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ERISA plaintiffs may seek compensation for plan misrepresentations

The 7th Circuit reversed itself in light of a 2011 Supreme Court decision

For more information on the concurring opinion in this case, click here.

Cases of negligent misrepresentation under the Employee Retirement Income Security Act (ERISA) are common and perhaps inevitable. A health plan’s documents aren’t clear, or a health plan employee makes a mistake when representing the plan’s scope of coverage, and the result is a patient who finds out too late that a health procedure will not be covered. It was long thought to be the case that plaintiffs who sued over such situations were not entitled to make-whole relief in the form of monetary compensation. If they paid out-of-pocket for medical care that a plan representative mistakenly told them would be covered, they couldn’t get that money back.

That earlier Kenseth decision also was significant for ERISA litigation. In 2010 the appeals court found in Kenseth that a plan fiduciary has an affirmative duty to communicate accurate and complete material facts to plan participants. The failure to train customer service staff adequately to field inquiries or to draft plan documents in clear language could constitute a breach of fiduciary duty.

However, the court noted that forms of relief to which Kenseth was entitled were limited. ERISA only authorized equitable relief such as injunctions, mandamus and restitution, and the appeals court said that the relief Kenseth seemed to be seeking was beyond the statute’s scope.

Associate Editor

Melissa Maleske

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