In Peters v. Aetna Inc., No. 19-2085, __F.3d__, 2021 WL 2546412 (4th Cir. June 22, 2021), a putative class action, the Fourth Circuit revived ERISA breach of fiduciary duty and prohibited transaction claims against Aetna Life Insurance Company (“Aetna”) and Optumhealth Care Solutions, Inc. (“Optum”) (collectively, “Appellees”) as it relates to their subcontractor fee agreement for providing in-network services for Aetna insureds. The Fourth Circuit also determined that the district court “too rigidly” analyzed Rule 23’s class certification requirements when it denied class certification for lack of ascertainability and commonality.

Plaintiff-Appellant Sandra Peters is a member of the Mars, Inc. self-funded health care plan (“the Plan”). Mars hired Aetna as its claims administrator pursuant to a Master Services Agreement (“MSA”) which included a Service and Fee Schedule. As permitted by the MSA, Aetna subcontracted with Optum to provide chiropractic and physical therapy services to Plan participants for more cost-effective prices than Aetna could get on its own. Rather than pay Optum out of the fees Aetna received from Mars, Aetna and Optum agreed to “bury” Optum’s fee within the claims submitted by Optum’s providers via a “dummy code” from the CPT to reflect a bundled rate fee that would be paid by the participants and the Plan based on their annual deductible and coinsurance maximums. In other words, the participants and the Plan paid for Optum’s administrative services. The Plan does not permit these administrative services fees to be passed along to participants.

Peters brought a class action suit against Appellees, alleging violations of ERISA § 404, 29 U.S.C. § 1104; and ERISA § 502(a)(1)–(3), 29 U.S.C. § 1132(a)(1)–(3) for Aetna’s arrangement to have the Plan and its participants pay Optum’s administrative fee via the bundled rate. In addition to seeking redress for harm she suffered individually, she also sought to redress the harm suffered on behalf of the Plan in the form of restitution, surcharge, disgorgement, and declaratory and injunctive relief. She sought to represent the following two classes of similarly situated plans and their participants: (1) “[a]ll participants or beneficiaries of self-insured ERISA health insurance plans administered by Aetna for which plan responsibility for a claim was assessed using an agreed rate between Optum and Aetna that exceeded the provider’s contracted rate with Optum for the treatment provided”; and (2) “[a]ll participants or beneficiaries of ERISA health insurance plans insured or administered by Aetna for whom coinsurance responsibility for a claim was assessed using an agreed rate between Optum and Aetna that exceeded the provider’s contracted rate with Optum for the treatment provided.” The district court denied class certification after finding that the class did not meet the ascertainability and commonality requirements of FRCP 23(a). The district court also concluded that Appellees could not be held liable under ERISA as they were not acting as fiduciaries when engaging in the actions at the heart of Peters’ complaint and granted them summary judgment.

The Fourth Circuit affirmed in part, vacated in part, and remanded the case for further proceedings. The court went through a lengthy discussion of ERISA’s civil enforcement and remedial scheme. First, it found that Peters had Article III standing to pursue her claims because she demonstrated a financial injury sufficient to proceed with her restitution claim when one looks at the financial loss at the individual claims level rather than at the aggregate claims level. Even if on the whole Peters did not suffer a financial loss, she showed that when combining Optum’s administrative fee with the provider’s Negotiated Charge via the bundled rate she paid more on certain individual claims that she otherwise would have paid. Based on this, she may proceed with her claim on the merits. However, on the merits, the court found that Peters experienced no direct financial injury as a result of Appellees’ use of the bundled rate in the claims process when one considered the Donovan framework and offset her losses with the gains she experienced on all her healthcare claims under the Plan. See Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2d Cir. 1985) (“the measure of loss applicable … requires a comparison of what the Plan actually earned on the … investment with what the Plan would have earned had the funds been available for other Plan purposes.” “If the latter amount is greater than the former, the loss is the difference between the two; if the former is greater, no loss was sustained.”). Absent a direct financial injury, the court affirmed the district court’s judgment on Peters’ personal claim for restitution under ERISA § 502(a)(1) and (3). The court found that the record needed to be developed as to Peters’ restitution claim on behalf of the Plan under ERISA § 502(a)(2). The court vacated and remanded that claim to the district court for development of the record.

For Peters’ claims seeking surcharge, disgorgement, and declaratory and injunctive relief, the court found that these do not require a showing of direct financial injury “and are persuaded that she has produced sufficient evidence for a reasonable factfinder to conclude that Aetna was operating as a functional fiduciary under ERISA and breached its fiduciary duties.” The court also found that there was sufficient evidence for a reasonable factfinder to conclude “that Optum was acting as a party in interest engaged in prohibited transactions, but not as a fiduciary.” Thus, the court reversed the district court’s judgment as to Peters’ claims for equitable relief under ERISA § 502(a)(1) and (3), and for her claims on behalf of the Plan for equitable relief under ERISA § 502(a)(2). Lastly, the court held “that the district court abused its discretion in denying Peters’ motion for class certification when it failed to properly ascertain the full measure of available remedies.” Peters has withstood summary judgment on her equitable relief claims without regard to financial injury. The court vacated the district court’s order denying class certification for a full reevaluation under Rule 23.