ORDER

ROSLYN SILVER, District Judge.

Pending before the Court is Defendant's Motion for Partial Summary Judgment on All Claims Relating to Long Term Disability Benefits [Doc. #19], filed March 15, 2002. Plaintiff submitted a Response [Doc. #25] on April 22, 2002, and Defendant filed a Reply on May 17, 2002 [Doc. #27]. For the following reasons, partial summary judgment will be granted for Defendant on Plaintiff's claims relating to long term disability benefits.

I. Facts

The following facts are not in dispute. At all relevant times, Plaintiff Cynthia Allocco was employed as a telephone service center representative at American Express Travel Related Services, Inc. ("AMEX"). Defendant's Statement of Facts ("SOF") ¶ 1. Plaintiff was eligible, as an employee, for benefits under AMEX's group insurance benefit program ("benefits plan"). SOF ¶ 2. Relevant parts of the plan are administered by Defendant, Metropolitan Life Insurance Company. SOF ¶ 3. The benefit plan provided life insurance and business travel accident insurance to employees at AMEX's expense. SOF T 8. The benefit plan also allowed certain employees, including Plaintiff, to enroll in a plan for long-term disability benefits ("LTD") at their own expense. SOF ¶¶ 3-6. Plaintiff paid premiums on her LTD coverage under the benefit plan. SOF ¶ 7.

In 2000 and 2001, Plaintiff and Defendant engaged in a series of disputes related to Plaintiff's alleged development of fibromyalgia and her subsequent requests for benefits. On May 9, 2000, Plaintiff submitted a claim for salary continuation benefits to AMEX. SOF ¶ 12. Defendant denied this application for benefits on June 20, 2000. SOF ¶ 13. On July 24, 2000, Plaintiff filed an administrative appeal with Defendant in accordance with the provisions of the benefit plan, and the appeal was denied on July 24, 2000. SOF ¶ 14. On about January 29, 2001, Plaintiff contacted Defendant and applied for LTD benefits due to her fibromyalgia. SOF ¶ 17. Defendant denied Plaintiff's claim for LTD benefits in a letter dated September 12, 2001. SOF ¶ 19, Exh. G to SOF. That letter informed Plaintiff that she could appeal the denial of her claim for LTD benefits within 60 days of receiving the notice of denial. SOF ¶ 20, Exh. G to SOF.

Plaintiff, however, never filed an appeal of the denial of her LTD benefits. SOF ¶ 21. On October 16, 2001, Plaintiff filed suit in state court, alleging claims for breach of contract and bad faith under state law. SOF ¶ 22, Exh. B to Notice of Removal. The state law suit was then removed to federal court on Nov. 14, 2001 (Doc. #1). Defendant contends that her failure to appeal the denial of LTD benefits is dispositive of any claim based on LTD benefits.

II. Discussion

As an initial matter, Defendant contends that Plaintiff's LTD benefit plan is covered by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001-1461 (ERISA), and that Plaintiff's state law claims for LTD benefits are preempted by ERISA. Concomitantly, Defendant contends that Plaintiff failed to exhaust her administrative appeals pursuant to ERISA, requiring that her claim for LTD benefits be dismissed.

Three issues must be resolved: first, whether the LTD plan is covered by ERISA; second, whether ERISA preempts Plaintiff's state law causes of action; and third, if her claims are governed by ERISA, whether Plaintiff has failed to exhaust her remedies under ERISA.

A. Is the plan covered by ERISA?

Whether Plaintiff's LTD benefit plan is an "employee benefit plan" is defined by ERISA. "ERISA defines an `employee benefit plan' to include, among others, `any plan, fund, or program . . . established or maintained by an employer . . . for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance . . . medical, surgical, or hospital care or benefits." Stuart v. UNUM Life Ins. Co. of America, 217 F.3d 1145, 1149 (9th Cir. 2000) (quoting Qualls ex rel. Qualls v. Blue Cross of California, Inc., 22 F.3d 839, 843 (9th Cir. 1994); 29 U.S.C. § 1002(1), (3)). Also, "[t]he existence of an ERISA plan is a question of fact, to be answered in light of all the surrounding circumstances from the point of view of a reasonable person." Stuart, 217 F.3d at 1149 (quoting Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1120 (9th Cir. 1998)).

A benefit plan can fall outside the coverage scope of ERISA if it meets the four requirements under the Department of Labor's "safe harbor" regulation, 29 C.F.R. § 2510.3-1(j). These four requirements are:

(1) No contributions are made by an employer or employee organization;

(2) Participation in the program is completely voluntary for employees or members;

(3) The sole functions of the employer of employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and

(4) The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or due checkoffs.

In this case, Plaintiff contends that her LTD benefit plan was not covered by ERISA. Plaintiff notes that she paid her own premiums on the LTD benefit plan, and participation was voluntary, which meets at least the first two prongs of the safe harbor requirement. Plaintiff's argument fails, however, for two reasons. First, the LTD benefit plan cannot be viewed in isolation from the overall benefit plan provided by AMEX, which clearly is an ERISA plan. Second, the LTD plan does not meet the requirements of the third prong of the safe harbor regulation.

First, other circuits have specifically held that particular components of an employee benefit plan cannot be "severed" for purposes of determining whether the plan meets the safe harbor requirements. In Gaylor v. John Hancock Mutual Life Ins. Co., 112 F.3d 460 (10th Cir. 1997), the Tenth Circuit considered an analogous case where the plaintiff purchased optional disability coverage without contribution from her employer. However, because the plaintiff had enrolled in an accidental death and dismemberment plan where the employer did contribute, the Court evaluated the "employee welfare benefit plan" as a whole. The Court held that, "[f]or purposes of satisfying the safe harbor provision, [the plaintiff] attempts to sever her optional disability coverage from the rest of the benefits she received through her employer's plan. `This cannot be done because the [optional] coverage was a feature of the Plan, notwithstanding the fact the cost of such coverage had to be contributed by the employee.'" Gaylor, 112 F.3d at 463 (quoting Smith v. Jefferson Pilot Life Ins. Co., 14 F.3d 562, 567 (11th Cir. 1994)). The Seventh Circuit has also recently adopted this approach. See Postma v. Paul Revere Life Ins. Co., 223 F.3d 533, 538 (7th Cir. 2000) ("For purposes of determining whether a benefit plan is subject to ERISA, its various aspects ought not be unbundled.").

Without addressing this precise situation, the Ninth Circuit has held that courts should look at an employer's benefit program as a whole to determine if the plan is covered by ERISA. In Peterson v. American Life Health Ins. Co., 48 F.3d 404 (9th Cir. 1995), the Court considered an employer plan where only one partner was the only employee covered by a particular policy. ERISA does not cover an employer plan where the only beneficiary is a partner in a partnership, but the Court evaluated the employer program, which also covered other employees under separate policies, in its entirety. The Court found the features of one component of the plan "not determinative," concluding that "the [partner's] policy was just one component of [the employer's] employee benefit program and that the program, taken as a whole, constitutes an ERISA plan." Peterson, 48 F.3d at 407. The Ninth Circuit's approach therefore is consistent with that of other circuits that evaluate the "employee benefit program . . . as a whole." Significantly, Plaintiff does not dispute that AMEX's overall benefit plan is covered by ERISA and does not meet the safe harbor requirements.

Moreover, even standing alone, Plaintiff's LTD benefit plan does not satisfy the third prong of the safe harbor requirements. The third prong narrowly limits the employer's involvement in an employee benefit plan to a few administrative functions, "without endorsing the plan." Stuart, 217 F.3d at 1149. Here, the undisputed facts show that AMEX participated in the administration of the LTD benefits to a material extent bringing the Plaintiff's plan outside the scope of the safe harbor.

First, AMEX designated the employees who were eligible to participate in the LTD Plan. Affidavit of Laura Sullivan ¶ 9 ("Sullivan Aff."), Exh. A to SOF. Designation of eligible employees may establish sufficient involvement of an employer in a plan to bring the plan under ERISA. See The Meadows, 826 F. Supp. at 1230 (designation of employees eligible for a benefit plan brings plan outside scope of safe harbor provision). Second, AMEX was responsible for filing forms with the Department of Labor required by ERISA, which is evidence of an ERISA plan. Sullivan Aff. ¶ 10; see Pacificare, Inc. v. Martin, 34 F.3d 834, 837 (9th Cir. 1994). Next, AMEX is designated as Plan Sponsor, and the Plan Administrator is designated as an Administration Committee of AMEX. Sullivan Aff. ¶ 11; "2000 Benefits Handbook," Exh. B to SOF, at MET 0592. Acting as administrator of the benefit plan tends to show that the employer endorsed the plan. See Sarraf v. Standard Ins. Co., 102 F.3d 991, 993 (9th Cir. 1996).

Finally, AMEX created a Summary Plan Description for distribution to AMEX employees which contained a section entitled "Summary of ERISA Rights." Sullivan Aff. ¶ 12. Specific reference in the plan to ERISA is additional evidence that the plan was meat to be covered by ERISA. See Stuart, 217 F.3d at 1154 ("The policy also tended to prove that Desert Hospital and UNUM intended to create an ERISA plan because the Policy specifically refers to ERISA ."), See also Thompson v. American Home Assurance Co., 95 F.3d 429, 437 (6th Cir. 1996) ("[W]here the employer provides a summary plan description that specifically refers to ERISA in laying out the employee's rights under the policy . . . the employee is entitled to presume that the employer's actions indicate involvement sufficient to bring the plan within the ERISA framework.").

Considering these features together, the Court finds that AMEX created an ERISA plan when providing LTD benefits. Plaintiff's arguments are perfunctory and unsupported by persuasive case law. Plaintiff's LTD benefit plan does not meet the requirements of the safe harbor, and is an employee benefit plan covered by ERISA.

B. Does ERISA preempt the state law claims?

ERISA's preemption clause, § 514(a), 29 U.S.C. § 1144(a), states that ERISA provisions "shall supersede . . . State laws" to the extent those laws "relate to employee benefit plans." However, the statute also provides an exception, a broadly-phrased savings clause, § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), which exempts "any law of any State which regulates insurance." See UNUM Life Ins. Co. of America v. Ward, 526 U.S. 358, 363, 119 S.Ct. 1380, 143 L.Ed.2d 462 (1999). ERISA thus broadly preempts claims relating to employee benefit plans, including bad faith claims, unless those claims fall within the ambit of the savings clause. The precise meanings of the scope of these clauses has been the subject of much interpretation by many courts. Ward, 526 U.S. at 363, 119 S.Ct. 1380.

In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), the Supreme Court held that Mississippi's common law tort of bad faith did not "regulate insurance" within the meaning of ERISA's savings clause, and therefore was preempted by ERISA. The Court analyzed the connection between the tort and insurance regulation both in terms of the "common sense" view of the savings clause language, and in terms of the three-part rubric established by the McCarron-Ferguson Act, 15 U.S.C. § 1011 et seq. Under the "common sense" view, the Court concluded that "a law must not just have an impact on the insurance industry, but must be specifically directed toward that industry." Pilot Life, 481 U.S. at 50, 107 S.Ct. 1549. However, the Court found that "the roots of [the bad faith] law are firmly planted in the general principles of Mississippi tort and contract law." Id.

The Supreme Court then turned to the three factors defining the "business of insurance" under the McCarron-Ferguson Act, that is: (1) whether the practice has the effect of transferring or spreading a policyholder's risk; (2) whether the practice is an integral part of the policy relationship between insurer and insured; and (3) whether the practice is limited to entities within the insurance industry. Pilot Life, 481 U.S. at 48-49, 107 S.Ct. 1549. The Court found that the tort of bad faith "at most meets one of the three criteria," an attenuated connection to the insuredinsurer relationship, but neither functioned to spread policyholder risk nor was limited to the insurance industry. Id. at 50-51. Therefore, Mississippi's tort of bad faith was found to be preempted by ERISA benefit plans.

The Ninth Circuit, following Pilot Life, concluded that Arizona's tort of bad faith is "flatly preempted" by ERISA and does not fall under the savings clause. Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1133 (9th Cir. 1992). "Like the Mississippi law against bad faith insurance settlement practices [at issue in Pilot Life], the Arizona tort [of bad faith] `arises from a breach of [a] duty . . . implicit in all contracts.' Such a law fails the . . . test for inclusion under the saving clause . . . and is preempted under Pilot Life's express authority." Tingey, 953 F.2d at 1133 (quoting Clearwater v. State Farm Mut. Auto. Ins. Co., 164 Ariz. 256, 792 P.2d 719, 721 (1990)) (citations omitted). The Court does not find the Ninth Circuit's citation to controlling Arizona law establishing the tort of bad faith as mere happenstance. The citation to Clearwater v. State Farm Mut. Auto. Ins. Co., 792 P.2d 719, 721 (1990) by the Ninth Circuit indicates to the Court that it was plainly aware that its decision foreclosed in favor of ERISA the tort cause of action of bad faith as well as precluding an action for contractual bad faith. See also Rawlings v. Apodaca, 151 Ariz. 149, 153, 726 P.2d 565, 569 (1986) ("The law implies a covenant of good faith and fair dealing in every contract. The duty arises by virtue of a contractual relationship.") (citations omitted). Thus generally, bad faith claims against insurance carriers are preempted by ERISA if a plan exists, notwithstanding the savings clause. Bast v. Prudential Ins. Co. of America, 150 F.3d 1003, 1008 (9th Cir. 1998); Kanne v. Connecticut General Life Ins. Co., 867 F.2d 489 (9th Cir. 1988) (en banc).

Plaintiff argues that the Supreme Court's recent decision in Ward narrowed the holding of Pilot Life such that courts should reevaluate whether bad faith claims are still preempted by ERISA. Plaintiff urges that the savings clause be read broadly to include the tort of bad faith as a "law . . . which regulates insurance."

Plaintiff's reliance on Ward is misplaced. In Ward, the Court declined to reconsider whether any particular state cause of action was within the scope of the savings clause, because the plaintiff sued under ERISA to recover benefits under the terms of his plan. Thus, the issue of whether a state cause of action was preempted by ERISA was not before the Supreme Court. See Ward, 526 U.S. at 377, 119 S.Ct. 1380 ("The case therefore does not raise the question whether § 502(a) provides the sole launching ground for an ERISA enforcement action.") In arguing Ward, the Solicitor General, as amicus curiae, took the position that Pilot Life did not mandate that state causes of action be broadly preempted under ERISA. The Court dismissed this argument, stating, "[w]e need not address the Solicitor General's current argument, for Ward has sued . . . for benefits due [under ERISA]. . . ." Ward, 526 U.S. at 376, n. 7, 119 S.Ct. 1380.

Plaintiff has urged this Court to infer from a footnote in Ward that the Supreme Court is inclined the narrow the scope of ERISA preemption by expanding the scope of the savings clause. Plaintiff's position is fanciful. For one, the footnote cannot be fairly interpreted to hold that the scope of the savings clause (much more the holding in Pilot Life) is an open question. Second, this Court has no authority to blithely ignore Supreme Court and Ninth Circuit precedent to the contrary. See Agostini v. Felton, 521 U.S. 203, 237, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997) ("We do not acknowledge . . . that other courts should conclude our more recent cases have, by implication, overruled an earlier precedent."); United States v. Pacheco-Zepeda, 234 F.3d 411, 414 (9th Cir. 2000) ("speculation [that a case may be overruled] does not permit us to ignore controlling Supreme Court authority"). The Ninth Circuit law is that Arizona's tort of bad faith is "flatly preempted" by ERISA under the analysis of the nearly identical statute considered by the Supreme Court in Pilot Life. Ward, far from overruling Pilot Life, reiterates its holding that Mississippi's tort of bad faith, grounded in general principles of tort and contract law, does not regulate insurance within the meaning of ERISA's savings clause. Ward, 526 U.S. at 369, 119 S.Ct. 1380.

Plaintiff cites a number of district court cases in support of her position that Ward did alter the previous understanding of Pilot Life. Plaintiff's primary authority, Hill v. Blue Cross Blue Shield of Alabama, 117 F. Supp.2d 1209 (D.Ala. 2000) rests on shaky ground. For one, the case has been overruled by the Eleventh Circuit, which deemed the decision "flawed." Gilbert v. Alta Health Life Ins. Co., 276 F.3d 1292, 1300-1 (11th Cir. 2001). The Eleventh Circuit in Gilbert disagreed both with the district court's construction of Alabama tort law and with the premise that Ward created an inconsistency with prior precedent. Id. at 1299-1301. Further, the decision does not undo Ninth Circuit law explicitly holding that Arizona's tort of bad faith is preempted by ERISA. Arizona's tort of bad faith originates from general contract law principles, and is applicable in the context of many non-insurance contracts. Compare Hill, 117 F. Supp.2d at 1212 ("The only targets for the tort of bad faith in Alabama are insurance companies") with Rawlings, 151 Ariz. at 158-160, 726 P.2d 565 (tort actions for bad faith allowed for variety of special contractual relationships). When determining whether a law "regulates insurance," this distinction is critical.

Finally, many courts have found that Ward did not create an inconsistency with Pilot Life. See, e.g., Jabour v. CIGNA Healthcare of Cal., Inc., 162 F. Supp.2d 1119, 1127 (C.D.Cal. 2001) ("This Court agrees with [decisions] finding that the Ward decision merely applied (and perhaps clarified) the criteria established by Pilot Life for determining whether a state law is exempted from preemption by the ERISA saving clause; Ward did not transform that legal analysis in a manner which would require that decisions relying on Pilot Life be reconsidered."); Walker v. Southern Co. Serv., Inc., 279 F.3d 1289, 1292-3 (11th Cir. 2002) ("[Ward] does not create a new standard for analyzing ERISA's savings clause.")

Plaintiff's claims for both bad faith and breach of contract are preempted by ERISA. Therefore, Plaintiff can only state a cause of action under ERISA.

C. Did Plaintiff fail to comply with the requirements of ERISA?

Having determined that Plaintiff's LTD benefits are covered by ERISA, and that Plaintiff's state law claims are preempted, the Court also finds that Plaintiff's claims relating to LTD benefits are barred under ERISA, because she failed to exhaust her administrative remedies.

"[A] claimant must avail himself or herself of a plan's own internal review procedures before bringing suit in federal court." Diaz v. United Agricultural Employee Welfare Benefit Plan and Trust, 50 F.3d 1478, 1483 (9th Cir. 1995); see also Sarraf, 102 F.3d at 993 (applying administrative exhaustion requirement). "[T]he federal courts have the authority to enforce the exhaustion requirement in suits under ERISA, and . . . as a matter of sound policy they should usually do so." Amato v. Bernard, 618 F.2d 559, 568 (9th Cir. 1980). Moreover, "the exhaustion doctrine is consistent with ERISA's background, structure and legislative history and serves several important policy considerations." Diaz, 50 F.3d at 1483.

Plaintiff concedes that she did not exhaust her administrative appeals. Plaintiff cursorily argues that pursuit of an appeal would have been futile. Though evidence that an appeal would have been futile can serve to waive the administrative exhaustion requirement, Plaintiff fails to provide evidence or develop the argument. "[B]are assertions of futility are insufficient to bring a claim within the futility exception, which is designed to avoid the need to pursue an administrative review that is demonstrably doomed to fail." Diaz, 50 F.3d at 1485. Plaintiff's record contains "nothing but speculation" that further appeal would have been futile. Hence, Plaintiff was obligated to pursue a remedy on administrative appeal. Diaz, 50 F.3d at 1486.

III. Conclusion

Plaintiff's LTD benefit plan was covered by ERISA. Her causes of action for breach of contract and bad faith are preempted by ERISA, and Plaintiff failed to exhaust her administrative remedies under ERISA before commencing this lawsuit. Therefore, summary judgment must be granted against Plaintiff's claims relating to long term disability benefits.

Accordingly,

IT IS HEREBY ORDERED that Defendant's Motion for Partial Summary Judgment on All Claims Relating to Long Term Disability Benefits [Doc. #19] is GRANTED. IT IS FURTHER ORDERED that Defendant's Motion to Strike Portions of Plaintiff's Responsive Statement of Facts [Doc. #28] is DENIED AS MOOT.