Lyn Everhart v. Allmerica Financial Life Insurance Company, Dba State Mutual Life Assurance Company of America

275 F.3d 751, 27 Employee Benefits Cas. (BNA) 1276, 2001 Cal. Daily Op. Serv. 10698, 2001 Daily Journal DAR 13337, 2001 U.S. App. LEXIS 27210, 2001 WL 1654535

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 27, 2001
• Docket: 99-17094
• Status: Published

Opinions

Opinion by Judge FISHER; Dissent by Judge REINHARDT.

FISHER, Circuit Judge:

Lyn Everhart appeals the district court’s summary judgment in favor of Allmerica Financial Life Insurance Co. (“Allmerica”). She argues that the district court was incorrect in concluding that ERISA barred her suit against Allmerica, its employee benefit plan’s insurer. Because Everhart may not bring suit to recover benefits against Allmerica in its capacity as a third-party insurer under the applicable ERISA provisions, we affirm.

I.

Appellant was married to Charles Ever-hart, an employee of Credence Systems Corp. (“Credence”). Credence established an employee benefit plan (“the plan”) subject to the terms of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., for which it was the plan administrator. In accordance with the terms of the plan, Credence purchased a group life insurance policy (“the policy”) from Allmerica. If a plan participant died, the terms of the policy dictated that his beneficiaries were to receive a death benefit of twice his annual earnings.

Charles Everhart was a plan participant. In his enrollment form, he listed his annual salary as $84,800. Although this sum reflected his annual base salary, he earned a great deal more in commissions — in the last 15 months of his life he earned $193,734 in commissions, which averages out to an additional $154,987 per year. Thus, his average yearly salary, including commissions, was roughly $239,787.

Charles died in a plane crash December 5, 1994. As his beneficiary, Appellant sought twice the amount of his base salary plus commissions; rounded up to the nearest thousand (per the terms of the policy), that figure was $480,000. On September 18, 1998, Allmerica sent Everhart a check for $202,829.79 ($170,000 plus interest) to cover its obligation under the policy. It continued to maintain it was required to pay benefits only on Charles Everhart’s stated salary of $84,800.

In addition to the dispute over the policy, Appellant also alleged Credence owed Charles Everhart unpaid benefits and compensation at the time of his death. Credence and Appellant entered into an agreement March 21, 1997, under which she released all claims against Credence in exchange for $230,000.

Everhart filed this action against Allm-erica February 22, 1999 for recovery of benefits under the ERISA, 29 U.S.C. § 1132(a)(1)(B). Thereafter, the district court granted Allmerica’s motion for summary judgment and denied Everhart’s counter-motion for summary judgment, finding that Everhart could not sue Allm-erica for benefits without joining the plan as a party. Everhart filed a timely notice of appeal.

II.

We review a grant of summary judgment de novo. Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir.1999) (en banc). The court must determine, upon viewing the evidence in the light most favorable to the nonmoving party, whether the district court correctly applied the relevant substantive law and whether any genuine issues of material fact exist. Id. Interpretation of ERISA is a question of law reviewed de novo. Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643, 646 (9th Cir. 2000) (en banc).

III.

An employee welfare benefit plan is a plan an employer establishes or maintains to provide benefits for its participants. The plan provides these benefits “through the purchase of insurance or otherwise.” 29 U.S.C. § 1002(1).

ERISA allows participants or their beneficiaries to bring a civil action “to recover benefits due to [them] under the terms of [their] plan, to enforce [their ] rights under the terms of the plan, or to clarify [their] rights to future benefits under the terms of the plan.” Id. § 1132(a)(1)(B). However, a money judgment for an action brought under § 1132(a)(1)(B) may be enforced “only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity.” Id. § 1132(d)(2).

Additionally,' ERISA § 1132(a)(3) allows a beneficiary to bring a civil action “to enjoin any act or practice” which violates any ERISA provision or “to obtain other appropriate equitable relief.” Liability under § 1132(a)(3) is not limited to the plan itself or its fiduciary. Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 247, 120 S.Ct. 2180, 147 L.Ed.2d 187 (2000) (holding that § 1132(a)(3) authorizes suit against a non-fiduciary “party in interest” to a breach of fiduciary duty); Gibson v. Prudential Ins. Co. of America, 915 F.2d 414, 415-18(9th Cir.1990) (stating that insurance company that served as the plan’s claims-handling agent but was not an ERISA fiduciary “cannot be sued to recover benefits or [for damages] for breach of fiduciary duty,” but an “equitable remedy may have been available” under § 1132(a)(3)). Everhart did not bring her suit under § 1132(a)(3). She brought this action against Allmerica solely under § 1132(a)(1)(B).

We held in Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985), that “ERISA permits suits [under § 1132(a)(1)(B) ] to recover benefits only against the Plan as an entity.” Subsequent cases in this circuit have relied on Gelardi to limit benefit suits to the plan. See Gibson, 915 F.2d at 417; Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279, 1287 (9th Cir.1990) (holding that inclusion of employer was improper in an ERISA suit to recover benefits). Other circuits, quoting Gelardi, also have held that the plan itself is the only proper defendant in a suit to recover benefits. See 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 ...”); Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir.1993) (same).

However, under another line of cases, in this circuit and others, claimants may also bring ERISA actions to recover benefits against plan administrators. See Taft v. Equitable Life Assurance Soc’y, 9 F.3d 1469, 1471 (9th Cir.1993) (holding that “[t]he beneficiary of an ERISA plan may bring a civil action against a plan administrator” to recover benefits under § 1132(a)(1)(B)); Layes v. Mead Corp., 132 F.3d 1246, 1249 (8th Cir.1998) (permitting suit under § 1132(a)(1)(B) against plan administrator but not employer); 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.”);¹ Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988) (holding that an employer is not a proper defendant in an action for benefits under ERISA unless it is “shown to control administration of a plan”). These lines of cases are summarized in Hall v. Lhaco, Inc., 140 F.3d 1190, 1194-95(8th Cir.1998).

Because Credence, and not Allmerica, was the plan administrator — a fact both parties freely acknowledge — we need not determine which line of cases more accurately states the law.² Appellant released all her claims against the plan and the plan administrator, and has limited her claim against Allmerica to a suit under § 1132(a)(1)(B). Under either Gelardi or Taft and their respective progeny, she may not sue the plan’s insurer for additional ERISA plan benefits.³

Everhart argues that the pronouncements in our cases limiting actions for benefits to suits against the ERISA plan itself apply only to self-funded plans, under which the plan acts as an insurer to provide the benefits guaranteed to participants. She contends that when a plan purchases benefits from an outside insurance carrier, as here, plan beneficiaries are entitled to sue the insurance carrier to enforce their rights, as third-party beneficiaries, to collect promised benefits from the insurer.

In support of this argument, Everhart cites Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir.1997), aff'd, 525 U.S. 299, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999). In Forsyth, a group of employee beneficiaries under an ERISA plan sued the insurance company providing health insurance for the plan. Their suit, brought pursuant to § 1132(a)(1)(B), alleged the insurance company had negotiated a discounted treatment rate with a hospital but failed to pass along that discount to the plan beneficiaries in the form of lower co-payment charges. Forsyth, 114 F.3d at 1473. The district court granted summary judgment in favor of the plaintiffs on their breach of contract claim against the insurer, and this court affirmed. Id. at 1475.⁴

Everhart contends that in Forsyth the court allowed the action against the insurance company because it recognized that plan beneficiaries could sue to ensure that the insurance company would comply with its contractual obligations. Thus, she argues that the court limited, sub silentio, Gelardi’s broad pronouncement that “ERISA permits suits to recover benefits only against the Plan as an entity.” Gelardi 761 F.2d at 1324. But there is another, simpler explanation: In Forsyth, Humana, the insurance company, functioned as the plan administrator.⁵ Suit against Humana was therefore consistent with Taft’s interpretation of § 1132(a)(1)(B) as encompassing suits against plan administrators. See Taft, 9 F.3d at 1471.

The distinction Everhart proposes, based on the type of plan at issue, is not compelling. Nowhere does § 1132 explicitly distinguish plan types or indicate that plans utilizing outside insurance carriers permit suits against third parties whereas self-funded plans do not. Moreover, neither Gelardi nor Forsyth turns on this distinction. The statement in Gelardi that “ERISA permits suits to recover benefits only against the Plan as an entity” provides no indication that the type of plan is determinative in confining proper suits to those against the plan. Forsyth did not purport to distinguish Gelardi when it allowed a § 1132(a)(1)(B) suit against Huma-na to proceed; indeed, Forsyth does not cite Gelardi at all. It may have — with or without Taft in mind — extended the definition of permissible suits under § 1132(a)(1)(B) to include actions against plan administrators, but it did not create a new rule for allowable suits premised on the type of plan funding at issue. Nor has Everhart cited any other cases to us that turn on the distinction between self-funded plans and those that purchase insurance from an outside carrier.⁶

We find no reason to depart from the established precedent of this circuit, and of every other circuit that has expressly considered the issue, that § 1132(a)(1)(B) does not permit suits against a third-party insurer to recover benefits when the insurer is not functioning as the plan administrator.⁷

Thus, we conclude that the district court properly rejected Appellant’s suit.

AFFIRMED.

1 .Garren is almost directly on point here. The benefit plan at issue was administered by the plaintiffs employer, while an outside insurance company serviced the plan. Garren sued the insurance company, arguing his employment benefit plan wrongfully denied his son’s claim for benefits. The court dismissed the claim because the insurance company was not a plan administrator. Garren, 114 F.3d at 187("The evidence is clear that [plaintiff's employer] is the proper party defendant, not [the insurance company].”).

2 . For this reason, we disagree with the dissent’s contention that we should only resolve this case through an en banc proceeding.

3 . The dissent proposes a new test for suits under § 1132(a)(1)(B) whereby suits for benefits could be brought against a party that is neither the plan itself nor the plan administrator, but that makes “the discretionary decisions as to whether benefits were owed.” Dissent at 17345. The dissent cites no authority for this proposition. It is contrary to the cases discussed in text in this and other circuits that limit § 1132(a)(1)(B) suits to plans or plan administrators, and — significantly — it seems to confuse or conflate a § 1132(a)(1)(B) suit with a § 1132(a)(3) suit for breach of fiduciary duty, which is not the claim Everhart is making against Allmerica. See Gelardi, 761 F.2d at 1325(“ERISA defines a fiduciary of a Plan as anyone who 'exercises any discretionary authority or discretionary control respecting management of such plan or ... has any discretionary authority or discretionary responsibility in the administration of such plan' ") (quoting 29 U.S.C. § 1002(21)(A)); Gibson, 915 F.2d at 417 (noting that § 1132(a)(3) "allows equitable relief against both fiduciaries and nonfiduciaries”).

Some of the Supreme Court's rationale in Harris may raise questions about Gelardi's continuing vitality. See Harris, 530 U.S. at 246, 120 S.Ct. 2180 (explaining that § 1132(a)(3) "admits of no limit ... on the universe of possible defendants”). But the Court also observed that "ERISA’s comprehensive and reticulated scheme warrants a cautious approach to inferring remedies not expressly authorized by the text,” id. at 247, 120 S.Ct. 2180 (quotation marks omitted), and ultimately turned to the language of § 1132(1) as explicitly authorizing suits for breach of fiduciary duty against a fiduciary or "other person.” Id. at 247-48. No similar express authorization to reach third parties exists for § 1132(a)(1)(B). Accordingly, Harris reinforces our view that the dissent's test belongs under § 1132(a)(3), not § 1132(a)(1)(B).

4 . The district court in this case distinguished Forsyth on the ground that Humana, the insurer, was a fiduciary of the plan. However, Everhart correctly notes that fiduciary status is an improper basis on which to distinguish Forsyth because the district court there explicitly rejected plaintiffs’ attempt to bring a claim for violation of fiduciary duty: "[T]he cause of action provided by ERISA to compensate the [plaintiffs] for the questionable conduct of Humana Insurance is a claim for benefits pursuant to § 1132(a)(1)(B) and not a claim for breach of fiduciary duty under § 1109 or § 1132(a)(3).” Forsyth v. Humana, Inc., 827 F.Supp. 1498, 1506 (D. Nev.1993). This court specifically affirmed this portion of the district court's ruling. Forsyth, 114 F.3d at 147,5.

5 . That Humana was understood to be the plan administrator is indicated by Forsyth's discussion of Varity Corp. v. Howe, 516 U.S. , 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), decided while Forsyth was pending. Forsyth was concerned with establishing plaintiffs’ standing — as individual beneficiaries — to bring not only a § 1132(a)(1)(B) action, as the district court had ruled, but also a § 1132(a)(3) claim for breach of fiduciary duty. Varity Corp. held that, under certain circumstances, individuals could bring such a claim. As the court in Forsyth explained:

While this appeal was pending the Supreme Court issued its decision in Varity Corp. ... The Court held that an individual beneficiary may bring suit against a plan administrator for a breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) ... only where other equitable relief is available.... In the present case, the Co-Payors seek to recover individual relief under section 1132(a)(3) for Humana Insurance’s breach of fiduciary duty. But the Co-Payors have already won a judgment for damages under section 1132(a)(1).... In these circumstances, Varity Corp. does not authorize equitable relief under the catchall provision of section 1132(a)(3).

Forsyth, 114 F.3d at 1474 (emphasis added). There would have been no reason to mention that Varity Corp. specifically applied to "a plan administrator” if Humana was not the administrator.

6 . The dissent suggests we misconstrue plaintiff’s argument, and that where third-party insurers are "legally responsible, by contract, for the making of discretionary decisions and for the payment of ERISA benefits, such parties properly can be sued under ERISA.” Dissent at 17347. As we have made clear, Allmerica may well have been subject to suit were it the plan administrator or acting in a fiduciary capacity; but those are not the facts here. Indeed, Everhart did sue, and settle with, the plan administrator — Credence. On the record before us, we decline to speculate as to whether and how she might have resolved any claims she might have had against Allmerica through Credence.

7 . Although Cisneros v. UNUM Life Ins. Co. of Am., 134 F.3d 939 (9th Cir.1998), and Ward v. Management Analysis Co. Employee Disability Benefit Plan, 135 F.3d 1276 (9th Cir.1998), aff'd in part and rev'd in part, 526 U.S. 358, 119 S.Ct. 1380, 143 L.Ed.2d 462 (1999), might, as the dissent argues, be read as having permitted suit against an insurance company not acting as the plan administrator, neither decision addresses the issue nor makes clear what UNUM's role was under each of the plans at issue. See, e.g., Ward, 135 F.3d. at 1288("Whether MAC acted as fiduciary and as agent of UNUM in administering the MAC Plan’s long-term disability policy, particularly in receiving and forwarding claims for benefits, cannot be decided as a matter of law on the existing record.”) (emphasis added and footnote omitted). To the extent this circuit's decisions in this area may be talking past each other, we feel bound to follow those that are explicit in their holdings.