Gordon & Rees partner Ronald K. Alberts and senior counsel Jennifer Ghozland of Los Angeles, and partner Ryan T. Brown of Chicago and St. Louis, successfully argued on summary judgment that an ERISA claim for benefits could not be maintained against their client.
The lawsuit arose out of a denial of the plaintiff’s claim for long-term disability benefits under a fully insured disability benefits plan. The plaintiff received long-term disability benefits from Jan. 23, 2003, through Oct. 31, 2009, at which time the benefits were terminated due to her failure to meet certain terms of the plan. Gordon & Rees’s client served as the third-party claims administrator of the plan and issued the termination of benefits letter to the plaintiff.
In December 2011, the plaintiff filed a civil complaint against the firm’s client in the U.S. District Court for the Western District of Missouri (Central Division) alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA), as amended 29 U.S.C. § 1132(a)(f). The complaint was amended in January 2012 to name the insurer and funding source for the plan.
In June 2012, the insurer entered rehabilitation under the receivership of the Illinois Office of the Special Deputy Receiver. The Circuit Court of Cook County issued an order in the rehabilitation action, so the ERISA case against the insurer was stayed pending completion of the rehabilitation process (and eventual liquidation and transfer of responsibility for the defense of the insurer to the Missouri Insurance Guarantee Association). Notwithstanding the stay against the insurer, the court, upon the plaintiff’s motion, allowed the case against the firm’s client to continue.
After the insurer was placed into liquidation, the firm’s client elected to terminate its role as third-party administrator, effective June 11, 2013, in accordance with the terms of the plan.
In July 2013, the parties filed cross-motions for summary judgment, with Gordon & Rees arguing that its client could not be held liable under ERISA where it served only as the third-party claims administrator and not a co-insurer, reinsurer, or plan administrator. Gordon & Rees further argued that any liability that may have existed was extinguished when the relationship was severed in June 2013.
In granting summary judgment for the firm’s client, U.S. District Judge Beth Phillips cited the plan documents and prevailing 8th U.S. Circuit Court of Appeals case law in confirming the plaintiff had no standing to bring her ERISA claims under § 502(a)(1)(B) and § 502(a)(3) when the defendant no longer provides any administrative services to the plan.