Legal Alert: Ninth Circuit Holds that Third Party Insurers may be Sued Under ERISA

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Specifically overruling the holdings of four prior decisions, a full panel of the Ninth Circuit has held that ERISA permits the beneficiaries of an employee benefits plan to sue parties other than the plan administrator to recover benefits due under the plan. See Cyr v. Reliance Standard Life Insurance Company (9th Cir. June 22, 2011).

Cyr's employer, Channel Technologies Inc. (CTI) provided employees with long-term disability benefits under a program insured by Reliance Standard Life Insurance Company. Although Reliance effectively controlled the decision of whether to honor or deny a claim under the program, it was not identified as the plan administrator.

Cyr was discharged in October 2000 and immediately filed a claim for long-term disability benefits based on a back condition. Reliance approved the payment of benefits based on Cyr's salary of $85,000 and subsequently paid those benefits.

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