Fourth Circuit Focuses on Availability of Monetary Relief Under ERISA for Denied Heart Transplant

On September 12, 2023, in Rose v. PSA Airlines, Inc., the Fourth Circuit Court of Appeals (Fourth Circuit) reviewed the district court’s dismissal of ERISA claims brought by Jody Rose, the mother and administratrix of the estate of a group health plan beneficiary. Specifically, the Fourth Circuit considered whether the estate could seek monetary relief under the specific claims raised.

The case involved twenty-seven-year-old flight attendant Kyree Devon Holman, who worked for PSA Airlines, Inc. (PSA) and was a covered participant under PSA’s self-insured group health plan. Holman had been diagnosed with myocarditis in 2018 and his doctors determined a heart transplant was necessary for his survival. However, his doctors’ requests for approval for heart transplant surgery were denied twice by the plan, first on the basis that the surgery was experimental and then on the grounds that Holman did not meet certain alcohol-abuse criteria, although no such criteria was specified in the plan terms.

After unsuccessfully appealing the denial, Holman’s doctors sought an external review of the claim on an expedited basis, which under federal law requires a decision within no more than seventy-two hours. However, the external review organization, MCMC, treated the claim as standard, which requires a decision within 45 days. Although MCMC eventually overturned the previous claim denials, it was too late; Holman passed away five days after the expedited decision should have been made.

Rose then sued the plan, the named plan administrator, PSA, plan service providers UMR and Quantum, and MCMC (collectively, the defendants), seeking relief for a wrongful denial of benefits under ERISA § 502(a)(1)(B) or, alternatively, for a breach of fiduciary duty under ERISA § 502(a)(3). Rose sought, among other forms of relief, the monetary cost of Holman’s surgery that was wrongfully denied. However, the district court granted the defendants’ motion to dismiss both claims and held that the monetary relief sought was not available under either ERISA provision.

On appeal, the Fourth Circuit affirmed the district court’s dismissal of the denial of benefits claim, explaining that ERISA § 502(a)(1)(B) only permits a plaintiff to recover benefits due “under the terms of the plan” (i.e., seek reimbursement of out-of-pocket expenses) or enforce rights under the terms of the plan (i.e., seek an injunction). This provision does not allow a plaintiff to seek the monetary cost of a benefit never provided.

The Fourth Circuit then focused on Rose’s claims under ERISA § 502(a)(3), which allows a plan beneficiary to seek an injunction or “other appropriate equitable relief” to enforce the terms of ERISA or the plan or redress a violation of those terms. The key question before the Fourth Circuit was whether the monetary cost of Holman’s wrongfully denied surgery qualified as “equitable relief.” The Fourth Circuit observed that monetary damages for compensatory purposes are considered a form of legal relief not available under ERISA § 502(a)(3). However, based on US Supreme Court precedent, monetary restitution for unjust enrichment can be considered a form of equitable relief under ERISA if certain requirements are met. Specifically, to support a claim to recover money under § 502(a)(3), a plaintiff must point to the specific funds they rightfully own that are possessed by the defendant (i.e., courts cannot award relief from the defendant’s general assets to make the plaintiff whole).

The case was remanded back to the district court to make the determination as to whether Rose’s § 502(a)(3) claim sufficiently alleged that the defendants were unjustly enriched by interfering with Holman’s rights and that the fruits of that unjust enrichment remain in their possession or can be traced to other assets.

Although at an early stage, the case provides several important takeaways for employer plan administrators. First, it underscores the importance of ensuring that group health plan claim reviews and appeals are conducted in accordance with ERISA and the plan terms and that external claim reviews are completed within the federally required timeframes. Additionally, it serves as a reminder that equitable relief under ERISA can potentially encompass monetary relief for plaintiffs, provided specific requirements are satisfied.

Rose v. PSA Airlines, Inc. »