ERISA is not as clear as it could be about who can and must be included as a defendant when suit is brought under the statute. The statute states that an ERISA plan is an entity that can sue or be sued in its own name. 29 U.S.C. §1132(d). However, an ERISA plan is often not something an employer thinks of as being separate from itself. When a small business buys a group health, disability or life plan for its employees, it does not generally consider that it has established a distinct legal entity that can sue or be sued. But it has. Larger employers or trust funds established under collective bargaining agreements between unions and employers are more likely to understand the significance of the legal reality that an ERISA plan is separate from the entities that fund those benefits.
Building on this principle, some courts have ruled that when a claim is brought under ERISA for payment of denied benefits, claimants must sue the "plan" rather than just the employer or the insurer paying the benefits. Indeed, the U.S. Court of Appeals for the Ninth Circuit has gone so far as to say that the plan is the only proper party when a claim for unpaid benefits is brought. Everhart v. Allmerica Fin. Life Ins. Co., 275 F.3d 751 (9th Cir. 2001); Ford v. MCI Comm. Corp. Health & Welfare Plan, 399 F.3d 1076 (9th Cir. 2005).
These holdings are pretty clearly wrong IMHO. It may be true that because the ERISA plan is a separate entity that can sue or be sued, it must be named as a defendant in a suit for unpaid benefits. But there is no language in the statute to support the idea that an insurer cannot be named as a defendant in a claim for unpaid benefits. On the contrary, numerous provisions of ERISA go to the heart of insurers’ inter-plan activities. The Ninth Circuit rulings in Everhart and Ford suggest that there is no way to effectively obtain any remedy for an insurer’s systematic breaches of ERISA’s disclosure, fiduciary duty or claims procedure requirements that cross plan boundaries.
This is a significant defect in the case law of the Ninth Circuit. It is all the more pernicious because the Ninth Circuit is, by far, the largest in the country both in geography and population. It covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.
Every Circuit in the country has its poorly reasoned and deficient case law regarding ERISA and just about every other area of law. But this Ninth Circuit precedent is a glaring deformity.