Pegram v. Herdrich

Summary

Justice Souter delivered the unanimous opinion holding that mixed eligibility and treatment decisions made by HMO physicians are not fiduciary decisions under ERISA. Herdrich therefore failed to state an ERISA fiduciary-breach claim based on financial incentives rewarding physician owners for limiting care. The Court reasoned that these decisions involve medical judgment rather than traditional trust administration, and that imposing fiduciary liability would undermine congressionally approved HMO structures and effectively federalize malpractice litigation. The Court also rejected judicial estoppel because Carle’s earlier position concerning a possible disclosure obligation was not inconsistent with denying fiduciary responsibility for the treatment decisions challenged in the amended complaint. It reversed the Court of Appeals. There were no separate opinions.