Opinion ID: 891657
Heading Depth: 5
Heading Rank: 1

Heading: The Plan's right of action.

Text: {51} Guardian is bound by the terms of its Policy, which obligate it to pay benefits when disability is determined. Under the Policy, Guardian must pay benefits upon its own determination of the beneficiary's eligibility. The Policy also incorporates by reference all rights afforded beneficiaries under ERISA, which include administrative and judicial review of a denial by Guardian of a beneficiary's claim for benefits. Under ERISA, a beneficiary obtains judicial review, as Kirby has done here, by filing a claim for wrongful denial of benefits under § 1132(a)(1)(B). See Kirby-Federal, slip op. at 24 (Section 1132(a)(1)(B), coupled with state court judgment enforcement mechanisms, provide [Kirby] with adequate relief for her claim.). The result of a judicial determination of eligibility, then, is to replace Guardian's decision to deny benefits, thereby triggering Guardian's obligation to pay benefits in accordance with the Policy. {52} We have reviewed the Policy, and it leaves no ambiguity as to the entity charged with making disability payments, and the circumstances triggering that obligation. Kirby properly sued the Plan for wrongful denial of benefits under § 1132(a)(1)(B), and the result of that litigation was a valid default judgment in Kirby's favor. The time is long past to set aside the default judgment. Guardian correctly points out that this judgment was entered against the Plan, not Guardian. But the Policy imposes an obligation upon Guardian alone to make disability payments when the insurer or a court determines that a beneficiary is eligible under the terms of the Policy. That obligation gives rise to a legal right in the Plan to compel Guardian to make disability payments improperly denied. It is that right of action of the Plan against Guardian that Kirby is entitled to garnish. {53} While Guardian's assets are not assets of the Plan, Guardian's legal obligation to pay benefits under the Policy is an asset of the Plan; indeed it is the only asset of the Plan. See Trustees of Laborers' Local No. 72 Pension Fund v. Nationwide Life Ins. Co., 783 F.Supp. 899, 910 (D.N.J.1992) (It is well established that an insurance contract issued to a plan is itself an asset of the plan, even if the assets invested with the insurance company are not.). That legal obligation, like all legal obligations, includes consequences for its violation. The consequence of Guardian's noncompliance with the terms of the Policy is that the Plan has a valid right of action against Guardian for the liability the Plan has incurred as a result.