                             No. 95-2064
                            _____________



The Prudential Insurance           *
Company of America,                *
                                   *
               Appellant,          *   Appeal from the United
                                   *   States District Court for
     v.                            *   the Eastern District of
                                   *   Missouri.
John Doe, individually and as      *
parent and guardian ad litem       *
for a minor; Jane Doe, a minor,    *
                                   *
               Appellees.          *


                           ________________

                      Submitted:    November 15, 1995

                            Filed: February 7, 1996
                           ________________


Before RICHARD S. ARNOLD, Chief Judge, BRIGHT and FAGG, Circuit
     Judges.

                           ________________


BRIGHT, Circuit Judge.



     The Prudential Insurance Company of America (Prudential) filed
this declaratory judgment action seeking an interpretation of
certain provisions of an "employee benefit plan" under the
applicable provisions of the Employee Retirement Income Security
Act (ERISA), 29 U.S.C. §§ 1001-1461.          The district court1
determined that Doe was not a "participant" or a "beneficiary", as
those terms are defined by ERISA, and thus did not have standing to


     1
      By consent of the parties, the matter was decided by a
United States Magistrate Judge. See 28 U.S.C. § 636(c)(3).
sue under the statute. The district court dismissed the action,
and Prudential appealed. We hold that Doe is a "beneficiary", and
remand to the district court for further proceedings.

I. BACKGROUND


     John Doe is an attorney and the controlling shareholder in the
law firm of Doe & Roe, P.C.2 Doe & Roe is an Illinois professional
corporation with approximately twenty individuals on its payroll.
John Doe and John Roe serve as the exclusive managers of the firm.
The firm has a group insurance policy with Prudential which
provides medical benefits to its employees and their eligible
dependents. Doe & Roe, P.C. is listed on the insurance contract as
the contract holder.


     When Doe's daughter Jane received inpatient hospitalization
for mental disorders, Prudential limited its payments to the first
thirty days of hospitalization.     Doe claimed that this was an
improper limitation and sought review of the denial of further
payment. The Prudential's Southwestern Group Operations Regional
Appeal Committee upheld the original denial of the claim. Upon
this exhaustion of administrative remedies, Prudential immediately
sought a declaratory judgment, pursuant to ERISA, that the decision
of the review panel was proper.


     The district court dismissed the action.        Although the
district court indicated that an employee benefit plan, as defined
by ERISA, existed in this case, it concluded that Doe did not have
standing to sue. To have standing to sue under ERISA, a party must
be either a "participant", a "beneficiary" or a "fiduciary". The
district court determined that Doe was an "employer" and thus
neither he nor his daughter fit into any of these categories.
Presumably, the district court concluded that although the policy

     2
      These names are pseudonyms.

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was an ERISA plan as to the firm's employees, it constituted an
insurance contract governed by state law as regards Doe. Because
the court concluded that Doe could not have filed suit under ERISA,
it dismissed Prudential's declaratory judgment action for lack of
subject matter jurisdiction.

II. DISCUSSION


     ERISA applies to all employee benefit plans established or
maintained by an employer engaged in commerce or any industry or
activity affecting commerce. 29 U.S.C. § 1003(a)(1). An employee
benefit plan is defined as "an employee welfare benefit plan or an
employee pension benefit plan or a plan which is both . . . ." 29
U.S.C. § 1002(3). ERISA describes an "employee welfare benefit
plan" as


     any plan, fund, or program . . . established or main-
     tained by an employer or by an employee organization, or
     by both, to the extent that such plan, fund, or program
     was established or is maintained for the purpose of
     providing for its participants or their beneficiaries,
     through the purchase of insurance or otherwise, (A)
     medical, surgical, or hospital care or benefits, or
     benefits in the event of sickness, accident, disability,
     death or unemployment . . . .


29 U.S.C. § 1002(1). The parties do not dispute that an "employee
welfare benefit plan" exists.    Nonetheless, the district court
determined that the plan, as regards Doe, is not covered by ERISA.


     A private individual claiming benefits due under a benefit
plan subject to ERISA must be either a "participant" or a
"beneficiary." 29 U.S.C. § 1132(a). ERISA defines "participant"
as:
     any employee or former employee of an employer . . . who
     is or may become eligible to receive a benefit of any
     type from an employee benefit plan which covers employees
     of such employer or members of such organization, or


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     whose beneficiaries may be eligible to receive any such
     benefit.3

29 U.S.C. § 1002(7).    ERISA defines "beneficiary" as: 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).


     Based largely on Doe's status as the controlling shareholder
of the corporation, the district court determined that Doe is an
"employer"4 and not an "employee", and as such he cannot be a
"participant" or a "beneficiary" of an ERISA plan. The district
court concluded that since Doe could not have brought an ERISA
claim, Prudential is without standing to bring this declaratory
judgment action.


     When the district court reached this conclusion, it did not
have the benefit of this court's recent opinion in Robinson v.
Linomaz, 58 F.3d 365 (8th Cir. 1995).       See also, Peterson v.
American Life & Health Ins. Co., 48 F.3d 404 (9th Cir.), cert.
denied, 116 S. Ct. 377 (1995). In Robinson, this court determined
that the sole shareholders of a corporation were "beneficiaries" of
an ERISA plan because they were designated to receive benefits by
the terms of the employee benefit plan. Id. at 369-70.     Thus, as
beneficiaries, the sole shareholders had standing to maintain suit


     3
      ERISA defines an "employee" as "any individual employed by
an employer." 29 U.S.C. § 1002(6). The Supreme Court has
recently stated that this definition of "employee" is "completely
circular and explains nothing." See Nationwide Mut. Ins. Co. v.
Darden, 503 U.S. 318, 323 (1992). The Court therefore adopted a
common law agency test for determining who qualifies as an
employee under ERISA. Id.
     4
      ERISA defines "employer" as "any person acting directly as
an employer, or indirectly in the interest of an employer, in
relation to an employee benefit plan; and includes a group or
association of employers acting for an employer in such
capacity." 29 U.S.C. § 1002(5).

                               -4-
under ERISA. The court declined to rule on the employer/employee
distinction, finding "beneficiary" status sufficient to bring the
action under ERISA. Id. at 369.

     John Doe is enrolled on the group insurance policy issued by
Prudential.      The policy apparently designates Ms. Doe, his
daughter, a beneficiary of the plan as a "qualified dependent."
Since both John and his daughter are designated to receive benefits
under the terms of the "employee benefit policy", they are
"beneficiaries" within the meaning of ERISA and have standing to
sue under its provisions.


     In defense of the district court's judgment, Doe argues that
this court's decision in Robinson failed to take into account
ERISA's "anti-inurement" provision.      29   U.S.C.   §   1103(c)(1).
Section 1103(c)(1) provides,


          Except as provided in paragraph (2), (3), or (4) or
     subsection (d) of this section, or under sections 1342
     and 1344 of this title (relating to termination of
     insured plans), or under section 420 of title 26 (as in
     effect on January 1, 1995), the assets of a plan shall
     never inure to the benefit of any employer and shall be
     held for the exclusive purposes of providing benefits to
     participants in the plan and their beneficiaries and
     defraying reasonable expenses of administering the plan.


Id. Doe argues that this provision evidences ERISA's statutory
purpose of excluding the controlling owners of a business from
falling within the umbrella of ERISA protections and remedies.


     Other circuits have cited the anti-inurement clause in
determining that an "employer" did not have standing to sue for
health insurance benefits under ERISA.  Fugarino v. Hartford Life
and Acc. Ins. Co., 969 F.2d 178, 185-86 (6th Cir. 1992), cert.
denied, 113 S. Ct. 1401 (1993); Giardono v. Jones, 867 F.2d 409,
411-12 (7th Cir. 1989) (stating that when employer files suit in


                               -5-
his own interest, he risks running afoul of the requirement that
assets of plan not inure to benefit of employer).        Fugarino
concludes that, as regards an "employer," state law and not ERISA
governs the health insurance policy. 969 F.2d at 186.


     Although we would likely find that Doe is an "employee" and
thus a "participant" under the framework of ERISA, see Madonia v.
Blue Cross & Blue Shield of Virginia, 11 F.3d 444, 448-50 (4th Cir.
1993), cert. denied, 114 S. Ct. 1401 (1994), even assuming that Doe
should be characterized as an "employer," we conclude that the
anti-inurement provision constitutes an insufficient basis for
departing from this court's holding in Robinson.


     First, Robinson's holding corresponds to the plain language of
the statute. The statute defines "beneficiary" to include those
designated "by the terms of an employee benefit plan" to receive
benefits.   29 U.S.C. § 1002(8).     Second, the "anti-inurement"
provision does not seem directly applicable to the collection of
health insurance benefits. The provision states that no asset of
the plan may inure to the benefit of the employer. 29 U.S.C. §
1103(c)(1). The provision appears intended to restrict the use of
assets accumulating in trust and pension funds. Section 1103 is
headed "Establishment of trust," and the exceptions to the anti-
inurement rule, listed within section 1103(c)(1) itself, deal with
the return of contributions and the distribution of residual
assets.


     Finally, the legislative history involving the section
indicates congressional concern over the wrongful diversion of
trust assets and the administrative integrity of benefit plans.
Section 1103(c)(1) and 29 U.S.C. § 1104(a) deal with fiduciary
duties for plan administrators and employers. Boyle v. Anderson,
68 F.3d 1093, 1102 (8th Cir. 1995).      Congress included these
provisions in order to make the law of trusts applicable to the
plans and to eliminate "`such abuses as self-dealing, imprudent

                               -6-
investing, and misappropriation of plan funds.'" Id. (quoting Fort
Halifax Packing Co. v. Coyne, 482 U.S. 1, 15 (1987)).


     The Boyle court stated that the legislative history made it
clear that the legislation imposed strict fiduciary obligations on
those having discretion or responsibility for the management or
disposition of pension or welfare plan assets. Id. In summarizing
the ERISA conference report, Senator Williams stated that "`the
objectives of these provisions are to make applicable the law of
trusts; to prohibit exculpatory clauses that have often been used
in this field; to establish uniform fiduciary standards to prevent
transactions which dissipate or endanger plan assets; and to
provide effective remedies for breach of trust.'" Id. (quoting 120
Cong. Rec. 29,932 (1974)). See also, H.R. Rep. No. 870, 93d Cong.,
2d Sess., reprinted in 1974 U.S.C.C.A.N. 4670, 4681; S. Rep. No.
383, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 4890,
4902-03. None of these concerns would force the exclusion of a
controlling shareholder from the terms of an ERISA group health
policy.


     The Robinson court indicated a policy rationale which
supported allowing the sole shareholders to fall within an ERISA
policy. The court stated "`[t]o hold otherwise would create the
anomaly of requiring some insureds to pursue benefit claims under
state law while requiring others covered by the identical policy to
proceed under ERISA.'" Robinson, 58 F.3d at 369 (quoting Peterson,
48 F.3d at 409). In Madonia, the Fourth Circuit reached a similar
conclusion: "once a plan has been established, it would be
anomalous to have those persons benefitting from it governed by two
disparate sets of legal obligations." 11 F.3d at 450.


     Doe also argues that ERISA does not permit an insurance
company to bring a declaratory judgment action. Doe may be correct
that nothing in ERISA specifically grants a fiduciary the authority
to file a declaratory judgment action to interpret a policy. See

                               -7-
Transamerica Occidental Life Ins. Co. v. DiGregorio, 811 F.2d 1249,
1251-53 (9th Cir. 1987); Gulf Life Ins. Co. v. Arnold, 809 F.2d
1520, 1524 (11th Cir. 1987).         Nonetheless, the Declaratory
Judgment Act, 28 U.S.C. § 2201, provides jurisdiction.          See
Transamerica, 811 F.2d at 1253; Reynolds v. Stahr, 758 F. Supp.
1276, 1281 (W.D. Wis. 1991). As determined above, Doe could have
asserted a claim in federal court.


     Finally, Doe contends that the policy contains a "forum
selection clause" which requires any dispute to be litigated in the
State of Illinois. Prudential argues that the clause is a choice
of law provision. The district court did not address this issue.
Because we are remanding the case, the trial court may address the
clause on remand as a matter of jurisdiction, venue or choice of
law as may be appropriate.

III.    CONCLUSION


      We conclude that Doe is a "beneficiary" within the meaning of
29 U.S.C. § 1002(8), and that the district court incorrectly
dismissed the suit. We remand the case for further proceedings.


       A true copy.


            Attest:


                 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




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