Whom to Sue in an ERISA Benefits Case?
The "short answer" is sue both the insurer and the Plan.
Of course you sue the insurer, who denied the disability benefits. In the usual case, the employer funds the long-term disability benefits provided by the Plan through a policy of insurance, and it is the insurer who decides whether the claim should be paid and pays the claim.
However, 29 U.S.C. section 1132(d) provides that "an employee benefit plan may sue or be sued under this title as an entity ... [and] [a]ny money judgment under this title against an employee benefit plan shall be enforceable only against the plan as an entity ..." Under a strict interpretation of this statute, the Plan is the only proper entity in a claim against plan benefits. Riordan v. Commonwealth Edison Co., 128 F.3d 549, 551 (7th Cir. 1997). Even where a Plan was fully insured, the claim had to be brought against the plan itself.
In Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1201 (9th Cir. 2011), the Ninth Circuit modified this rule holding that the insurer of a fully insured plan that made the denial decision was a proper party to an ERISA lawsuit.
Accordingly, if you are absolutely certain that the Plan is fully insured, you can sue only the insurer. However, sometimes it may be confusing because a self-funded plan, with an insurer acting as a third-party administrator, may create the appearance of a fully insured plan, when in actuality it is not.
To avoid problems, sue both the insurer and the Plan.
ERISA law is complicated. At Law Med, we are ERISA knowledgeable and experienced.