Opinion ID: 72773
Heading Depth: 2
Heading Rank: 2

Heading: Engelhardt's Standing To Sue Under ERISA As A Plan Beneficiary

Text: 24 The district court erred in finding that Engelhardt was not a beneficiary under the disability insurance plan and thus did not have standing to sue under ERISA. ERISA's civil enforcement section permits two categories of individuals to sue for benefits under an ERISA plan-plan beneficiaries and plan participants. See 29 U.S.C. § 1132(a). A beneficiary is a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder. 29 U.S.C. § 1002(8). 25 It is undisputed that Paul Revere's group policy was an ERISA plan, that the policy provided benefits to eligible employees of participating employers, that Montgomery Orthopaedic was a participating employer, and that Engelhardt was an eligible employee designated to receive benefits under the policy. Further, Engelhardt's claim for benefits under the policy confirms his status as a plan beneficiary. Based on these facts, Engelhardt falls within ERISA's definition of beneficiary. 26 Notwithstanding the plain language of the statute, Engelhardt claims that he cannot be an ERISA beneficiary because he is a shareholder of the professional corporation and thus an employer. As support for this contention, he relies on ERISA's anti-inurement provision, which states that the assets of a plan shall never inure to the benefit of any employer. 29 U.S.C. § 1103(c)(1). Engelhardt argues that allowing a shareholder to recover ERISA benefits would violate this provision. 27 Engelhardt's status as a shareholder does not preclude him from being a beneficiary under the ERISA plan. See Prudential Ins. Co. of America v. Doe, 76 F.3d 206, 209 (8th Cir.1996) (controlling shareholder was a beneficiary under ERISA); Robinson v. Linomaz, 58 F.3d 365, 370 (8th Cir.1995) (sole shareholders of corporation were beneficiaries of ERISA plan); Peterson v. American Life & Health Ins. Co., 48 F.3d 404, 408 (9th Cir.1995) (partner in a business concern had standing to sue under ERISA as a beneficiary). ERISA's anti-inurement provision addresses plan assets-i.e., assets accumulating in trust and pension funds--and is designed to guard against  'such abuses as self-dealing, imprudent investing, and misappropriation of plan funds'  by plan administrators and employers. Prudential Ins. Co. of America, 76 F.3d at 209 (quoting Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 15, 107 S.Ct. 2211, 2219, 96 L.Ed.2d 1 (1987)). Engelhardt's recovery of benefits would not be paid out of pension or other funds entrusted to Montgomery Orthopaedic by its employees; rather, his recovery would come from the general funds of the insurer. Such funds are not plan assets in this case. Therefore, no danger of self-dealing or misappropriation arises because Engelhardt's status as a shareholder does not put him in a position to exercise control over Paul Revere's funds. 28 Engelhardt's anti-inurement argument provides no basis or reason to depart from ERISA's straightforward and clear statutory definition of beneficiary. We thus find that Engelhardt is a beneficiary within the meaning of § 1002(8). 5