"Many might be surprised to learn that defendant has no legal duty to make things right under those circumstances."

This was the observation of U.S. District Court Judge Barbara B. Crabb of the Western District of Wisconsin, in her decision in Kenseth v. Dean Health Plan,. Inc.:

Kenseth v. Dean Health Plans, Inc.

It comes as no surprise, of course, that "no legal duty" means "no duty under ERISA."

What are the circumstances Judge Crabb had in mind? Why, it's just an ERISA health insurer doing what ERISA insurers do: Dean "has refused to provide [Ms. Kenseth] any relief after lulling her into believing that she had coverage for an expensive operation, only to reverse course after the procedure was performed, leaving her with a stack of medical bills."

So Ms. Kenseth is told by Dean Health Care, before undergoing expensive surgery, that the surgery was a covered benefit of her ERISA health plan. Ms. Kenseth undergoes the surgery. Dean says oops! Did we say the surgery was covered? Our bad!

But, of course, not our problem.

Here's the skinny, as described by Judge Crabb:

In 1987, plaintiff had gastric bands placed around her stomach to help her lose weight. Years later she needed to have the bands removed after she began experiencing acid reflux that was damaging her esophagus. By that time, she had changed employers and had a different health plan through defendant. In 2005, she called defendant’s customer service number and was told that her health insurance would cover the procedure. However, after plaintiff underwent surgery, defendant denied plaintiff’s claim under a provision that precluded coverage for procedures related to obesity. The court of appeals concluded that these facts supported a claim for breach of fiduciary duty under ERISA:

The facts support a finding that Dean breached its fiduciary duty to Kenseth by providing her with a summary of her insurance benefits that was less than
clear as to coverage for her surgery, by inviting her to call its customer service
representative with questions about coverage but failing to inform her that whatever the customer service representative told her did not bind Dean, and by failing to advise her what alternative channel she could pursue in order to obtain a definitive determination of coverage in advance of her surgery.

So what Dean did was not only unfair and, to say the least, negligent, but its conduct also constituted a breach of the fiduciary duties an ERISA insurer is expected to fulfill. So what was the problem?

ERISA provides no remedy for the breach of fiduciary duty Dean committed, that's what. Judge Crabb describes the reasons for this finding at length in her opinion, and it is worth a read to see just how absurd the thicket is for those who have been defrauded by their ERISA insurance carriers.

I think Judge Crabb got it wrong, and there are arguments to be made that even under ERISA a remedy should have been available. But she's got plenty of company, probably the majority, in her evaluation of the issues. And I don't have "U.S. District Court Judge" in front of my name.

There's an old legal maxim that for every wrong there is a remedy. As with most other things the usual rules don't apply in an ERISA case. Sure, ERISA defines what Dean did as a wrong -- a breach of its fiduciary duty. But in the absence of any meaningful consequence what incentive does Dean have to live up to its fiduciary obligations?

None.