Application of Law in an ERISA Case

Posted by Matthew Garretson

Question:
I am in federal court in Nevada fighting with a Plan (document) out of New York over reimbursement from a tort recovery. My client incurred his injuries here and benefits were paid here. What circuit’s law would apply first to the judge’s determination re: the Plan’s right to reimbursement? The Plan language itself does not address the issue.

-Nevada Attorney

Answer:
I would make the argument that your venue in Nevada is proper under ERISA and that 9th Circuit precedent should be applied. ERISA allows for venue in any jurisdiction where the plan is administered, where the breach occurred, or where a defendant may be found. See 29 USC 1132(e)(2). There isn’t much consensus among the courts on this point, but an early ERISA decision from the 9th Circuit held that this may be the location where the participant resides because 1) the Plan and its parent company can be “found” there, 2) maintenance of a plan there satisfies the minimum contacts test, and 3) forcing the beneficiary to pursue an action across the country would cause “peculiar hardship.” Varsic v. U.S. Dist. Court for Central Dist. of California, 607 F.2d 245 (9th Cir. 1979). (However, take note that in Varsic, the beneficiary was the plaintiff suing the Plan. If the Plan files suit, it may choose to do where it is administered under ERISA. Your client would then likely have to seek to transfer venue based on hardship.)

Once venue is secure, I would then argue that because the plan document is silent on the matter, the law of the proper venue should be applied. I recently spoke about this issue with Mark Taylor, our firm’s lead on ERISA / Private health liens, and he wasn’t familiar with any solid authority to the contrary. However, be wary of an attempt by the plan to argue that the law of its home jurisdiction should be applied to promote uniformity in plan interpretation – a stated policy of ERISA’s original enactment.