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The below blog post was authored by Nossman ERISA and Employee Benefits attorney, Harley Bjelland:

CYR v. Reliance Standard Life Insurance Company, et al., decided June 22, 2011 by the Ninth Circuit Court of Appeals makes it clear that who may be a defendant in an action for benefits under an ERISA plan will depend upon the status of the person being sued, not whether the person is designated as the Plan, its fiduciaries or as the Plan Administrator.

Laura Cyr (“Cyr”) was an executive with Channel Technologies, Inc. (“CTI”) and was covered by a disability benefits plan (the “Plan”) that was insured by Reliance Standard Life Insurance Company (“Reliance”).  CTI was the Plan Administrator of the Plan, but Reliance had the absolute authority and control over what benefits were paid and to whom they were paid.

Cyr was terminated by CTI and filed a claim for disability under the Plan based upon a back condition.  Reliance processed the claim and paid Cyr disability benefits based upon her $85,000 per year salary.  A year later, Cyr filed an action against CTI claiming gender discrimination based upon unequal pay.  CTI and Cyr settled the action and enterred into a settlement where Cyr’s salary was retroactively adjusted to $155,000, effective one week before she was terminated by CTI.

Based upon the settlement, Cyr sought benefits from the Plan based upon the $155,000 salary.  Reliance refused to provide the higher benefit and Cyr brought the current action to enforce the higher benefit.

Reliance claimed that only the Plan and CTI, as Plan Administrator, could be sued for benefit claims under Section 1132(a)(1)(B) of ERISA.  Section 1132(a)(1)(B) provides that a participant may file a civil action 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.”

The Ninth Circuit made it clear that Section 1132(a)(1)(B) has no limitation on who may be sued.  CTI and the Plan were both sued as appropriate defendants, but neither one of them had any authority or control over the benefits paid under the Plan.  Reliance alone possessed that power and the Court indicated that Reliance was “a logical defendant for an action by Cyr to recover benefits due her under the terms of the plan and to enforce her rights under the terms of the plan.”

The Cyr decision is consistent with the long line of cases that provide responsibility when one has discretionary authority or control over some aspect of an ERISA plan.  We note, however, that Cyr is a welfare benefit plan case.  Where persons outside the employer have responsibility for oversight and decision making regarding benefits the Ninth Circuit will permit actions against that person under ERISA Section 1132(a)(1)(B).  At least in the Ninth Circuit, plaintiffs may now be able to allege causes of action against insurers and possibly other persons that serve in a decision making capacity, even if those persons are not employees of the plan sponsor.

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The below blog post was authored by Nossman ERISA and Employee Benefits attorney, Harley Bjelland:

Some pundits are calling CIGNA Corp. v. Amara, et al., decided May 16, 2011 by the United States Supreme Court, a very important case changing the landscape of employee benefits litigation. It has been described as eliminating the requirement that employees prove detrimental reliance on miscommunications about benefit plan terms in order to obtain relief.  As a benefits expert, I read the case differently.

A common theme in many employee benefit cases is the existence of a wrong without a remedy. These cases often include circumstance where the plan document provides for a specific benefit, but the summary plan description or some other communication provided by the employer ("Employer Communication") provides for another.  Does the employee get the richer benefit even though not provided for in the formal plan document?  In most cases the employee gets the benefit promised in the plan document regardless of any contrary language in any Employer Communication.

The typical facts involve an employee reading and relying on a description of a valuable benefit in an Employer Communication and, after relying on the promised benefit, the employee retires. Some cases even involve circumstances where the employee double checks the benefit described in the Employer Communication with an employee in Human Resources.  In general, the federal courts have refused to rewrite the terms of a qualified retirement plan to give the richer benefit.  The logic behind these decisions is that ERISA consistently encourages employers to communicate benefits to employees in terms the employees can understand and in so doing, perfection is not required.  All benefit plans are voluntary and the Supreme Court has consistently held that plain English communication may become extinct if employers are required to insure the precision of all Employer Communications.

CIGNA Corp. v. Amara does not change this legal premise.  In CIGNA, the employer sent summary plan descriptions to all employees.  The summary document described a greater benefit than actually provided by the terms of the plan itself.  The plaintiff sued for the benefit promised in the summary description.  The District Court agreed and ordered CIGNA to pay the higher benefit.  In a unanimous decision, the Supreme Court reversed and remanded.

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