Seabrooke v . Arch Comm. CV-01-349-JD 06/20/03
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
Jennifer L . Seabrooke
v. Civil N o . 01-349-JD
Opinion N o . 2003 DNH 107
Arch Communications Group, Inc.
and Liberty Mutual Insurance Company
O R D E R
The plaintiff, Jennifer L . Seabrooke, brought suit in state
court seeking an award of short-term disability benefits from her
former employer’s benefit plan under the Employee Retirement
Income Security Act (“ERISA”). The defendants removed the action
to this court. Seabrooke’s claims against her former employer,
Arch Communications Group, Inc., have been dismissed due to
Arch’s bankruptcy. Liberty Mutual Insurance Company moves for
summary judgment on the ground that it is merely a third-party
service provider, and, as such, Seabrooke cannot recover benefits
from i t .
Standard of Review
Summary judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(c). The party seeking summary judgment must first demonstrate
the absence of a genuine issue of material fact in the record.
See Celotex Corp. v . Catrett, 477 U.S. 3 1 7 , 323 (1986). A party
opposing a properly supported motion for summary judgment must
present competent evidence of record that shows a genuine issue
for trial. See Anderson v . Liberty Lobby, Inc.,
477 U.S. 2 4 2 ,
256 (1986). All reasonable inferences and all credibility issues
are resolved in favor of the nonmoving party. See id. at 255.
Background
Seabrooke seeks to recover short-term disability benefits
under an employee benefit plan established by her former
employer, Arch Communications Group, Inc., based on an alleged
period of disability during her pregnancy. Arch administers the
Group Benefits Plan, which includes short-term disability
benefits, and the Plan is self-insured. Liberty provides certain
administrative services for the Plan but does not insure the Plan
and is not designated as Plan Administrator.
Liberty’s services include accepting and reviewing all
claims for benefits and making recommendations to Arch on benefit
claims. In Seabrooke’s case, Liberty reviewed her claim for
benefits and denied the claim. The decision to deny benefits was
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communicated to Seabrooke by both Liberty and the Arch human
resources director. At Seabrooke’s request, Arch had the denial
reviewed by Liberty, and the claim was denied again.
Discussion
Seabrooke contends that Liberty is liable to pay her for the
amount of benefits she believes she was entitled to receive under
the Plan.1 Liberty contends that it is not liable for a claim
for benefits because it served only as a third-party processor of
claims for Arch. Seabrooke responds that Liberty functioned as a
plan administrator and is therefore liable.
Another judge in this district has noted that the circuits
are divided as to whether an ERISA claim for benefits under §
1132(a)(1)(B) may be brought only against the plan or may also be
brought against the plan administrator. See Cook v . Liberty Life
Assurance Co., 2002 DNH 7 5 ,
2002 WL 482572 at * 2 , n.3 (D.N.H.
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Although Seabrooke’s claim is not entirely clear as alleged
in her state writ, she states in her objection to summary
judgment that she “seeks to recover short-term disability
benefits from Liberty.” P l . Mem. at 1 . As such, Seabrooke
alleges a claim for benefits pursuant to 29 U.S.C. §
1132(a)(1)(B), rather than a breach of fiduciary duty claim
pursuant to
29 U.S.C. § 1132(a)(2). See, e.g., Crocco v . Xerox
Corp.,
137 F.3d 105, 107 n.2 (2d Cir. 1998); Wolf v . Reliance
Standard Life Ins. Co.,
71 F.3d 4 4 4 , 449 n.8 (1st Cir. 1995);
Kodes v . Warren Corp.,
24 F. Supp. 2d 9 3 , 100-101 (D. Mass.
1998).
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Mar. 2 9 , 2002). In Cook, the court concluded that the First
Circuit had not clearly decided the issue and indicated that a
plan administrator with authority to pay benefits would be liable
under § 1132(a)(1)(B). Id. That analysis is persuasive. In
addition, however, the First Circuit has stated that a plan
administrator may be liable under § 1132(a)(1)(B) under certain
circumstances.
In Terry v . Bayer Corp., 145 F.3d 28 (1st Cir. 1998), the
court considered the plaintiff’s benefits claim against his
former employer and the plan. In that case, the plan
administrator, Bayer Corporation, had retained Northwestern
National Life Insurance Company to process its benefits claims.
Id. at 3 1 . The district court granted summary judgment on the
plaintiff’s ERISA claim on alternative grounds that only the
plan, not the plan administrator, was the proper party and that
the claimed benefits had been properly denied.
Id. at 34 n.5.
On appeal, the court affirmed the decision based on the benefits
decision and did not review the district court’s determination of
the proper party.
Id.
Nevertheless, in the context of deciding whether the initial
decision made by Northwestern to deny benefits or the
determination of the Bayer Benefit Committee was the decision
subject to judicial review, the court addressed the issue of
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proper parties for an ERISA benefits claim. Id. at 35-36. In
addition, the court discussed the liability of a third-party
service provider under ERISA.
Id. at 3 5 . In Law v . Ernst &
Young,
956 F.2d 3 6 4 , 372-73 (1st Cir. 1992), the court held that
an entity that acts as the plan administrator may be treated as
such for purposes of an ERISA breach of fiduciary duty claim.
With few exceptions, ERISA claims must be brought against
the employee benefit plan or plan fiduciaries.2 Terry, 145 F.3d
at 3 5 . “[W]hen the plan administrator retains discretion to
decide disputes, a third party service provider . . . is not a
fiduciary of the plan and thus is not amenable to a suit under §
1132(a)(1)(B).” Id. On the other hand, if someone other than
the named plan administrator controls the management of the plan,
that entity is functioning as the plan administrator and may be
treated as such. Law,
956 F.2d at 373. “Thus, the proper party
defendant in an action concerning ERISA benefits is the party
that controls administration of the plan.” Terry,
145 F.3d at
2
Courts have interpreted this holding to mean that plan
administrators, if they are fiduciaries, are proper parties in an
ERISA benefits claim. See, e.g., Nicholson v . Prudential Ins.
Co., 235 F. Supp. 2d 2 2 , 26 (D. M e . 2003); Kennard v . UNUM Life
Ins. Co.,
2002 WL 412067, at *1 (D. M e . March 1 4 , 2002); Lacour
v . Life Ins. Co.,
200 F. Supp. 2d 6 2 2 , 627-28 (W.D. La 2002);
Liggans v . Daughters of Charity Nat’l Health Sys., Inc.,
2000 WL
33309747, at *2 (S.D. Ind. July 6, 2000); Kodes v . Warren Corp.,
24 F. Supp. 2d 9 3 , 101 (D. Mass. 1998).
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36. When a plan administrator is named in the plan, the
plaintiff bears the burden of showing that another entity
controls the administration of the plan. See Beegan v . Assoc.
Press, 43 F. Supp. 2d 7 0 , 73 (D. M e . 1999).
In this case it is undisputed that Arch was named in the
plan as the plan administrator. Seabrooke nevertheless contends
that Liberty, as the third-party services provider, acted as the
plan administrator based on both the express terms of its
agreement with Arch and on its actions in her case. In support
of her claim, Seabrooke points to parts of the agreement between
Arch and Liberty and the communications she received from Arch
and Liberty pertaining to her claim.
Seabrooke cites Section I.A.2. of Annex B , which is part of
the Disability Risk Management Agreement between Liberty and
Arch. Section I.A pertains to claim payments and control and
provides that Liberty makes the initial decision whether to
approve or deny a submitted claim or to request additional
information. If Liberty finds that a claim is not payable, it
notifies Arch and the claimant of that finding. When Liberty
finds that a claim for benefits is payable, it makes that
recommendation to Arch and then Arch is responsible for paying
benefits under the Plan.
“In the event that [Arch] determines that Liberty has
6
misinterpreted the Plan and so informs Liberty in writing, all
claim recommendations reported after delivery of such writing
will be made according to [Arch’s] interpretation,” unless on
advice of counsel Liberty decides that Arch’s interpretation
would cause a violation of the law. Annex B at I.A.2. Under the
agreement, Arch establishes the review procedure for disputed
claims with advice on those claims from Liberty and makes the
final determination on ERISA claims.
The Short Term Disability Benefits portion of the Group
Benefits Plan provides that notice and proof of claims are to be
given to Arch and that benefits are paid by Arch. Nothing that
is cited by Seabrooke shows that Liberty has authority under the
agreement to control or administer the Plan or to pay benefits.
Seabrooke also points to section E of Part Six of the
agreement. That provision states that Liberty will have “sole
discretion” with respect to the handling and resolution of claims
or suits for which Liberty may be liable. Contrary to
Seabrooke’s interpretation, section E does not provide Liberty
with discretion in determining benefits claims under the Plan but
instead pertains to Liberty’s discretion in handling claims
brought against i t .
In addition to the language of the agreement and the Plan,
Seabrooke contends that the correspondence pertaining to her
7
claim demonstrates that Liberty actually administers the Plan.
That correspondence shows that Arch’s benefits manager notified
Seabrooke’s counsel that Seabrooke’s claim was submitted to and
reviewed by Liberty. The determination that she did not qualify
for disability benefits was communicated by Arch’s Human
Resources Director and by Liberty. Arch directed Liberty to
review the claim again, and it was again denied. Arch then
explained the decision in a letter to Seabrooke.
Despite Liberty’s authority to review and decide claims
under the Plan, Arch retained final authority over the claims.
Arch alone had the authority to pay benefits. Based on the
summary judgment record, Seabrooke has not shown a trialworthy
issue as to whether Liberty controls the administration of the
Plan. Therefore, Liberty is entitled to summary judgment on the
ground that it is not a proper party defendant in this case.
Conclusion
For the foregoing reasons, Defendant Liberty Mutual
Insurance Company’s motion for summary judgment (document n o . 18)
is granted. The plaintiff’s claim against Arch Communications
was previously dismissed (document n o . 1 3 ) .
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The clerk of court shall enter judgment accordingly and
close the case.
SO ORDERED.
Joseph A . DiClerico, J r .
United States District Judge
June 2 0 , 2003
cc: James G. Noucas Jr., Esquire
William D. Pandolph, Esquire
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