:: Overview of Circuit Split Over Benefit Claims Against Plan Administrators
Under ERISA, an employee benefit plan may sue or be sued as an entity. 29 U.S.C. § 1132(d)(1). Any money judgment against a plan is enforceable only as against the plan. 29 U.S.C. § 1132(d)(2). However, as our sister court noted in West v. Sedgwick Claims Mgmt. Servs., Inc., “these provisions do not lead inexorably to the conclusion that the only proper party defendant to a claim for wrongful denial of benefits is the plan itself.†No. 3:05CV-486-S, 2006 U.S. Dist. LEXIS 41653 (W.D. Ky. June 19, 2006). Teel v. Sedgwick Claim Management Services, Inc., Slip Copy, 2007 WL 1231545 (W.D.Ky.) (April 25, 2007)
This case addresses the question of whether an ERISA plan is the only proper defendant in a claim based upon ERISA § 502(a)(1)(B). Under the facts, the defendant claims administrator, Sedgwick, argued that the plaintiff could not assert an ERISA § 502(a)(1)(B) claim against it, but only against the plan. The courts are not agreed on how to answer this question.
Split In Authority
The district court noted that the circuits are divided on the question of whether a plan is the only proper defendant in a suit to recover benefits under § 502(a)(1)(B). The Eighth Circuit opinion cited for this proposition, Hall v. LHACO, Inc., 140 F.3d 1190, 1194 (8th Cir.1998), collects numerous authorities on this point which are set forth below.
Only The Plan
On the view that claims for benefits may only be asserted against the plan, see:
Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir.1993)
Riordan v. Commonwealth Edison Co., 128 F.3d 549, 551 (7th Cir. 1997) (“It is true that ERISA permits suits to recover benefits only against the plan as an entity[.]â€)
Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir.1996) (“ ‘ERISA permits suits to recover benefits only against the Plan as an entity …,’)
Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir.1985) ( per curiam )
Gibson v. Prudential Ins. Co. of Am., 915 F.2d 414, 417 (9th Cir.1990);
Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1287 (9th Cir.1990), cert. denied, 498 U.S. 1087, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991)
Parties In Addition To the Plan
For a contrary view, see:
Mitchell v. Eastman Kodak Co., 113 F.3d at 433 (3d Cir.1997) (entertaining a suit against the plan administrator to recover benefits pursuant to § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B));
Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 233 (3d Cir.1994) (noting that ERISA permits suits to recover benefits against the plan as an entity and against the fiduciary of the plan, and finding that a plan administrator is such a fiduciary);
Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir.1988) (stating that the proper party defendant in an ERISA action concerning benefits is the party that “is shown to control administration of a planâ€), cert. denied, 488 U.S. 826, 109 S.Ct. 76, 102 L.Ed.2d 52 (1988).
Layes v. Mead Corp., 132 F.3d 1246, 1249 (8th Cir.1998) (quoting the decision of the Eleventh Circuit Court of Appeals in Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir.1997), and also citing Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir.1988), cert. denied, 488 U.S. 826, 109 S.Ct. 76, 102 L.Ed.2d 52 (1988)).
Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1471 (9th Cir.1993) (“The beneficiary of an ERISA plan may bring a civil action against a plan administrator ‘to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan,’ †quoting 29 U.S.C. § 1132(a)(2));
Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir.1997) (“The proper party defendant in an action concerning ERISA benefits is the party that controls administration of the plan.â€)
Since the Hall opinion the Fifth Circuit has weighed in on the issue:
Musmeci v. Schwegmann Giant Super Markets, Inc., 332 F.3d 339 (5th Cir.2003), cert. denied, 540 U.S. 1110, 124 S.Ct. 1078, 157 L.Ed.2d 898 (2004) (employer as plan administrator and plan sponsor is proper defendant)
Administrators May Be Proper Defendants
Turning to the issue before it, the district court stated:
Under ERISA, an employee benefit plan may sue or be sued as an entity. 29 U.S.C. § 1132(d)(1). Any money judgment against a plan is enforceable only as against the plan. 29 U.S.C. § 1132(d)(2). However, as our sister court noted in West v. Sedgwick Claims Mgmt. Servs., Inc., “these provisions do not lead inexorably to the conclusion that the only proper party defendant to a claim for wrongful denial of benefits is the plan itself.†No. 3:05CV-486-S, 2006 U.S. Dist. LEXIS 41653 (W.D. Ky. June 19, 2006).
The court observed that in Hall v. LHACO, Inc., the Eighth Circuit stated that the Sixth Circuit has held that a plan is not the only proper party defendant to a § 502(a)(1)(B) claim, citing Daniel v. Eaton Corp. Hall, 839 F.2d 263 (6th Cir.1988). Based on the authority of the Daniel case, and influenced by the decision in West v. Sedgwick Claims Mgmt. Servs., Inc., the district court held that “one in control of the administration of a plan may be a proper § 502(a)(1)(B) defendant.â€
Note: The statutory language at issue is as follows:
(a) Persons empowered to bring a civil action
A civil action may be brought–
(1) by a participant or beneficiary–
(A) for the relief provided for in subsection (c) of this section, or
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan . . .
29 U.S.C.A. § 1132 (emphasis added)
Plan Administrator Versus De Facto Administrators – The issue in Teel involved whether a claim for benefits may be asserted against the plan only or also the plan administrator. An additional issue arises over whether, “nonadministrators” may be deemed “de facto†plan administrators, thus broadening the scope of defendants still further. There is also a split in the circuit courts of appeals as to whether some party other than the one designated in the plan instrument can be a “ de facto †administrator of the plan. See Jones v. UOP, 16 F.3d 141, 145 (7th Cir.1994).
Fourth Circuit - The Fourth Circuit has not considered the ERISA § 502(a)(1)(B) “proper defendant” issue raised in Hall in a published decision. See, Ankney v. Metropolitan Life Ins. 438 F.Supp.2d 566 (D.Md.2006) (permitting claim for benefits against party that has control over administration), stating:
Some courts have held that only an ERISA plan itself is the proper party defendant in cases involving the administrative denial of benefits. Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir.1996). The holding in Jass, however, has engendered severe criticism and is the subject of an apparent circuit split. See Rivera v. Network Health Plan of Wisconsin, 320 F.Supp.2d 795, 798-99 (E.D.Wis.2004); John M. Teske, Damages Suits Under ERISA: Why Third Parties With Discretion Over Benefit Plans Must Be Held Accountable, 36 LOY. L.A. L. REV. 1753, 1760-67 (2003); Magin v. Monsanto Co., 420 F.3d 679, 686 (7th Cir.2005) (recognizing that some suits have been allowed against employers in their role as plan administrators). The Fourth Circuit has yet to weigh in on the issue.
(emphasis added)
Cf. Gluth v. Wal-Mart Stores, Inc.117 F.3d 1413 (4th Cir. 1997) (citing Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988) (”[t]rust, as the funding mechanism for the Plan with no control over its administration, is not a proper defendant in this action”); Colin v. Marconi Commerce Systems Employees’ Retirement Plan, 335 F.Supp.2d 590 (M.D.N.C.,2004) (benefit committee that currently had no control or discretion regarding Plaintiffs’ benefits could not provide redress of Plaintiffs’ claims under § 502(a)(1) and was not proper defendant).
While one might infer the converse, i.e., that a party with control over administration would be a proper defendant, the conclusion is not logically required.
Standing - As suggested in both Hall and reiterated in Colin, issues of “redressability†arise (implicating standing to sue) in the context of who may be a proper defendant under ERISA § 502(a)(1)(B). For more on that topic, see, :: The Continuing Controversy Over Standing To Sue Under ERISA
