May 24, 2019

Colorado Court of Appeals: Default Judgment Must Be Set Aside When Defendants Not Served

The Colorado Court of Appeals issued its opinion in Burton v. Colorado Access on Thursday, August 13, 2015.

Employee Retirement Income Security Act of 1974—Process Service.

Burton was formerly employed by a company known as Colorado Access. Colorado Access sponsored the Colorado Access Long Term Disability Plan (plan), which was issued and administered by Unum Life Insurance Company of America (Unum). Burton sought benefits from Unum under the plan, and Unum paid her benefits for approximately two years before terminating them. Burton filed a complaint against the plan, claiming entitlement to additional benefits under the Employee Retirement Income Security Act of 1974 (ERISA). Instead of serving the complaint on the plan, she served the complaint on the Secretary of the U.S. Department of Labor. Burton sought a default judgment against the plan, which the district court entered but later set aside. The district court also entered summary judgment in favor of the plan.

On appeal, Burton argued that the trial court erred in finding that she did not properly serve the plan administrator when she served the Secretary of Labor. A party intending to sue a plan must serve the plan administrator where it is designated as the agent for service of process. It is only where the summary plan description designates neither the plan administrator nor some other person as the agent for service of process that service on the Secretary of Labor is allowed. Given that Colorado Access was the plan administrator, and the plan designated Colorado Access as its agent for service of process, Burton could not properly serve process on the plan by serving the Secretary of Labor under § 1132(d)(1) of ERISA. Therefore, the district court did not err in determining that Burton failed to properly serve the plan.

Burton also argued that the district court erred in entering summary judgment in favor of the plan. The only proper defendants in an ERISA claim to recover plan benefits are those entities that make eligibility or payment decisions or are obligated to pay benefits. In this case, Unum (the insurer) made all decisions regarding eligibility for and payment of benefits, and made all such decisions with respect to Burton. Further, only Unum was obligated to pay any benefits owed to Burton under the plan. Therefore, the plan was not a proper defendant as to Burton’s ERISA benefits claim, and the trial court properly entered summary judgment in the plan’s favor.

Summary and full case available here, courtesy of The Colorado Lawyer.

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