Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_08-cv-00074/USCOURTS-caed-1_08-cv-00074-3/pdf.json

Parties Involved:
Cislyn Blackwood
Plaintiff
Community Hospitals of Central California
Defendant
Community Medical Centers Employee Benefit Plan
Defendant
Sun Life Assurance Company
Defendant
Sun Life Financial
Defendant

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

CISLYN BLACKWOOD, )

 )

Plaintiff, )

 )

v. )

 )

SUN LIFE ASSURANCE COMPANY OF ) 

CANADA, )

 )

Defendant. )

____________________________________ )

CV F 08-0074 AWI GSA

ORDER TO SHOW CAUSE

WHY ACTION SHOULD NOT

BE DISMISSED AND ORDER

DENYING MOTION TO

AUGMENT RECORD

WITHOUT PREJUDICE

Doc. # 29

This is an action pursuant to the federal Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. § 1001 et seq. In this action, plaintiff Cislyn Blackwood

(“Plaintiff”) seeks to recover benefits she contends were wrongfully denied by defendant Sun

Life Assurance Company of Canada (“Sun Life”). In the instant motion, Plaintiff seeks to

augment the administrative record with medical records dating from the inception of her

illness and with declarations of treating physicians and of personnel associated with her

former employer. 

PROCEDURAL HISTORY

The complaint was first filed on January 14, 2008. Defendant Sun Life filed an

answer on March 10, 2008. On April 14, 2008, Plaintiff filed a notice of dismissal with

prejudice of defendants Community Hospitals of Central California dba Community Medical

Centers Employee Benefit Plan, and Sun Life Financial. On April 7, 2008, the court issued

an order pointing out that Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure permits

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voluntary dismissal of any defendant parties of a multi-defendant case only upon stipulation

by all parties who have made an appearance in the case. The court noted that defendant Sun

Life had made an appearance by filing an answer and had not stipulated to the dismissal of

the other two defendants. Defendant Sun Life filed its stipulation for dismissal with

prejudice of Community Hospitals of Central California dba Community Medical Centers

Employee Benefit Plan, and Sun Life Financial two days later; on April 9, 2008. Pursuant to

Rule 41(a)(1), the dismissal with prejudice of Sun Life Financial and Community Hospitals

of Central California dba Community Medical Centers Employee Benefit Plan was effective

as of the date of filing of the stipulation. See Hamilton v. Shearson-Lehman American

Express, 813 F.2d 1532, 1534 (9th Cir. 1987) (dismissal is effective on filing and no court

order is required). 

On April 28, 2008, Plaintiff filed a stipulation and proposed order to permit filing of a

First Amended Complaint. The stipulation was signed by attorneys for Plaintiff and for

defendant Sun Life. The First Amended Complaint (“FAC”) was filed on May 14, 2008. 

Defendant Sun Life filed its answer on May 23, 2008. The instant motion to augment the

administrative record was filed by Plaintiff on July 1, 2008. Defendant Sun Life filed its

opposition on August 1, 2008, and Plaintiff filed her reply on August 8, 2008.

FACTUAL BACKGROUND

Plaintiff was formerly employed by Community Hospitals of Central California

(“Community Hospitals”) as the manager of the skilled nursing department. The FAC alleges

Community Hospitals of Central California dba Community Medical Centers Employee

Benefit Plan (hereinafter, the “Plan”) is an employee benefit plan as defined by ERISA

sponsored by Community Hospitals. The FAC also alleges that Community Hospitals is the

Plan administrator. Defendant Sun Life is apparently the Plan’s third-party insurer and

claims administrator.

 Plaintiff became a participant in Community Hospitals’ group disability insurance

program on January 1, 1999. Plaintiff paid an extra premium so as to be entitled to enhanced

disability benefits. The FAC alleges that Plaintiff was diagnosed in September 2001 as

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The term “claim administrator” as used herein refers to Sun Life Assurance and its 1

agents or employees acting in the role of claims processing and review.

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suffering from multiple myeloma, a cancer affecting the body’s antibody-producing plasma

cells. Multiple myeloma results in the production of plasma cell tumors that are usually

located in bone where they tend to cause bone and joint pain, and loss or abnormality of bone

structure. The FAC alleges Plaintiff suffered pain in all her joints and “experienced

symptoms of swelling and generalized weakness and fatigue.” FAC at ¶ 11.

Multiple Myeloma is a cancer that is treatable, but not curable. Plaintiff was

informed that patients with multiple myeloma survive for periods of time ranging from two to

five years. The FAC alleges that Plaintiff began to experience “cognitive difficulties as well

as impaired memory secondary to medications that she was required to take for the treatment

of her cancer.” FAC at ¶ 11. Plaintiff has been treated by several doctors including an

oncologist a physiatrist and an internist. Plaintiff has been receiving daily chemotherapy

since 2004. Plaintiff continued to work in her position as nurse manager until August 15,

2006, at which time she left employment and did not return. Plaintiff filed for disability

under the Plan on January 30, 2007, alleging she was disabled as of August 16, 2006. 

On July 2, 2007, the Plan claims administrator informed Plaintiff that disability 1

benefits were denied because it had been determined that Plaintiff was not physically

disabled at the time she applied for disability benefits. Disability, according to the Plan’s

terms occurs when the plan member “is unable to perform the Material and Substantial

Duties of his own Occupation.” FAC at ¶ 10. Plaintiff timely filed an administrative appeal

and filed a letter on August 7, 2007, addressing the matters raised by the Plan’s denial of

benefits. Plaintiff was informed on November 8, 2007, that her appeal had been denied and

that Plaintiff had exhausted all administrative remedies. 

LEGAL STANDARD

The ability of the court to consider information outside the administrative record

depends on the extent of the court’s discretion in reviewing the actions of the Plan

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administrator. Generally, where the court is bound to review the actions of the Plan

administrator for abuse of discretion under an arbitrary and capricious standard, the court

“‘may consider only the arguments and evidence before the administrator at the time it made

that decision.’ [Citation.]” Nance v. Sun Life Assurance Co. of Canada, 294 F.3d 1263, 1269

(10th Cir. 2002). However, where the court is to apply a de novo standard of review to the

Plan administrator’s denial of benefits, the court may, “in its discretion [. . .] allow evidence

that was not before the plan administrator. The district court should exercise its discretion,

however, only when circumstances clearly establish that additional evidence is necessary to

conduct an adequate de novo review of the benefit decision.” Mongeluzo v. Baxter Travenol

Long Term Disability Benefit Plan, 46 F.3d 938, 943-944 (9th Cir. 1995) (italics in original). 

The parties in this case have stipulated that this court is to apply de novo review to

the Plan administrator’s denial of benefits. The court may, therefore admit evidence that was

not before the Plan administrator at the time of the denial of benefits subject to the limitation

set forth in Mongeluzo.

DISCUSSION

I. Proper Party Defendant

It is this court’s understanding that Community Hospitals of Central California dba

Community Medical Centers Employee Benefit Plan is the Plan entity and that Community

Hospitals is the Plan administrator and that Sun Life Assurance is the third-party insurer and

claims administrator. It is also this court’s understanding that Community Hospitals of

Central California dba Community Medical Centers Employee Benefit Plan has been

dismissed and that Community Hospitals of Central California in its role as Plan

administrator is not now, and never has been, a party to this case. Subject to that

understanding, the court must conclude that this action cannot proceed because the proper

party defendant is not before the court.

ERISA permits suits to recover benefits against the Plan as an entity. Gelardi v.

Pertec Computer Corp., 761 F.2d 1323, 1324-25 (9th Cir. 1985). In addition, plan

administrators can also be sued under ERISA. See, e.g., Everhart v. Allmerica Fin. Life Ins.

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Co., 275 F.3d 751, 754 n. 6 (9th Cir.2001) (acknowledging in dicta that this circuit and others

now recognize suits brought under 29 U.S.C. § 1132(a)(1)(B) against plan administrators,

and stating that the third party insurer defendant may well have been a proper party defendant

had it been acting as the plan administrator); Taft v. Equitable Life Assurance Soc'y, 9 F.3d

1469, 1471 (9th Cir.1993) ("the beneficiary of an ERISA plan may bring a civil action against

a plan administrator" to recover benefits). 

While a beneficiary may sue the plan's insurer for a breach of fiduciary duty under 29

U.S.C. §§ 1132(a)(2) and (a)(3), suit against a third party insurer is not permitted for

wrongful denial of benefits pursuant to § 1132(a)(1)(B) unless the insurer is functioning as

the plan administrator. Everhart v. Allmerica Fin. Life Ins. Co., 275 F.3d 751, 754-56 (9th

Cir.2001). While district courts in this state have applied the “defacto administrator”

exception to find third-party insurers proper party defendants in ERISA suits pursuant to

section 1132(a)(1)(B), see, e.g., Cyr v. Reliance Standard Life Ins. Co., 525 F.Supp.2d 1165,

1172-1173 (C.D. Cal. 2007), courts require a substantial showing that any party other than

the Plan administrator named by the Plan actually controls the Plan. See Garren v. John

Hancock Mutual Life Insurance Co., 114 F.3d 186, 187 (11th Cir.1997) (“[t]he proper party

defendant in an action concerning ERISA benefits is the party that controls administration of

the plan”).

The FAC indicates Sun Life Financial is being sued pursuant to § 1132(a)(1)(B) and

not for breach of fiduciary duty. The court may therefore only find that Sun Life is a proper

party defendant if facts are alleged that support the proposition that Sun Life functioned as

the Plan administrator. Facts to support such an allegation are lacking. The court has no

information before it that would tend to negate Plaintiffs allegation in the FAC that

Community Hospitals of Central California dba Community Medical Centers Employee

Benefit Plan is the Plan entity and that Community Hospitals is the Plan administrator. Thus,

although Sun Life may have administered Plaintiff’s claim and may have notified Plaintiff of

the denial of disability benefits, the court is without any basis at this point to find that Sun

Life was actually in control of the administration of the Plan and is therefore the proper party

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defendant. 

If the prior stipulated dismissal of Community Hospitals of Central California dba

Community Medical Centers Employee Benefit Plan was the product of mistake or

inadvertence, the court will postpone dismissal of the action to permit the parties to stipulate

to vacating their prior stipulation to dismiss. The court’s order will be in the form of an order

to show cause. In the alternative, the parties may submit information that would allow the

court to correct its understanding of the proper party defendant in this case. The pending

motion to augment the administrative record will be denied without prejudice as moot.

THEREFORE, for the reasons discussed above, it is hereby ORDERED that Plaintiff

shall SHOW CAUSE why this action should not be dismissed for lack of a proper party

defendant. Plaintiff’s Motion to Augment the Administrative Record is hereby DENIED

without prejudice as moot. Plaintiff shall file and serve a response to this order to show

cause not later than thirty (30) days from the date of service of this order. If Plaintiff’s

response to this order to show cause includes, or is based upon, a stipulation by both parties,

no response to Plaintiff’s response need be filed. If Sun Life opposes Plaintiff’ s response to

this order to show cause, such response shall be filed and served not less than twenty-one

(21) days from the date Plaintiff’s response is filed.

IT IS SO ORDERED.

Dated: September 12, 2008 /s/ Anthony W. Ishii 

0m8i78 CHIEF UNITED STATES DISTRICT JUDGE

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