Thursday, June 23, 2011

Ninth Circuit Rules Unanimously For My Client Laura Cyr

Cyr v. RSL, 642 F.3d. 1202 (9th Cir. June 22, 2011)(en banc)

Laura Cyr, for whom I am co-counsel, sued her former employer's ERISA disability plan insurer after the insurer reneged on its promise to implement an upward correction of her disability benefit following the settlement of her wage discrimination lawsuit against the employer. Mrs. Cyr alleged claims for benefits under 29 U.S.C. § 1132(a)(1)(B), estoppel, and breach of fiduciary duty. The insurer, Reliance Standard Life Insurance ("RSL") initially prevailed on summary adjudication as to the (a)(1)(B) claim only, on the basis that the Ninth Circuit's holdings in Ford v. MCI and Everhart v. Allmerica categorically insulated ERISA plan insurers from civil liability to participants for payment of benefits.

In a decision authored by Judge Clifton, a unanimous 11-judge en banc panel of the Ninth Circuit explicitly overturned its prior decisions in Ford v. MCI, Everhart v. Allmerica, Spain v. Aetna, and Gelardi v. Pertec -- cases dating back to 1985 that RSL and other ERISA plan insurers had intermittently invoked in order to avoid liability for ERISA benefits on technical procedural grounds. Citing the Supreme Court's decision in Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000), the Ninth Circuit held that the remedial provisions contained in ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), imposes no categorical limitations upon the universe of appropriate defendants. As such, an insurance company that makes benefit determinations and pays the benefits, such as Appellant RSL, is an entirely appropriate defendant in a suit for benefits under that section of ERISA.

This result of the case will likely prove beneficial for thousands of ERISA plan participants nationwide who are forced to pursue their benefit claims in court. It also benefits employers who no longer need to fear that they will be forced into litigation to defend the conduct of their insurers.

Additionally, there are at least four notable procedural features of Cyr v. RSL, all of which are rare in federal appellate practice: first, the Ninth Circuit heard the case en banc in the first instance -- this was a hearing en banc, not a rehearing en banc; second, an 11-judge en banc panel of the Ninth Circuit issued a unanimous opinion; third, the Ninth Circuit explicitly overturned its own historical precedent; and finally, the United States Secretary of Labor filed an amicus brief in support of Mrs. Cyr's petition to have the matter heard en banc, and appeared and argued at the en banc oral argument. These events speak to the court's recognition of the importance of the issue that it resolved.

Here is a link to the published decision:

If you find yourself struggling with your ERISA plan's administrator or insurer over your benefits (pension, disability, health, or otherwise), let us see if we can help.