A California federal district court has declined a plan administrator’s motion to dismiss a class action lawsuit for wrongful denial of benefits and breach of fiduciary duty. The plaintiffs, a group of participants in various employer-sponsored health plans, blame the administrator’s use of an automated algorithm to make decisions on participants’ benefits claims as the basis for their lawsuit. The plan participants pointed to examples of benefits claims that they allege the plan should have covered. Still, the plan administrator denied them as medically unnecessary or inappropriate based on coding errors.
The case is Kisting-Leung v. Cigna Corp., 2025 WL 958389 (E.D. Cal. 2025).
On the plan administrator’s motion to dismiss, the court dismissed the plaintiffs’ wrongful denial of benefits claims, concluding that they had not specifically pointed to the plan terms that made them eligible for benefits. However, the court allowed the plaintiffs to amend their claims for reconsideration.
Regarding the fiduciary breach claims, the plan administrator argued that it was acting within its discretion to use an algorithm to determine the medical necessity of claims as per the plan’s terms. The court disagreed, citing the plan terms that required medical necessity determinations must be made by a “medical director,” and found that the plan administrator had abused its discretion in using the algorithm. As a result, the court allowed these claims for breach of fiduciary duty to proceed.
The court dismissed other fiduciary breach of duty claims because the plan administrator showed evidence that it did not use the algorithm for other benefits decisions. However, the judge gave the plaintiffs leave to amend their claims and add evidence that the plan administrator applied the algorithm to those claims.
Finally, the court rejected the plan administrator’s motion to dismiss because the wrongful denial of benefits and fiduciary breach claims were duplicative. The court found that the remedies for each claim differed, and therefore, the claims were distinct.
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