2018 CO 11
Colo.2018Background
- Caroline Burton and Brenda Olivar filed ERISA § 1132(a)(1)(B) suits for long-term disability benefits but served only the U.S. Department of Labor Secretary under § 1132(d)(1) instead of the plans or their agents.
- The Labor Secretary did not forward the complaints; both plans defaulted, and petitioners obtained default judgments for benefits and fees.
- Years later each plan moved to vacate the default judgment for lack of proper service; trial courts granted relief and later granted the plans summary judgment.
- The plans submitted the insurance policies showing (1) the insurers (Unum, Standard) were the plan governing instruments, (2) insurers alone determined eligibility and paid benefits, and (3) the plans had no role in claims handling or assets to satisfy judgments.
- The court considered (1) whether "individual" in § 1132(d)(1) excludes corporations for service-of-process purposes, (2) whether void judgments for lack of service can be set aside after long delays, and (3) whether the plan or insurer is the proper defendant when the insurer alone decides and pays benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether service on the DOL Secretary under 29 U.S.C. § 1132(d)(1) is sufficient when the summary plan description names a corporation as administrator/agent | Service on the Secretary is proper because the plans designated no "individual" human being; "individual" means natural person only | "Individual" can include a corporation; § 1132(d)(1) is a substituted-service rule, so service on Secretary is proper only if no administrator or other person (including a corporation) is designated | "Individual" includes a corporation in § 1132(d)(1); service on the Secretary is proper only when no administrator or other person (including a corporation) is designated as agent for service |
| Whether a default judgment entered without proper service may be set aside after long delay under C.R.C.P. 60(b)(3) | Vacatur was untimely because plans waited years after judgments and after paying benefits | A judgment entered without personal jurisdiction is void and may be attacked at any time; the "reasonable time" limitation does not bar relief for a void judgment | A judgment void for lack of service may be set aside at any time; the trial courts properly vacated the defaults |
| Whether the named plan or the insurer is the proper defendant in an ERISA benefits action when the insurer alone determines eligibility and pays benefits | The plan is always a proper defendant under the statutory text allowing suits against plans | When an insurance-funded plan has no assets, the insurer who decides claims and is obligated to pay is the obligor and proper defendant | Where the plan's terms make the insurer solely responsible for eligibility and payment, the insurer (not the plan) is the proper defendant in a § 1132(a)(1)(B) claim |
Key Cases Cited
- Mohamad v. Palestinian Auth., 566 U.S. 449 (U.S. 2012) ("individual" may mean more than natural person where context requires)
- TRW Inc. v. Andrews, 534 U.S. 19 (U.S. 2001) (avoid rendering statutory words superfluous)
- Yates v. United States, 574 U.S. 528 (U.S. 2015) (identical language can have different meanings in different statutory contexts)
- Larson v. United Healthcare Ins. Co., 723 F.3d 905 (7th Cir. 2013) (insurer is proper defendant when insurer decides eligibility and owes benefits)
- Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (functional approach: insurer can be logical defendant where it controls claims)
- Chapman v. ChoiceCare Long Island Term Disability Plan, 288 F.3d 506 (2d Cir. 2002) (plan is a proper defendant under the statutory text)
- Goodman Assocs., LLC v. WP Mountain Props., LLC, 222 P.3d 310 (Colo. 2009) (default judgment entered without personal jurisdiction is a nullity)
- Weaver Constr. Co. v. District Court, 545 P.2d 1042 (Colo. 1976) (personal jurisdiction required for valid judgment)
- Davidson Chevrolet, Inc. v. City & County of Denver, 330 P.2d 1116 (Colo. 1958) (void judgments may be attacked at any time)