I enjoyed this post on a fundamental question in ERISA denial of benefit litigation, namely which of the many entities involved with a plan – employer, plan sponsor, fiduciary, claim administrator, insurer, and so on – is a proper defendant to such a claim. As the post points out, correctly, there is some ambiguity on the question, and courts in various parts of the country apply different rules. The author focuses on a recent decision out of the federal court in Minnesota, Nystrom v. AmerisourceBergen Drug Corp., holding, in the author’s words, that “a third party administrator was a proper defendant in a lawsuit seeking benefits on the grounds that Section 502(a)(1)(B), the section of ERISA under which such claims are brought, does not limit the universe of entities that may be sued, and that liability flows from ‘actual control’ over benefit claims;” the author further notes that, according to that court, the “First, Fifth, and Ninth Circuits have reached a similar conclusion.”

In fact, this is the approach typically taken by courts in the First Circuit, and in some ways the case law here on this issue is more concrete and definitive than elsewhere with regard to exactly what entities, within that universe, are in fact the proper defendants. In the words of the First Circuit, “[t]he proper party defendant in an action concerning ERISA benefits is the party that controls administration of the plan.” Terry v Bayer Corp., 145 F.3d 28, 35-36 (1st Cir. 1998)(quoting Garren v. John Hancock Mut. Life. Ins. Co., 114 .F3d 186, 187 (11th Cir. 1997)). It is the decision of the “entity with the power to make, and is the entity that actually made, the final decision to terminate [the plaintiff’s] benefits” that is subject to review, not that of other parties. Id.; see also Aponte-Miranda v. Sensormatic Electronics Corp., 2006 WL 468695 (D.PR. 2006).

So in essence, the First Circuit case law does not leave open who the proper defendant is in a denial of benefit claim, in a manner that would allow the targeting of anyone and everyone involved with a plan. Rather, the proper defendant is the party that actually decided the claim for benefits and has the power to order the payment of benefits. This, in turn, is the right rule: it does not make sense to have a defendant to such a claim be anyone other than the party that could have, but declined to, pay the benefits, as any other defendants are, in that circumstance, being sued for an action they did not take and had no control over.