Justice Ginsburg's Fiduciary Loophole: A Viable Achilles' Heel to HMOs' Impenetrable ERISA Shield

Brigham Young University Law Review, 2006 by Johnson, Charlotte

D. Regulatory Vacuum

In essence, Justice Scalia's narrow scope of remedies combined with ERISA's preemption clause has left most injured ERISA plan participants empty-handed, without remedy against their HMO, in what has been termed a "regulatory vacuum."56 ERISA's broad preemptive power strips the plaintiff of state remedies.57 Yet, ERISA's "comprehensive and reticulated" scheme fails to replace them with appropriate federal remedies for a plaintiff physically injured due to delay or denial of medical treatment coverage.58 The Court has made it abundantly clear that there is no compensatory relief available under ERISA for consequential injury.59 If the most an HMO would have to provide as an ERISA remedy would be an injunction or the cost of the denied treatment, it stands to reason that an HMO would seek ERISA preemption.60 In most cases, unless the plaintiff seeks a preliminary injunction or reimbursement for denied treatment that he or she has already paid for out-of-pocket, the plaintiff, being unable to recover for resulting injuries, is simply out of luck, while the HMO incurs no liability for the injury.61 Under ERISA's liability shield, there seems to be little that can stop HMOs from inducing unbridled harm to ERISA plan members.62

Thus, perhaps the Court, in its strict textualist approach for consistency, has lost sight of ERISA's mission to protect the interests of plan participants. Indeed, the Court indicated that the ERISA drafters "were primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than with the rights of the individual beneficiary."63

Furthermore, ERISA participants' desperate attempts to circumvent ERISA's remedial scheme have been met with little success in the courts-those claims that do succeed tend to be the exception rather than the rule.64 Instead of trying to get around ERISA preemption, Justice Ginsburg's unique approach to this dilemma actually embraces ERISA's remedial scheme. In her concurrence in the recent Davila decision, she proposed the breach of fiduciary duty claim as a potential source of relief available under § 502(a)(3), which provides for "other appropriate equitable relief."65 Though the Court has not yet ruled on this exact issue in the HMO context, Part III introduces a series of cases that illustrate the tug-of-war within the Court for the "appropriate" scope of § 502(a)(3).

III. "APPROPRIATE EQUITABLE RELIEF" REVEALED

A. ERISA § 502(a)(3): Outside of the Realm of HMOs

1. Massachusetts Mutual Life Insurance Co. v. Russell

Beginning with Massachusetts Mutual Life Insurance Co. v. Russell in 1985, a sharp division arose in the Court as to the scope of "equitable" relief available to individual ERISA plan beneficiaries.66 The plaintiff in Russell sought compensation for her disability plan's wrongful denial of benefits.67 The majority decision, authored by Justice Stevens, ruled against individual relief under §§ 409(a) and 502(a)(2), which allowed relief only to the plan for breach of fiduciary duty.68 What is more, Justice Stevens read ERISA as so "comprehensive and reticulated" that the Court is precluded from inferring other remedies not expressly included in the statute because Congress had actually intended to omit them.69 Taking it one step further, Justice Scalia extended this theory to § 502(a)(3) relief in his decision in Mertens v. Hewitt Associate70 and Great-West Life and Annuity Insurance Co. v. Knudson.71 As explained in more detail below, it was Justice Stevens's opinion in Russell that seemed to later spark Justice Scalia's restrictive Mertens opinion.72