Everhart v. Allmerica Fin. Life Ins. Co

• Citation: 275 F.3d 751
• Decision Date: 27 December 2001
• Docket Number: DEFENDANT-APPELLEE,No. 99-17094,PLAINTIFF-APPELLANT,99-17094
• Parties: (9th Cir. 2001) LYN EVERHART,, v. ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, DBA STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA,
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 751

275 F.3d 751 (9th Cir. 2001)

LYN EVERHART, PLAINTIFF-APPELLANT, v. ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, DBA STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA, DEFENDANT-APPELLEE.

No. 99-17094

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted March 14, 2001

Filed Dec. 27, 2001

Charles J. Wisch, San Francisco, California, for the plaintiff-appellant.

Paul E.B. Glad, Sonia Renee Martin, Sonnenschein Nath & Rosenthal, San Francisco, California, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California Vaughn R. Walker, District Judge, Presiding D.C. No. CV-99-00733-VRW

Before: Stephen Reinhardt, Pamela Ann Rymer and Raymond C. Fisher, Circuit Judges.

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 Everhart, 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 Allmerica 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 Allmerica 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 (2000) (holding that §§ 1132(a)(3) authorizes suit against a nonfiduciary "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 thirdparty 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 (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...