7th Circuit Affirms Dismissal of Chiropractic Care Copay Suit

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Larson v. United Healthcare Ins. Co.
U.S. Ct. Apps. for the 7th Cir.,July 26, 2013
The plaintiffs filed a proposed class action alleging that health insurance companies violated Wisconsin law by requiring copayments for chiropractic care. The insurance code prohibits insurers from excluding coverage for chiropractic services if their policies cover the diagnosis and treatment of the same condition by a physician or osteopath. The complaint cited violations of Employee Retirement Income Security Act for recovery of benefits due, 29 U.S.C. 1132(a)(1)(B) & 502(a)(3), and for breach of fiduciary duty, sections 1132(a)(3), 1104.

The district court dismissed holding that insurance companies were not the proper defendants on an ERISA claim for benefits and the practice of requiring copays is not a fiduciary duty. The Seventh Circuit affirmed the dismissal under different reasoning.

The circuit court held that nothing in ERISA categorically precludes a benefits claim against an insurance company and because the complaint alleges that the insurers decide all claims questions and owe the benefits, the insurers are proper defendants on the 1132(a)(1)(B) claim. In this context, the court stated that “nothing in ERISA categorically precludes a suit against an insurance company for benefits due under § 1132(a)(1)(B).”

While finding the insurers to be proper defendants, the circuit court held that the complaint fails to state a claim for breach of fiduciary duty because setting policy terms, including copayments, determines the content of the policy, and decisions about the content of a plan are not themselves fiduciary acts. The court found that the allegations of the complaint which cited the defendants breach of fiduciary duty arising out of their issuance of policies that require “illegal copayments for chiropractic care” and their failure to “eliminate” the illegal policy provisions did not challenge individual eligibility and benefits determinations, but rather targeted decision-making about policy terms. As such, the allegations failed to state a claim for a breach of fiduciary duty.