When Can You Sue an Employer for Denial of ERISA Governed Benefits?

Interesting case out of the United States District Court for the District of Maine the other day, concerning a challenge by a plan participant to how his long term disability payments were calculated. The court essentially found that, since deferential review applied, the administrator’s calculation method could not be challenged, since it was a reasonable approach given the plan’s terms and the evidence. Of more interest, however, was the court’s nice thumbnail approach to the question of when an employer, who has delegated plan operation and decision making to an outside administrator - in the case at bar, the insurer of the long term disability benefits - can be properly named as a defendant in a claim for benefits. The court’s answer is generally never, unless the employer inserted itself into the actual administration and decision making over the claim. The court’s handy-dandy summary, suitable for inclusion in a parenthetical in the brief of your choice, is:

[T]he proper defendant for a denial of benefits claim is "the party that controls administration of the plan." Terry v. Bayer Corp., 145 F.3d 28, 36 (1st Cir. 1998) (quoting Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir. 1997)). Typically, an employer is not the proper defendant when the plan documents name another entity as the plan administrator or claims fiduciary. Kennard v. Unum Life Ins. Co., 2002 U.S. Dist. LEXIS 4467, 2002 WL 412067, *2 (D. Me. March 14, 2002). Here, the Plan names Guardian Life as the "Claims Fiduciary with discretionary authority to determine eligibility for [long-term disability] benefits and to construe the terms of the plan with respect to claims." The Plan expressly states that Guardian Life decides whether a claimant is eligible for disability insurance, whether a claimant meets the requirements for payment of benefits, and what long-term benefits will be paid by the Plan. Guardian Life also disburses the long-term benefits. The courts have developed an exception to the rule that the plan administrator is the proper defendant in instances in which the plaintiff presents evidence that the employer, although not formally identified as the plan administrator, "controlled or influenced the administration of the plan." Beegan v. Associated Press, 43 F. Supp.2d 70, 73-74 (D. Me. 1999) (listing cases); Law v. Ernst & Young, 956 F.2d 364, 372-73 (1st Cir. 1992) ("[U]nless an employer is shown to control administration of a plan, it is not a proper party defendant in an action concerning benefits.") (quoting Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988)).

The case is LeBlanc v. Sullivan Tire Company.