It used to be that before an employee or former employee could get into federal court with a benefits-denial case, he had to show that he was a “plan participant.” But following a recent 9th Circuit Court of Appeals decision, merely claiming to have been a plan participant is enough. Proving he was a participant is left for later.
Recent case: Jack Leeson worked for Transamerica, which provided disability insurance benefits to its employees. Leeson developed headaches after he was injured in an auto accident. Three years later, he requested a leave of absence, and applied for and received benefits. However, a plan administrator cut off benefits after concluding Leeson could work.
He sued, alleging his benefits were illegally terminated.
Transamerica argued Leeson couldn’t sue because he hadn’t shown that at the time he applied for benefits that he was a plan participant. If he wasn’t a participant, he didn’t have standing to sue in federal court.
The 9th Circuit said all Leeson had to do was claim he was a participant, which he did by asserting he was an active employee at the time he applied for benefits. He could shore up the argument later in the proceedings. (Leeson v. Transamerica, No. 10-35380, 9th Cir., 2012)
Final note: Employee-benefits law is complicated. Always get expert legal help before denying benefits or cutting them off. Most companies outsource plan administration for this very reason.
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