the plaintiffs allege that the most reasonable
conclusion is that Dr. Wilmit assumed that N.R. had no previously
intact speech (and therefore treatment was not covered) because of
his ASD diagnosis and not based on any actual documentation of
N.R.'s condition.
The internal notes from the second-level appeal include
the following summary:
This request is for speech therapy for a [four-year-old] boy. This child has autism and a speech disorder. There is no documentation that speech therapy is needed for restoration of speech. The speech therapy is not a covered benefit and the request is denied.
Nothing in the internal documents discussed N.R.'s parents' Parity
Act argument.
After the last denial of their appeal, N.R.'s parents
contacted Raytheon and United Healthcare and requested the list of
"non-mental health conditions to which the Plan applies the 'non-
restorative' speech therapy exclusion," "the medical necessity
- 8 - criteria" for applying the non-restorative speech therapy
exclusion to medical or mental health benefits, and the "processes,
strategies, evidentiary standards, and other factors" used to
apply the exclusion. N.R.'s parents received no response.
Resultant Litigation
ERISA authorizes a plan participant or beneficiary to
bring a civil action "to recover benefits due to him under the
terms of his plan," "to enjoin any act or practice which violates
[ERISA]," for "relief" for failure to provide information
requested by the beneficiary, and "to obtain other appropriate
equitable relief." 29 U.S.C. § 1132(a)(1)-(3). Relying on each
of these provisions, N.R. and his parents sued Raytheon, United
Healthcare, and Bull, in his role as the Plan administrator,
seeking damages and declaratory and injunctive relief. At the
core of N.R.'s case was his argument that the Plan's exclusion of
non-restorative speech therapy for ASD violates the requirements
of the Parity Act.
The defendants collectively moved to dismiss. Of note
to our analysis, in their supporting memorandum, the defendants
told the district court that the Plan complied with the Parity
Act's requirements because the non-restorative exclusion applies
to all types of conditions, no matter whether the beneficiary is
prescribed treatment for a medical or a mental health/substance
- 9 - use diagnosis.1 The district court agreed that the defendants'
explanation of the Plan's application was the only possible reading
and so the Plan did not violate the Parity Act. For that and
additional reasons specific to some of the claims, the district
court allowed the defendants' motion and dismissed the case,
including dismissing some of the claims with prejudice. N.R.
timely appealed and here we are.2
1 The defendants explained the hypothetical operation of the Plan in the following way: A person might not develop a "normal" level of speech due to a medical/surgical condition as well as a mental health condition. For example, a person might have difficulty speaking due to a lisp, stutter, deafness, or physical deformity of the mouth or vocal [cords] from birth. Under these circumstances, there would be no loss of speech that was "previously intact." If the person sought speech therapy, and the purpose of the therapy was to help the person achieve a level of speech beyond what had previously been achieved, coverage for that treatment would be barred under the Exclusion. Coverage would be barred, not because treatment was sought for a certain type of condition, but because it was "nonrestorative."
2 N.R. also brought this suit on behalf of a purported class of participants or beneficiaries of the Plan who have received or are expected to require services for a mental health condition that are excluded from coverage by the Plan's habilitative services exclusion. The district court's order did not address the class allegations and there is no discussion of those allegations on appeal.
- 10 - II.
We review the district court's decision to dismiss
N.R.'s case for failure to state a claim de novo. Ezra Charitable
Tr., 466 F.3d at 6. In doing so, we assume all well-pleaded facts
to be true, analyze those facts in the kindest light to the
plaintiff's case, and draw all reasonable inferences in favor of
the plaintiff. U.S. ex rel. Hutcheson v. Blackstone Med., Inc.,
647 F.3d 377, 383 (1st Cir. 2011). A successful complaint must
plead "factual allegations, either direct or inferential,
respecting each material element necessary to sustain recovery
under some actionable legal theory." Gagliardi v. Sullivan, 513
F.3d 301, 305 (1st Cir. 2008). "We may augment these facts and
inferences with data points gleaned from documents incorporated by
reference into the complaint." Haley v. City of Boston, 657 F.3d
39, 46 (1st Cir. 2011).
N.R. brought four different claims, but one question
predominates the analysis: Does the Plan violate the Parity Act?
We conclude that it may, which is all N.R. needs at this stage of
the game, and so we begin by explaining our thinking on that point
and then move to what that means for each individual count of the
complaint.
Does the Plan Violate the Parity Act?
ERISA establishes the bare minimum standards to which
private health care plans must adhere. The Parity Act amended
- 11 - ERISA to require that, if a health insurance plan provides "both
medical and surgical benefits and mental health or substance use
disorder benefits," the plan must not impose more coverage
restrictions on the mental health or substance use disorder
benefits. 29 U.S.C. § 1185a(a)(3)(A)(i). Any treatment
limitations applied to mental health or substance use disorder
benefits must be "no more restrictive than the predominant
treatment limitations applied to substantially all medical and
surgical benefits covered by the plan." 29 U.S.C.
§ 1185a(a)(3)(A)(ii).
A violation of the Parity Act generally manifests
through a health insurance plan (1) applying treatment limits that
are more restrictive than "the predominant treatment limitations
applied to substantially all medical and surgical benefits" or (2)
applying "separate treatment limitations" only to mental health or
substance use disorder benefits. 29 U.S.C. § 1185a(a)(3)(A)(ii).
As the name of the Act suggests, health plans must have parity
between mental health and medical benefits within the same
"classification," which refers to (1) inpatient, in network
services; (2) inpatient, out of network services; (3) outpatient,
in network services; (4) outpatient, out of network services; (5)
emergency care; and (6) prescription drugs. 29 C.F.R.
§ 2590.712(c)(1)(i), (c)(2)(ii). The Parity Act also measures
parity between mental health and medical benefits in a qualitative
- 12 - manner, including mandating equivalence in "medical management
standards limiting or excluding benefits based on medical
necessity or medical appropriateness" and "restrictions based on
geographic location, facility type, provider specialty, and other
criteria that limit the scope or duration of benefits for services
provided under the plan or coverage." 29 C.F.R.
§ 2590.712(c)(4)(ii)(A), (H). However, "disparate results alone
do not mean that [nonquantitative treatment limitations] in use do
not comply [with the Parity Act.]" Preamble, Final Rules, 78 Fed.
Reg. at 68245-46. N.R. argues that, on its face, the terms of the
plan apply "separate treatment limitations," 29 U.S.C.
§ 1185a(a)(3)(A)(ii), to mental health benefits because the
Habilitative Services Exclusion applies only to "mental health
service[s]."
The defendants note that a "habilitative services"
exclusion shows up twice in the larger list of "Exclusions," once
generally in the main body of the list and once in a sub-list of
"mental health" exclusions. As they see it, no habilitative
service is covered, no matter what ailment the service is intended
to treat, so medical and mental health benefits are the same and
the Parity Act's requirements are satisfied. However, N.R. points
out, the Plan itself only defines habilitative services once, in
the "mental health" sub-list, as a type of "mental health service."
- 13 - So, per the Plan's own text, that exclusion can only apply to
mental health services.
N.R.'s argument is bolstered when we consider the Plan
covers at least some procedures (emphases our own) "when a physical
impairment exists and the primary purpose of the procedure is to
improve or restore physiologic function for an organ or body part."
Lest we be unsure what the Plan means by "improve," it provides a
clear definition: "Improving or restoring function means that the
organ or body part is made to work better." Put that together and
the Plan explicitly covers services that "[i]mprov[e] function"
for those with "a physical impairment." Yet, the Habilitative
Services Exclusion instructs us that the Plan does not cover
treatments that "improve skills and functioning" if the
beneficiary is seeking "mental health" services. This is precisely
the distinction the Parity Act prohibits. See 29 U.S.C.
No matter what we think of the text of the Plan though,
N.R. tells us, the way the habilitative services exclusion is
applied to plan beneficiaries violates the Parity Act. N.R.
directs us to the text of the defendants' denials of coverage for
his speech therapy. Each time the defendants denied coverage,
they told N.R. that "this service is not covered for the diagnosis
listed on the claim," and that diagnosis was always ASD. N.R.
alleges that the defendants never actually confirmed whether
- 14 - N.R.'s speech therapy was non-restorative, but simply denied
coverage because of his ASD diagnosis. Indeed, United Healthcare's
report of its review process, appended to the complaint, indicates
that its staff did not undertake a "medical necessity review" or
contact any of N.R.'s medical providers to confirm that all speech
therapy would be habilitative.
Plus, N.R. alleges that the Plan covers non-restorative
treatment for physical conditions that are present at birth, "such
as reconstructive procedures, congenital heart disease or
congenital malformations related to infertility, among others."
The defendants, for their part, insist (without any citation to
the text of the Plan) that is not true and that the Plan would not
cover speech therapy for a beneficiary with "difficulty speaking
due to a lisp, stutter, deafness, cleft palate, or physical
deformity of the mouth or vocal [cords] from birth."
This may be a tough disagreement to untangle, with each
side making arguments about the reading of the complex Plan
document and the actual application of the habilitative services
exclusion, but, thankfully, this case is before us on an appeal
from a motion to dismiss. We do not review a motion to dismiss by
granting any favor to the defendants' version of the facts.
Instead, "we accept the truth of all well-pleaded facts and draw
all reasonable inferences therefrom in the pleader's favor."
Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (2012). The Parity
- 15 - Act forbids "applying 'separate treatment limitations' only to
mental health or substance use disorder benefits." 29 U.S.C.
§ 1185a(a)(3)(A)(ii). N.R. pleads that the Plan defines
habilitative services as mental health services and accordingly
only applies the habilitative services exclusion to the treatment
of mental health ailments. That is an entirely plausible reading
of the text of the Plan, which N.R. appended to the complaint for
judicial review, and could make for a successful Parity Act claim.
See T.S. by and through T.M.S. v. Heart of CarDon, LLC, No. 1:20-
cv-01699-TWP-TAB, WL 981337, at *3-4 (S.D. Ind. March 16, 2021)
(cautioning that, once a plan explicitly covered a treatment for
ASD, "it could not use blanket exclusion 'to deny coverage of ABA
therapy' because that prohibition represented 'a separate
treatment limitation that applie[d] only to mental treatment.'"
(quoting A.F. ex rel. Legaard v. Providence Health Plan, 35 F.
Supp. 3d 1298, 1315 (D. Or. 2014) (holding that a plan covering
ASD, but excluding coverage for developmental disabilities,
violated the Parity Act))); see also Grajales, 682 F.3d at 44 ("In
order '[t]o survive a motion to dismiss for failure to state a
claim, the complaint must contain sufficient factual matter to
state a claim to relief that is plausible on its face." (quoting
Katz v. Pershing, LLC, 672 F.3d 64, 72–73 (1st Cir. 2012)
(alterations adopted))). The defendants' promise that the Plan
does not function as N.R. alleges, and, instead, is in compliance
- 16 - with the Parity Act, does not change our analysis of a motion to
dismiss. See, e.g., Ocasio-Hernández v. Fortuño-Burset, 640 F.3d
1, 13 (1st Cir. 2011) ("The relevant inquiry focuses on the
reasonableness of the inference of liability that the plaintiff is
asking the court to draw from the facts alleged in the
complaint.").
The same goes for N.R.'s allegations that the defendants
denied coverage of his speech therapy as soon as they saw his ASD
diagnosis and that, if his diagnosis were of a purely physical
malady, the result would have been different. Those claims, well-
articulated, are all N.R. needs to do to get to discovery, where
he can then find out whether he's actually right. See id. at 7.
The district court agreed with the defendants'
representation of how the Plan works. At this stage of the process
such determination was premature. See Cebollero-Bertran v. P.R.
Aqueduct and Sewer Auth., 4 F.4th 63, 73 (1st Cir. 2021) ("This
inference, drawn in the defendant's favor, not the plaintiff's,
was improper on a motion to dismiss.").
N.R.'s Parity Act argument informs all of his claims,
but the district court held that Count 3 of the complaint, a claim
for equitable relief per 29 U.S.C. § 1132(a)(3), was the only
proper procedural vehicle through which N.R. could adjudicate his
case, and so dismissed this claim on the merits. Having concluded
that N.R. sufficiently pled that the Plan violates the Parity Act
- 17 - in its text or in its application, we reverse the district court's
dismissal of Count 3.3 We now turn to the remaining ERISA
provisions under which N.R. brings his case.
Breach of Fiduciary Duty
N.R. brings a breach of fiduciary duty claim (Count 1)
under 29 U.S.C. § 1132(a)(2), arguing that he is entitled to relief
for the Parity Act violation claim under this statute. Given the
specific pleadings and circumstances here, we disagree. We will
explain why, but first a few background principles that helped us
get there.
ERISA requires plan fiduciaries to discharge their
duties "in the interest of the participants and beneficiaries" and
"in accordance with the documents and instruments governing the
plan insofar as such documents and instruments are consistent with
the provisions of [Subchapters I and III of ERISA]." 29 U.S.C.
§ 1104(a)(1). Fiduciaries are charged with many tasks, including
making "benefit determination[s]" in compliance with the terms of
the statute and the plan. Aetna Health Inc. v. Davila, 542 U.S.
200, 219 (2004) ("[A] benefit determination is part and parcel of
the ordinary fiduciary responsibilities connected to the
administration of a plan."); accord Varity Corp. v. Howe, 516 U.S.
489, 511 (1996) (citing 29 U.S.C. § 1104(a)(1)(D)) ("[A] plan
3On appeal, the defendants agree that § 1132(a)(3) is the avenue to pursue a Parity Act claim.
- 18 - administrator engages in a fiduciary act when making a
discretionary determination about whether a claimant is entitled
to benefits under the terms of the plan documents."); see Pegram
v. Herdrich, 530 U.S. 211, 231 (2000) ("At common law, fiduciary
duties characteristically attach to decisions about managing
assets and distributing property to beneficiaries."). If a
fiduciary breaches its duty, ERISA empowers participants and
beneficiaries to bring a civil suit for that breach, per 29 U.S.C.
§ 1132(a)(2), and to seek financial remedies and "such other
equitable or remedial relief as the court may deem appropriate,
including removal of such fiduciary," 29 U.S.C. § 1109.
Understanding that, N.R. alleges that Raytheon and Bull
each breached their fiduciary duties when they denied coverage for
N.R.'s speech therapy, in violation of the Parity Act.4 The
district court dismissed this claim with prejudice, reasoning that
the only proper claim for a breach of fiduciary duty is one in
which a plan was financially harmed by the fiduciary's action, and
the Plan suffered no financial losses from declining to pay for
N.R.'s speech therapy. Given the pleadings here, we agree with
the district court.
4 There appears to be no dispute that Raytheon and Bull are fiduciaries, which are simply those with authority over and discretion about the administration of the plan. 29 U.S.C. § 1002(21).
- 19 - While we have determined that Raytheon and Bull are
fiduciaries, that benefit determinations are fiduciary acts, and
that benefit determinations must be consistent with ERISA, we read
§ 1132(a)(2) as concerned solely with plan asset mismanagement and
solely authorizing remedies that inure to the benefit of the plan
as a whole. See LaRue v. DeWolff, Boberg & Assocs., Inc., 473
U.S. 134, 141-43 (1985); see also Varity Corp., 516 U.S. at 511–
12. Since the Parity Act violation claim does not allege plan
asset mismanagement and does not seek a remedy that would inure to
the benefit of the Plan as a whole, N.R. cannot package the claim
as one for breach of fiduciary duty under § 1132(a)(2).
Section 1132(a)(2) empowers a beneficiary to bring a
civil action "for appropriate relief under section 1109 of this
title." Section 1109(a) states in pertinent part:
Any . . . fiduciary . . . who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.
29 U.S.C. § 1109(a).
According to the Supreme Court, § 1132(a)(2) "does not
provide a remedy for individual injuries distinct from plan
- 20 - injuries." LaRue, 552 U.S. at 256; see also Graden v. Conexant
Sys. Inc., 496 F.3d 291, 295 (3d Cir. 2007) ("[S]uits under
[§ 1132(a)(2)] are derivative in nature;" though beneficiaries may
bring suit under the provision, "they do so on behalf of the plan
itself."). Moreover, the Supreme Court has characterized 29 U.S.C.
§ 1109(a) as "primarily concerned with the possible misuse of plan
assets, and with remedies that would protect the entire plan,"
Russell, 473 U.S. at 142; and has held that § 1109's "entire text
. . . persuades us that Congress did not intend that section to
authorize any relief except for the plan itself," id. at 144.
Interpreting § 1109, the Supreme Court specifically rejected a
broader reading based upon the provision's mention of other
appropriate equitable relief. See id. at 141-42 ("To read directly
from the opening clause of § [1109](a), which identifies the
proscribed acts, to the 'catchall' remedy phrase at the end --
skipping over the intervening language establishing remedies
benefiting, in the first instance, solely the plan -- would divorce
the phrase being construed from its context and construct an
entirely new class of relief available to entities other than the
plan.").
In line with this Supreme Court precedent, other
circuits have affirmed dismissal of claims for breach of fiduciary
duty brought under § 1132(a)(2) that do not allege damage to a
plan's financial integrity and do not seek a remedy that will inure
- 21 - to the plan as a whole. See Smith v. Med. Benefit Adm'rs Grp.,
Inc., 639 F.3d 277, 283 (7th Cir. 2011) (observing "Russell . . .
controls here, and as Smith has identified no injury to the plan,
he has no viable claim for relief under section [1132](a)(2)" and
affirming dismissal of claim brought under § 1132(a)(2) alleging
that claims administrator had misleading practice of pre-
authorizing treatment and subsequently refusing to cover it); Wise
v. Verizon Commc'ns Inc., 600 F.3d 1180, 1189 (9th Cir. 2010)
(affirming dismissal of claim brought under § 1132(a)(2) for plan
administrator's mishandling of plaintiff's individual benefits
claim where plaintiff did not allege "plan-wide injury"); Lee v.
Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993) (explaining "Russell
. . . bars plaintiffs from suing under [§ 1132(a)(2)] because
plaintiffs are seeking damages on their own behalf, not on behalf
of the Plan" and affirming dismissal of claim brought under
§ 1132(a)(2) seeking benefits owed but unpaid by plan's sponsor
due to its bankruptcy).
Our decision in Evans v. Akers, 534 F.3d 65 (1st Cir.
2008), says no different. Indeed, Evans supports a reading of
§ 1132(a)(2) as concerned with plan asset management. See 534
F.3d at 68-73. The alleged breach of fiduciary duty in Evans was
imprudent investment of participants' contributions to a defined
contribution retirement plan, and the plaintiffs sought to hold
the fiduciaries personally liable for this asset mismanagement.
- 22 - Id. at 68. By holding the fiduciaries personally liable under
§ 1132(a)(2), the value of the plaintiffs' individual accounts
could be restored to what it would have been but for the imprudent
investment. Id. at 73.5
Here, N.R.'s claim under Count 1 does not allege plan
asset mismanagement and does not seek a remedy that will inure to
the Plan as a whole. The only relief that N.R.'s complaint seeks
in connection with Count 1 is for "Defendants to restore all losses
arising from the breaches of fiduciary duties that occurred when
treatment was denied that is required by the terms of the Plan."
And the only losses alleged are benefits which were not paid out
to N.R. and putative class members. N.R. does not allege any
losses to the Plan itself. See K.H.B. ex rel. Kristopher D.B. v.
UnitedHealthcare Ins. Co., No. 18-cv-000795, 2019 WL 4736801, at
*3 (D. Utah Sept. 27, 2019) (unpublished) ("Although the denial of
coverage . . . is alleged to be systematic . . . the alleged injury
is class-wide, not plan-wide. . . . [I]n the absence of sufficient
factual allegations suggesting the Plan suffered monetary losses,
this fails to adequately plead relief on behalf of the Plan.");
5 The plaintiffs in Evans, unlike the plaintiffs here, could not have brought suit under § 1132(a)(1)(B) (which allows for recovery of benefits from "the Plan itself") because taking money from a defined contribution plan is a zero-sum game: in order to restore the benefits owed to the plaintiffs, other participants would be robbed because all of the money in a defined contribution plan is allocable to participants' individual accounts. 534 F.3d at 72-73.
- 23 - id. (affirming dismissal of claim brought under § 1132(a)(2)
alleging denial of coverage for mental health treatment in
violation of the Parity Act). Given the facts presented here, we
affirm the district court's dismissal of Count 1, leaving N.R. to
pursue his Parity Act violation claim through different avenues.
See Varity Corp., 516 U.S. at 512 ("ERISA specifically provides a
remedy for breaches of fiduciary duty with respect to the
interpretation of plan documents and the payment of claims, one
that is outside the framework of [§ 1132(a)(2)] . . . and one that
runs directly to the injured beneficiary. § [1132](a)(1)(B)."
(emphasis added)).
Recovery of Benefits
Moving on. N.R., as a plan beneficiary, can sue "to
recover benefits due to him under the terms of his plan, to enforce
his rights under the terms of the plan, or to clarify his rights
to future benefits under the terms of the plan." 29 U.S.C.
§ 1132(a)(1)(B). N.R.'s claim for speech therapy benefits breaks
down into two steps: (1) the Parity Act's requirements are
incorporated as "the terms of the plan" and (2) the Plan's
Habilitative Services Exclusion violates the Parity Act, so it is
inconsistent with a "term of the plan." The district court
dismissed this claim with prejudice because it concluded that the
Parity Act's requirement is not a "term of the plan" and that N.R.
- 24 - was correctly denied benefits per the Habilitative Services
Exclusion. The defendants make the same argument on appeal.
As we've said before, a plan's terms cannot override
ERISA's requirements. 29 U.S.C. § 1104(a)(1)(D) (requiring
fiduciaries to discharge duties consistent with plan documents
"insofar as such documents and instruments are consistent with the
provisions of [ERISA]"); e.g., In re Citigroup ERISA Lit., 662
F.3d 128, 139 (2d Cir. 2011) (holding that ERISA's requirements
supersede a plan's terms when inconsistent with one another). We
have already concluded that N.R. plausibly pled that the
Habilitative Services Exclusion violates the Parity Act.
Considering these concepts together, we see that N.R. properly
pleads that the Habilitative Services Exclusion is trumped by ERISA
and is accordingly unenforceable. Therefore, without the
Exclusion in force, N.R. has a perfectly reasonable argument that
he's owed "benefits due to him under the terms of his plan." See
29 U.S.C. § 1132(a)(1)(B). We reverse the district court's
dismissal of this claim.
Request for Information
Last up is N.R.'s claim under 29 U.S.C. § 1132(a)(1)(A),
that Bull, as the plan administrator, violated ERISA's disclosure
requirements when he did not answer N.R.'s parents' request for
- 25 - information.6 After a bit of a statutory scavenger hunt to line
up the details of this claim, we see that § 1132(a)(1)(A)
authorizes a plan participant or beneficiary to bring a civil
action against a plan administrator who violates § 1132(c)(1)(B),
which provides for damages for an administrator who (circularly)
"fails or refuses to comply with a request for any information
which such administrator is required by this subchapter to furnish
to a participant or beneficiary." Two provisions of the subchapter
in question require an administrator to furnish the following
information upon request: "a copy of the latest updated summary
plan description . . . or other instruments under which the plan
is established or operated" and "criteria for medical necessity
determinations made under the plan with respect to mental health
[and t]he reason for any denial under the plan . . . with respect
to mental health or substance use disorder benefits." 29 U.S.C.
§§ 1024(b)(4), 1185a(a)(4).
As a reminder, after the unsuccessful conclusion of the
internal appeals process, the complaint alleges, N.R.'s parents
contacted United Healthcare and Raytheon (through its in-house
counsel and its litigation counsel for this case) and requested,
6There is no dispute that Bull is the Plan Administrator as discussed in the statute and defined by the applicable regulations. See 29 U.S.C. § 1002(16)(A)(i) (defining "administrator" in several ways, including as "the person specifically so designated by the terms of the instrument under which the plan is operated"). Plus, the complaint identifies Bull as the Plan Administrator.
- 26 - essentially, all information about how the Plan applies the non-
restorative speech therapy exclusion.7 The district court noted
that the plaintiffs attached to the complaint a copy of a request
letter that was sent to United Healthcare, but did not include
such a letter that was sent to Raytheon. The district court
apparently concluded that the complaint, therefore, only
sufficiently alleged that N.R.'s parents sent a letter to United
Healthcare. All agree that United Healthcare is the claims
administrator, not the plan administrator, and therefore, the
district court dismissed this claim, reasoning that N.R.'s parents
never contacted the plan administrator, as required by statute.
See 29 U.S.C. § 1132(c)(1)(B).
On that specific point, the district court was correct.
A claims administrator is distinct from a plan administrator and
merely requesting information from a claims administrator does not
trigger § 1132(c)'s disclosure requirements. Tetreault v.
Reliance Std. Life Ins. Co., 769 F.3d 49, 59-60 (1st Cir. 2014).
Beyond that, to the extent Raytheon urges us to affirm dismissal
because the plaintiffs do not allege that they addressed a letter
7 More precisely, N.R.'s parents requested the list of "non- mental health conditions to which the Plan applies the 'non- restorative' speech therapy exclusion," "the medical necessity criteria" for applying the non-restorative speech therapy exclusion to medical or mental health benefits, and the "processes, strategies, evidentiary standards, and other factors" used to apply the exclusion.
- 27 - personally to Bull, we have never endorsed quite such a persnickety
reading of the statute. See Law v. Ernst & Young, 956 F.2d 364,
373 (1st Cir. 1992) (recognizing that Congress desired employees
to have "timely information about their ERISA benefits" and holding
that "[i]f to all appearances, [a company] acted as the plan
administrator . . . it may be properly treated as such"). The
plaintiffs alleged that N.R.'s parents attempted to acquire the
information that § 1132(c) requires plan administrators to
disclose by contacting Raytheon (Bull's employer), its in-house
counsel, and its outside counsel, who is also representing Bull in
this case. At the motion to dismiss stage, we presume that to be
true.
The better argument for dismissal, so we're told, is
that the defendants have already provided plaintiffs with all
required information and that anything left that could be
responsive to plaintiffs' request does not have to be disclosed,
per the statute. First, the argument that the defendants handed
over everything ERISA requires presumes that to be true, when the
appropriate standard is to credit the plaintiffs' allegations that
they are entitled to more, yet to be disclosed, documents. See
Cebollero-Bertran, 4 F.4th at 73.
Second, the defendants argue that the plaintiffs have no
right to the documents they claim to seek. In support of this,
the defendants rely heavily on Doe v. Travelers Ins. Co., 167 F.3d
- 28 - 53 (1st Cir. 1999). There, a plan beneficiary claimed a violation
of ERISA's disclosure requirements because the plan administrator
did not, upon request, tender a copy of the plan's "mental health
guidelines." Id. at 59. We held that the "mental health
guidelines" in that case did not qualify as one of the plan's
"instruments" that the administrator must disclose. Id. We
reached this conclusion, in part, because the "mental health
guidelines" were an optional screening tool that the plan
administrator used at its discretion, so the administrator may
well have disregarded those guidelines when deciding the
beneficiary's claim. Id. at 59-60.
Though the defendants sound alarms to the contrary,
nothing in Doe is inconsistent with our holding today.
Importantly, Doe interpreted ERISA requirements prior to the
enactment of the current version of the Parity Act, which added
substantive requirements for how plans engaged with mental health
and substance use disorder benefits. See 29 U.S.C. § 1185a(a)(4).
Plus, the optional "guidelines" at issue in Doe are unlike the
mandatory plan terms that governed the decision in N.R.'s case.
ERISA leaves no doubt that Congress intended plan participants and
beneficiaries to know about mandatory terms of their plans. See
Law, 956 F.2d at 373.
Considering all of this from the proper perspective for
reviewing a motion to dismiss, we conclude the plaintiffs properly
- 29 - pled a claim under 29 U.S.C. § 1132(a)(1)(A) and reverse the
district court's dismissal of that count.
III.
For all of the reasons just discussed, we affirm the
district court's grant of the defendants' motion to dismiss on
Count 1, and we reverse and remand for further proceedings on
Counts 2 through 4. Costs to the plaintiffs.
- 30 -