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UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
DWAYNE BRANDON,
Plaintiff, V.
HEALTH NET HEALTH PLAN OF OREGON, INC.,
Defendant.
ACOSTA, Magistrate Judge:
Case No. 3:19-cv-00356-AC
FINDINGS AND RECOMMENDATION
Plaintiff Dwayne Brandon ("Brandon"), sues Defendant Health Net Health Plan of
Oregon, Inc. ("HNOR"), under the Employee Retirement Security Act of 1974 ("ERISA"),
codified at 29 U.S.C. §§ 1001 et seq. Brandon alleges HNOR breached its fiduciary duties
under ERISA, which resulted in damages totaling $71,868.03. HNOR moves to dismiss
Brandon's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The court has
jurisdiction over this matter pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1337, and 29 U.S.C. §
1 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 1 of 17
1132(e). Brandon has stated a claim for relief and the equitable remedy of surcharge, and the
court recommends that Defendant's motion be DENIED.
Background
The following facts are taken from Brandon's Complaint and are assumed to be true for
the purpose of reviewing the pending motion to dismiss. See Bell Atl. Corp. v. Twombly, 550
U.S. 544, 572 (2007) ("[A] judge ruling on a defendant's motion to dismiss a complaint must
accept as true all of the factual allegations contained in the complaint.") (internal quotation and
citation omitted).
Brandon was a participant in an employer-based group health plan ("the Plan") insured by
HNOR. (Compl., ECF No. 1, ,r 7.) As an employer-based group health plan, the Plan is
governed by ERISA. (Id. ,r 8.) HNOR both insures and administers benefits under the Plan.
(Id. ,r 9.) Brandon intended to obtain services from a healthcare provider that was designated as
"out-of-network" under the Plan. (Id. ,r 12.) HNOR provides participating employee groups
with a "Member Handbook," and there also exists a "Group Contract." (Id. ,r,r 10, 20.) It is
unclear whether HNOR provides a copy of the group contract to participants, or how participants
may access that document.
Before undergoing these services, on April 18, 2018, Brandon and his wife contacted
HNOR via the telephone number provided in HNOR's Member Handbook to determine their
financial responsibility for receiving the out-of-network services. (Id. ,r,r 10-11, 13.) During
the phone call with an HNOR representative, the Brandons asked whether they correctly
understood that the calendar year out-of-pocket maximum for the Plan was $4,000, which the
HNOR representative confirmed. (Id ,r,r 14-15.) The concept of an out-of-pocket maximum
2 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 2 of 17
was discussed several times during the phone call. (Id. ,r 16.) The Brandons told the HNOR
representative they were trying to determine the total amount that they would have to pay for his
out-of-network surge1y. (Id. ,r 17.) The HNOR representative also recited Plan language,
which included the term "maximum allowable amount." (Id. ,r 18.) The HNOR representative
did not explain what a maximum allowable amount was or how it might affect Brandon's bill.
(Id. ,r 25.) At the conclusion of the call, the Brandons believed the maximum possible bill
would be limited to the Plan's out-of-pocket maximum. (Id. ,r 26.) The Brandons did not
understand how the Plan's maximum allowable amount provision could affect the bill for
out-of-network services. (Id. ,r 27.)
The Member Handbook does not define "maximum allowable amount," but the Group
Contract does contain that definition. (Id. ,r,r 19, 21.) The Group Contract does not state a
dollar amount that is the maximum allowable amount for any kind of procedure, but states, "You
should contact the Customer Contact Center if you wish to confirm the covered expenses for any
treatment or procedure you are considering." (Id. ,r 22.) Brandon proceeded with his
out-of-network surgery because he believed that his financial exposure would be limited to the
out-of-pocket maximum. (Id. ,r 29-30.) Brandon underwent surgery on April 30, 2018, with a
resultinghospitalstaythroughMay4,2018. (Id. ,r 31.)
Brandon was charged a total of $107,382.64 for services associated with the surgery.
(Id. ,r 33.) HNOR paid or otherwise adjusted the bill by $34,924.93 and issued an Explanation
of Benefits ("EOB") stating that the "amount not allowed" for these services, in total, was
$70,541.99. (Id. ,r 34-35.) Brandon received a bill from his provider for $71,868.03, after
accounting for payments or adjustments by HNOR. (Id. ,r 37.)
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 3 of 17
On March 8, 2019, Brandon filed this lawsuit asserting breach of fiduciary duties under
ERISA. (Compl., ECF No. 1.) On May 20, 2019, HNOR moved to dismiss Brandon's
complaint. (Defs. Mot. Dismiss, ECF No. 6.) Brandon has filed a response to HNOR's
motion (ECF No. 9), and HNOR filed its reply in support of its motion to dismiss (ECF No. 12).
Legal Standards
I. Motion to Dismiss
Under Rule 12(b)(6), a party may move to dismiss a complaint for "failure to state a claim
upon which relief can be granted." FED. R. CIV. P. 12(b)(6). A court may dismiss "'based on
the lack of cognizable legal theory or the absence of sufficient facts alleged"' under a cognizable
legal theory. UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014 (9th
Cir. 2013) (quoting Balistreri v. Pacifica Police Dept, 901 F.2d 696,699 (9th Cir. 1990)).
To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at
570; see also CallerID4u, Inc. v. MCI Commc'ns Servs. Inc., 880 F.3d 1048, 1061 (9th Cir.
2018). "A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Teixeira v. Cty. of Alameda, 873 F.3d 670, 678 (9th
Cir. 2017). The plausibility standard is not akin to a "probability requirement," but it asks for
more than a sheer possibility that a defendant has acted unlawfully. T·wombly, 550 U.S. at 556.
When a plaintiffs complaint pleads facts that are "merely consistent with" a defendant's liability,
the plaintiffs complaint "stops short of the line between possibility and plausibility of
'entitlement to relief."' Id at 557 (brackets omitted).
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 4 of 17
The court must accept as true the allegations in the complaint and construe them in favor
of the plaintiff. Teixeira, 873 F.3d at 678; see also Iqbal, 556 U.S. at 679; Kwan v. SanMedica
Int1, 854 F.3d 1088, 1096 (9th Cir. 2017). The pleading standard under Rule 8 "does not
reqmre 'detailed factual allegations,' but it demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 555); see also Fed. R. Civ. P. 8(a)(2). "A pleading that offers labels and conclusions
or a formulaic recitation of the elements of a cause of action will not do." Iqbal, 556 U.S. at 678
(internal citations omitted); Kwan, 854 F.3d at 1096. A complaint also does not suffice if it
tenders "naked assertion[s]" devoid of "further factual enhancement." Twombly, 550 U.S. at
557.
IL Preliminary Procedural Matter
In support of its motion to dismiss, HNOR submitted three documents, including excerpts
from a "Large Group ( 51 +) PPO and HD HP Plan Contract," a "Copayment and Coinsurance
Schedule," and excerpts from a "Member Handbook." (Deel. Jeffery Hem Supp. HNOR Mot.
Dismiss ("Hem Deel."), Exs. A, B, & C, ECF No. 13.) Upon request of the court, HNOR also
submitted the full "Large Group (51+) PPO and HDHP Plan Contract." (Supplemental. Deel.
Jeffery Hem Supp. HNOR Mot. Dismiss ("Sup. Hem Deel.") Ex. AA, ECF No. 16.)
Additionally, Brandon references to the "Member Handbook" and "Group Contract" in his
Complaint. (Compl., ECF No. 1.)
Generally, a court may not consider material beyond the complaint when deciding a Rule
12(b)(6) motion. FED. R. Crv. P. 12(d) (explaining that if court considers other materials, the
motion is converted into a motion for summary judgment under Rule 56); see Akhtar v. Mesa,
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 5 of 17
698 F.3d 1202, 1212 (9th Cir. 2012) (quoting Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.
2007) (per curiam)). However, a court may consider materials beyond the pleadings in certain
circumstances without converting the Rule 12(b)(6) motion into a Rule 56 motion for summary
judgment under two exceptions: judicial notice and incorporation by reference. Khoja v.
Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018); Lee v. City of Los Angeles, 250
F.3d 668, 688 (9th Cir. 2001) (discussing that a court may take judicial notice of matters of
public record without converting a motion to dismiss into a motion for summary judgment).
Judicial notice under Federal Rule of Evidence 201 permits a court to take judicial notice of
undisputed facts in matters of public record. Khoja, 899 F.3d at 999. A court may not take
judicial notice of disputed facts contained in such public records. Id.
In contrast to judicial notice, the incorporation by reference doctrine "is a judicially
created doctrine that treats certain documents as though they are part of the complaint itself." Id.
This doctrine is designed to prevent plaintiffs from selectively referencing portions of documents
that support their claims, while omitting portions of those documents that weaken "or doom"
their claims. Id. The Ninth Circuit has extended this doctrine to consider evidence on which
the complaint "necessarily relies" if: "(l) the complaint refers to the document; (2) the document
is central to the plaintiffs claim; and (3) no party questions the authenticity of the copy attached
to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445,448 (9th Cir. 2006); Coto Settlement v.
Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). The Ninth Circuit urges courts to use caution
when drawing any inferences from documents incorporated by reference on a motion to dismiss.
Khoja, 899 F.3d at 1003 (noting that the incorporation by reference doctrine is designed to
prevent artful pleading by plaintiffs, "the doctrine is not a tool for defendants to short-circuit the
6 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 6 of 17
resolution of a well-pleaded claim.").
In his Complaint, Brandon repeatedly refers to the Member Handbook and Group
Contract, alleges that HNOR "owed a duty to convey complete, thorough, and accurate
information," and that HNOR breached its fiduciary duty "by failing to adequately respond to
Plaintiffs request for information." (Compl. at 6.) Therefore, the court finds that the Member
Handbook and Group Contract are integral to resolution of at least some of Brandon's claims.
Farino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998) (finding a group health plan document's
terms, coverage, and administration were essential to the complaint.); Daugherty v. Presidio
Networked Solutions Group, LLC, Case No. 3:18-cv-00298-AC, 2018 WL 7118184, at *3-4 (D.
Or. Nov. 27, 2018) (incorporating by reference an attachment and employment agreement); Coto
Settlement, 593 F.3d at 1038 (finding a billing agreement was integral to resolution of claims
alleged in complaint and agreement's authenticity was not challenged). Although HNOR has
submitted these documents, neither party challenges their authenticity.
Accordingly, the court considers the Member Handbook and Group Contract (Hem Deel.
Ex. C, ECF No. 13, Sup. Hem Deel. Ex. AA, ECF No. 16) under the incorporation by reference
doctrine. The court declines to judicially notice or incorporate by reference HNOR's remaining
exhibits submitted in ECF No. 13.
Discussion
I. Claim for Breach of ERISA Fiduciary Duty
Brandon has filed a single claim against HNOR for breach of fiduciary duty under
ERISA, 29 U.S.C. § 1132(a)(3). (Compl., ECF No. 1.) HNOR moves to dismiss the claim
alleging that Brandon has not pleaded facts that HNOR is an ERISA fiduciary, that it breached its
7 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 7 of 17
fiduciary duty, or that the relief Brandon seeks is proper equitable relief. (HNOR Mot. Dismiss,
ECF No. 6, at 2-3.)
ERISA sets minimum standards for retirement and other benefit plans in the private
sector to provide protection for individuals in these plans. One of these protections is that
certain persons1 involved in the management of these plans have a fiduciary duty to participants
and beneficiaries of the plans. ERISA also creates a private right of action, under 29 U.S.C. §
1132(a)(3), for participants or beneficiaries to "enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or ... to obtain other appropriate equitable
relief ... to redress such violation or ... to enforce any provisions of this subchapter or the terms
of the plan[.]"
Two elements must be satisfied for a plaintiff to prevail on a breach of fiduciary duty
claim under ERISA: (1) the defendant is an ERISA fiduciary acting in its fiduciary capacity; and
(2) the defendant violated an ERISA-imposed fiduciary obligation. Mathews v. Chevron Corp.,
362 F.3d 1172, 1178 (9th Cir. 2004). Additionally, section ll 32(a)(3) only authorizes
"appropriate equitable relief' to redress violations of subchapter I of ERIS A or terms of the plan.
29 U.S.C. § 1132(a)(3) (2018).
A. HNOR is a Plan Fiduciary
ERISA provides two methods by which a person can be regarded as a fiduciary. A
person can be explicitly named as a fiduciary in a plan, 29 U.S.C. § 1102(a)(l), or a person can
become a "functional fiduciary" when "he exercises any discretionary authority or discretionary
1 "Person" is defined under ERISA as "an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association or
8 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 8 of 17
control respecting management of such plan or exercises any authority or control respecting
management or disposition of its assets ... or discretionary responsibility in the administration of
such plan." 29 U.S.C. § 1002(21)(A) (2018). Regardless of whether a person could be
regarded as a named fiduciary or a functional fiduciary, that person will become a fiduciary "only
'to the extent' that he acts in such capacity in relation to a plan." Pegram v. Herdrich, 530 U.S.
211, 225-26 (2000). Put another way, some acts are fiduciary acts, while others are not. The
threshold question is if the person was "performing a fiduciary function when taking the action
subject to complaint." Id. at 226.
Here, Brandon has not pleaded facts to establish that HNOR is a named fiduciary of its
health plan. (Compl., ECF No. 1; Resp. to Mot. To Dismiss, ECF No. 9.) Brandon points out
that 29 U.S.C. § 1102(a)(l) requires that a plan have at least one named fiduciary, but,
interestingly, neither party identifies the Plan's named fiduciary. Brandon instead argues that
HNOR is a "functional fiduciary" within the meaning of 29 U.S.C. § 1002(21)(A). The court
agrees.
The definition of a "functional fiduciary" is broad yet limited to the extent that a person is
exercising discretionary control. Yeseta v. Baima, 837 F.2d 380, 385 (9th Cir. 1988). A person
exercising purely ministerial functions is not a fiduciary within the meaning of 29 U.S.C. §
1002(2l)(A). 29 C.F.R. § 2509.75-8 (2019). Brandon alleges, and for purposes of a motion to
dismiss is taken as true, that HNOR is the Plan administrator. ERlSA also requires that certain
information be communicated to participants and beneficiaries and "shall be sufficiently accurate
and comprehensive to reasonably apprise such participants and beneficiaries of their rights and
employee organization. 29 U.S.C. § 1002(9) (2018).
9 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 9 of 17
obligations under the plan." 29 U.S.C. § 1022 (2018).
HNOR, as an administrator of the Plan, has exercised discretionary control in how and
what information was disseminated to Plan participants, as the author of its Member Handbook
and Group Contract. HNOR argues that any communication it conveys about benefits to plan
participants is a ministerial function. While advising a participant of his rights and obligations
under a plan is a ministerial function, HNOR is responsible for the administration of the Plan
generally, which is the hallmark of a plan fiduciary. See King v. Blue Cross and Blue Shield of
Illinois, 871 F.3d 730, 745-46 (9th Cir. 2017).
HNOR principally relies on Monper v. Boeing Co., 104 F. Supp. 3d 1170 (W.D. Wash.
2015), for its contention that it is not a fiduciary when it is communicating with participants.
Monper is distinguishable because the individuals who had misinformed the plaintiffs were listed
as defendants, in addition to plan administrators. See Monper, 104 F. Supp. 3d at 1178-84.
The court dismissed the individual defendants but held that the corporate defendants were proper
fiduciary defendants, having been generally responsible for communications to plaintiffs. See
Id. at 1183-85. For HNOR to parse out a particular flavor of communication to one of its
participants as the limit of how it can or cannot be considered a fiduciary narrows the definition
of "functional fiduciaiy" too greatly.
Part of administering the Plan, a fiduciary act, is ensuring certain disclosures and
information reach Plan participants and beneficiaries. This responsibility is exercised within the
discretion of HNOR, and for that reason the court finds HNOR to be a fiduciary within the
meaning of 29 U.S.C. § 1002(21)(A).
B. HNOR Possibly Breached its Fiduciary Duty to Brandon
10 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 10 of 17
ERISA requires a fiduciary to "discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries[.]" 29 U.S.C. § 1104 (a)(l) (2018). Section 1104
also establishes a "prudent man" standard of care that fiduciaries discharge their duties "with the
care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man
acting in a like capacity and familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims[.]" 29 U.S.C. § 1104 (a)(l)(B). "The duty of loyalty is
one of the common law trust principles that apply to ERISA fiduciaries, and it encompasses a
duty to disclose." King, 871 F.3d at 744 (quoting Washington v. Bert Bell/Pete Rozelle NFL
Ret. Plan, 504 F.3d 818, 823 (9th Cir. 2007)). "A fiduciary has an obligation to convey
complete and accurate information to the beneficiary's circumstance, even when a beneficiary
has not specifically asked for the information." Id. (quoting Barker v. Am. Mobile Pavver Corp.,
64 F.3d 1397, 1403 (9th Cir. 1995)). "[F]iduciaries breach their duties if they mislead plan
participants or misrepresent the terms or administration of a plan." Id.
HNOR correctly points out that the alleged misinformation at issue largely surrounds one
phone call between the Brandons and one of its customer service representatives. (Def. Mot.
Dismiss, at 5.) The customer service representative cannot reasonably be regarded as a plan
fiduciary (nor does either party assert this), and HNOR cannot be held liable for the customer
service representative's alleged misrepresentation solely on the basis of respondeat superior.
See Monper, 104 F. Supp. 3d at 1181 ("[T]he Ninth Circuit has plainly signaled that common
law theories, such as respondeat superior, are not to be imported into ERISA actions[.]")
However, fiduciaries would too easily escape their own liability if simply acting through an
employee was the only condition necessary to accomplish that escape.
11 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 11 of 17
The Seventh and D.C. Circuits have best articulated the contours of a fiduciary's
vicarious liability for an employee's failure to disclose material information. The central inquiry
is the completeness and accuracy of the materials a plan fiduciary provides. Where plan
materials are complete and unambiguous, then a plan fiduciary has fulfilled its duty to
"ameliorate the detrimental consequences of a ministerial employee's ... misinformation." Id.
at 1182. Conversely, supplying materials that are silent or ambiguous on a topic could expose a
fiduciary to liability for the misrepresentations of an employee. Kenseth v. Dean Health Plans,
Inc., 610 F.3d 452,472 (7th Cir. 2010).
HNOR relies on Schmidt v. Sheet Metal Workers' Nat'[ Pension Fund for its argument
that it cannot be held liable for the misstatements of its employee. 128 F.3d 541, 547-48 (7th
Cir. 1997). In Schmidt, the father of the plaintiff called the benefit fund and spoke to one of its
employees, inquiring how to designate the plaintiff as the sole beneficiary upon the father's
death. Id. at 544. The employee mistakenly sent the father the wrong form, and upon the
father's death, the benefit was split evenly between plaintiff and his sister in accordance with the
rules of the fund. Id. at 544-45. Participants of the plan also had received a booklet which
explained "the only proper way to designate a death benefit beneficiary is by filing the attached
beneficiary card with the participant's local union." Id. at 545-46. The booklet also stated the
procedure that would be followed if no card was on file. Id. at 546. The court held that where
the "Trustees provide complete and correct information to participants in both the Plan itself and
in the Plan Booklet only to have a ministerial employee make a negligent misrepresentation in
response to a single question from a single participant[,]" such an allegation could not support a
claim for breach of fiduciary duty. Id. at 547-48. The court also emphasized that the
12 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 12 of 17
"adequacy of the relevant disclosures in the written plan materials is an important consideration
in a circumstance ... where ... a[ n] ... agent subsequently provides erroneous information in a
response to a question[.]" Id. at 548 (emphasis added).
Kenseth, and cases like it, are more instructive on the question of when ambiguity in plan
materials can give rise to breach of fiduciary duty resulting from employee misstatements. In
Kenseth, the plaintiff had called a customer service representative to inquire if an upcoming
surgery would be covered. Kenseth, 610 F.3d at 459-60. The surgery was a follow-up to a
previous procedure to treat morbid obesity, which was not covered under the plan as a related
surgery to an excluded condition. Id. at 457-60. The court found that the plan documents did
not clearly explain whether or not the plaintiffs surgery would be covered, based on the
ambiguity of a treatment being "related to" an excluded condition. Id. at 474-75. Additionally,
the court noted that plan documents invited participants to call with questions, and that no
disclaimer was given that callers could not rely on the representations of the customer service
representatives. Id. at 456.
Similarly, in Eddy v. Colonial Life Ins. Co. of America, the plaintiff called and spoke with
a customer service representative seeking information about continuing soon-to-be canceled
group coverage or converting to an individual policy. 919 F.2d 747, 748-49 (D.C. Cir. 1990).
The plaintiff had asked about continuing coverage, which he could not do, but he could have
converted coverage to an individual plan. Id. at 479-50. The customer service representative
informed the plaintiff that he could not continue his policy but was silent about his ability to
convert the soon-to-be canceled policy to an individual policy. Id. In one of its documents, the
insurance company also invited participants to call with questions. Id. at 751. The court
13 - FINDINGS AND RECOMMENDATION
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 13 of 17
reasoned that once the plaintiff "made clear his situation, [the insurance company] had a duty to
provide material information." Id. at 752. On the matter of the use of the word continue versus
convert the plaintiff had no "duty to try and try again until he received correct and complete
information." Id.
In the present case, the alleged facts are much more similar to Kenseth and Eddy than to
Schmidt. The crux of Brandon's claim is that he and his wife were misled by a customer service
representative about the limit of their maximum financial liability should they choose an
out-of-network (OON) provider. Brandon alleges, based on the Member Handbook and the
phone call, that it was unclear how a "maximum allowable amount" (MAA) provision could
affect his bill, and that he believed the most he could be liable for was the Plan's "out-of-pocket
maximum" totaling $4,000. The Member Handbook defines "out-of-pocket maximum" as
"[t]he most you pay during a policy period ... after which your health coverage begins to pay
100% of the allowed amount for covered services. This limit never includes your premium or
health care charges for services your health plan doesn't cover." (Hem Deel. ex. C.) The
Member Handbook also directs paiiicipants to "[r]efer to your Plan Contract . .. for the specific
benefits that come with your health plan[,]" and provides a customer contact center phone
number should participants have questions about the Plan or its benefits. (Id.)
The Group Contract does reference MAA2 in its "out-of-pocket maximum" definition,
and also states that "[y]ou are still responsible for OON billed charges that exceed MAA." (Sup.
Hem Deel. ex. AA.) The Group Contract also defines MAA, using approximately two pages to
do so, and notably states, "For more information on the determination of MAA, or for
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 14 of 17
information, services, and tools to help you further understand your potential financial
responsibilities for Out-of-Network Services and Supplies, please log on to www.healthnet.com
or contact our Customer Contact Center at the number on your member identification card." (Id.
(emphasis added).) A factfinder could reasonably find that the language in these materials lacks
the clarity required to "ameliorate the detrimental consequences of a ministerial employee's ...
misinformation." Monper, 104 F. Supp. 3d at 1182. A factfinder could also reasonably find
that calculation of MAA and a person's potential financial liability is sufficiently complex
enough that HNOR, again, invited participants to call their customer care center to "further
understand potential financial responsibilities," which is exactly what the Brandons were
attempting to do.
For the reasons stated above, the court finds that Brandon has pleaded facts that plausibly
states a claim that HNOR breached its fiduciary duty to Brandon.
C. Surcharge is an Available Remedy
Section 1132(a)(3) allows for "appropriate equitable relief' when a fiduciary has
breached its duty to a beneficiary. 29 U.S.C. § 1132(a)(3). Appropriate equitable relief are
those categories of relief that, traditionally speaking (when the bench was split) were typically
available in equity. CIGNA Corp. v. Amara, 563 U.S. 421, 439 (2011). Amara recognized
where a beneficiary has sued a plan fiduciary, before the merger of law and equity, the suit could
have been brought only in a court of equity. Id. Any remedies available to a court of equity
would have traditionally been considered an equitable remedy. Id. at 440. One of the remedies
available to a court of equity was "surcharge" in the form of monetary compensation for a loss
2 It only references the acronym and not the long form "maximum allowable amount."
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 15 of 17
resulting from a breach of duty. Id. at 442.
HNOR argues that because Brandon has asked for relief in the form of money damages,
the requested relief must be considered legal rather than equitable. While the court agrees that a
plaintiff cannot simply request money damages and call it a surcharge remedy, asldng for money
damages does not automatically equate to seeking a legal remedy. An "appropriate equitable
remedy" does have limits, or else the modifier "equitable" would have no meaning. At a
minimum, for surcharge to be an available remedy, the suit must (1) be a beneficiary against a
plan fiduciary; and (2) there must be actual harm resulting from the fiduciary's breach. Id. at
439, 444. While detrimental reliance is not strictly a condition to obtaining a surcharge remedy,
in some contexts it may be required for the relief to be appropriate within the meaning of §
l 132(a)(3). Id. at 444; see also Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d
1162, 1167 (9th Cir. 2012) ("Appellants argue that the 'harm' of being deprived of their statutory
right to an accurate SPD is a compensable hmm, but we disagree. Appellants' interpretation
would render the advisory committee strictly liable for every mistake[.]").
In the present case, merely because Brandon has requested monetary relief does not
automatically render such relief as legal, and therefore inappropriate relief under § l 132(a)(3).
Surcharge is plainly a type of equitable relief, post-Amara, that the courts may allow. Brandon
has pleaded minimum facts which, if true, show a beneficiary-fiduciary relationship, and that he
suffered actual hmm caused by reliance on representations in plan materials and a phone call to
HNOR's customer care center. Whether Brandon reasonably relied on those representations or
the level of clarity involved in the materials and phone call are factual questions that are
inappropriate to decide on a motion to dismiss. Brandon has adequately pleaded that HNOR
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Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 16 of 17
breached its fiduciary duty to Brandon, and adequately pleaded a plausible claim for surcharge.
Conclusion
For the reasons stated above and after careful consideration of Plaintiffs Complaint in light
of the Rule 12(b)(6) standard, Defendants' Motion to Dismiss (ECF No. 6) should be DENIED.
Scheduling Order
The Findings and Recommendation will be referred to a district judge for review.
Objections, if any, are due within fourteen (14) days. If no objections are filed, then the
Findings and Recommendation will go under advisement on that date.
If objections are filed, then a response is due fourteen (14) days after being served with a
copy of the objections. When the response is due or filed, whichever date is earlier, the Findings
and Recommendation will go under advisement.
DATED this of October, 2019.
17 - FINDINGS AND RECOMMENDATION
JOHNV. ACOSTA Unite.cl States Magistrate Judge
,j
Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 Page 17 of 17
Recommended