HON. DAVID W. McKEAGUE.

MEMORANDUM OPINION DENYING PLAINTIFF'S MOTION TO REMAND

This action grows out of plaintiff's insurer's denial of disability income benefits. Plaintiff William P. Potthoff, M.D., asserts claims for breach of contract, violation of the Michigan Consumer Protection Act, breach of fiduciary duty, breach of covenant of good faith and fair dealing, and intentional infliction of emotional distress. He filed his complaint in state court, the Circuit Court for the County of Grand Traverse. Defendants, Provident Life Accident Insurance Company, Provident Companies and Unum Provident, removed the action to this Court based on federal question jurisdiction, contending plaintiff's claims relate to an employee welfare benefit plan governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Three weeks after removal, defendants moved for dismissal of the complaint, contending plaintiff's state law claims are preempted by ERISA.

Plaintiff, in turn, has moved the Court to remand the action to state court. Plaintiff contends the subject insurance policy is not an ERISA employee welfare benefit plan and that, in any event, he lacks standing to bring an enforcement action under ERISA. It follows, plaintiff argues, that his claims do not come within the reach of the complete preemption doctrine and that removal is therefore improper.

The parties have withdrawn their requests for a hearing on the motions. Having duly considered the parties' respective briefs on the motions, the Court now concludes, for the reasons that follow, that plaintiff's motion to remand must be denied.

I

The Court first addresses plaintiff's motion to remand, implicating the question of subject matter jurisdiction. Plaintiff contends ERISA is not implicated by his state law claims because the subject insurance policy is not an ERISA plan. In particular, plaintiff argues the policy is not an ERISA plan because it was not "established or maintained by an employer," as required by 29 U.S.C. § 1002(1). Although he acknowledges that the premiums were paid by Thirlby Clinic, P.C., of which he was a shareholder, plaintiff maintains Thirlby Clinic was not his employer and did not establish or maintain the policy. Defendants, who removed the case, bear the burden of establishing subject matter jurisdiction.

Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999).

Defendants acknowledge that a question of federal law is not expressly posed on the face of plaintiff's complaint. Ordinarily, pursuant to the well-pleaded complaint rule, plaintiff's complaint would not be removable simply on the basis of the defense of federal preemption. Warner v. Ford Motor Co., 46 F.3d 531, 533-34 (6th Cir. 1995). Nonetheless, to the extent plaintiff seeks recovery of benefits under an "employee welfare benefit plan," as defined under ERISA, defendants correctly contend his claims necessarily present questions of federal law that are properly subject to removal under the complete preemption doctrine. See id. If plaintiff's state law claims have the characteristics of a civil enforcement action to recover benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B), then they will be deemed to present "a superseding ERISA action," arising under federal law. Id., at 534. To justify removal, therefore, defendants bear the burden of showing that the policy under which plaintiff seeks to recover benefits is an ERISA plan.

Defendants have carried this burden by showing: (1) that plaintiff, a physician, is an employee of Thirlby Clinic; and (2) that Thirlby Clinic "established or maintained" the disability income insurance policy for plaintiff, along with other employees, by contractually binding itself, as plaintiff's employer, to pay the premiums, and by actually paying the premiums. Plaintiff has made no response and has offered no rebuttal to defendants' factual showing in support of the finding that the policy is an ERISA plan.

In Libbey-Owens-Ford Co. v. Blue Cross Blue Shield, 982 F.2d 1031, 1034 (6th Cir. 1993), the Sixth Circuit observed:

Employers may establish ERISA plans very easily. . . As defined under ERISA,

employee welfare benefit plans may be created through the mere purchase of a group health

insurance policy when the owner does not retain control, administrative power, or responsibility for benefits.

(Citation omitted). Thus, although there is little evidence of Thirlby Clinic's involvement in the administration of the policy, its purchase of the policy and agreement to maintain the policy for plaintiff's benefit constitute the "establishment or maintenance" of the policy and are sufficient to render the policy a qualifying ERISA plan.

Further, it is also clear that some, if not all, of plaintiff's claims relate to recovery of benefits under the plan. The complete preemption rule thus appears to have been properly invoked and removal appears to have been proper.

Yet, plaintiff maintains that ERISA cannot be deemed to preempt his claims because he does not have standing, either as a "participant" or as a "beneficiary," to bring an enforcement action under ERISA. See 29 U.S.C. § 1132(a)(1)(B). If he lacks such standing, then his state law claims are not preempted. Agrawal v. Paul Revere Life Ins. Co., 205 F.3d 297, 302 (6th Cir. 2000).

In Agrawal, the Sixth Circuit followed its earlier ruling in Fugarino v. Hartford Life Accident Ins. Co., 969 F.2d 178 (6th Cir. 1992), holding that a sole proprietor of a corporation is an employer, not an employee, and can not, therefore, be a participant or a beneficiary. Plaintiff argues by analogy that, as a "partner" in Thirlby Clinic, he is properly deemed an employer, rather than an employee. In support, he cites Ehrlich v. Howe, 848 F. Supp. 482, 486-88 (S.D.N.Y. 1994), holding, based on the facts presented, that a partner in a law firm was not an "employee" under ERISA. Plaintiff, however, offers no factual support for his argument.

Defendants respond by demonstrating that Thirlby Clinic is not organized as a partnership, but as a corporation, and that plaintiff was a minority shareholder (14.3%) and employee of the corporation. Accordingly, defendants contend Ehrlich v. Howe is inapposite because plaintiff is not a "partner." They also argue that Agrawal and Fugarino do not control because plaintiff is not the sole shareholder or sole proprietor of Thirlby Clinic. Instead, defendants contend the present facts are more like those presented in Engelhardt v. Paul Revere Life Ins. Co., 139 F.3d 1346, 1351 (11th Cir. 1998), where the plaintiff physician's status as a shareholder was held not to preclude him from being a beneficiary under an ERISA plan.

This Court agrees. Based on the present record, defendants have made a sufficient showing that plaintiff has standing to proceed under 29 U.S.C. § 1132(a)(1)(B), either as a participant (employee) or beneficiary. In his application for insurance, plaintiff declared himself to be an employee of Thirlby Clinic, evidencing his status as a "participant," i.e., an employee who is or may become eligible to receive a benefit from an employee benefit plan. See 29 U.S.C. § 1002(7). Further, the fact that plaintiff's claims clearly seek recovery of benefits under the policy confirms his status as a "beneficiary," i.e., one who is or may become entitled to a benefit under an employee benefit plan. See 29 U.S.C. § 1002(8); Engelhardt, 139 F.3d at 1351. The Court thus overrules plaintiff's objection to removal, concluding that he does indeed have standing to proceed under ERISA.

III

Accordingly, the Court concludes that complete preemption applies. It follows that plaintiff's complaint is deemed to assert a cause of action under ERISA, 29 U.S.C. § 1132(a)(1)(B), and was properly removed to this Court. See Warner, 46 F.3d at 534. Plaintiff's motion to remand will therefore be denied. Further, plaintiff shall be given a 30-day opportunity to amend his complaint, so as to particularly set forth the nature of his claim(s) under ERISA. This result renders moot defendants' motion to dismiss plaintiff's original complaint, which motion will be denied without prejudice. An order consistent with this opinion shall issue forthwith.

ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANTS' MOTION TO DISMISS

In accordance with the Court's memorandum opinion of even date;

IT IS HEREBY ORDERED that the motion of plaintiff William P. Potthoff to remand this action to the Circuit Court for the County of Grand Traverse is DENIED; and

IT IS FURTHER ORDERED that plaintiff shall file an amended complaint stating his claim(s) under the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a)(1)(B) not later than March 12, 2001; and

IT IS FURTHER ORDERED that defendants' motion to dismiss is DENIED, without prejudice.