Wightman v. Berkley Administrators of Texas

Full title: VICTOR WIGHTMAN, Plaintiff, v. BERKLEY ADMINISTRATORS OF TEXAS, INC., et…

Court: United States District Court, N.D. Texas, Dallas Division

Date published: Mar 17, 2000

Civil Action No. 3:99-CV-1072-L (N.D. Tex. Mar. 17, 2000)

Opinion

Civil Action No. 3:99-CV-1072-L.

March 17, 2000.

MEMORANDUM OPINION AND ORDER

SAM A. LINDSAY, District Judge.

Before the court is Plaintiff's Motion to Remand, filed June 15, 1999. The court has carefully examined the motion, response, notice of removal, record evidence, and the applicable law. For the reasons that follow, Plaintiff's Motion to Remand is denied.

I. Factual and Procedural Background

Plaintiff is an employee of John Eagle Toyota ("John Eagle") and is enrolled in John Eagle's occupational injury benefit plan (the "Plan"). Plaintiff alleges that he injured his back at work. Plaintiff asked to see a Plan doctor, and this request was denied by John Eagle. Plaintiff's Original Petition clearly seeks damages for failure to provide Plan benefits. Plaintiff filed suit against Defendants in state court on April 6, 1999. Defendants timely removed the case to this court on May 13, 1999. Plaintiff now moves the court to remand the case to state court.

II. Plaintiff's Motion to Remand

Defendants removed the case to federal court claiming that Plaintiff's claims are preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). In his motion to remand, Plaintiff does not argue that he is not seeking Plan benefits or that his claims are not related to the Plan; rather, he argues that the Plan itself is not an employee welfare benefit plan under ERISA. Specifically, Plaintiff contends that the Plan is a "multiple employer welfare arrangement" ("MEWA") that is not governed by ERISA.

ERISA defines an employee welfare benefit plan as any plan established or maintained by an employer or employee organization (or both) that is established and maintained for the purpose of providing medical and/or other benefits to plan participants or their beneficiaries. 29 U.S.C. § 1002 (1). In this case, Eagle Companies is the Plan's sponsor, and the Plan's Summary Plan Description ("SPD") states that the companies who have adopted the Plan are affiliated with Eagle Companies.

Plaintiff argues that the Plan is a MEWA because it has been adopted by numerous companies affiliated with Eagle Companies, including John Eagle. A MEWA is defined as "an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit described in paragraph (1) to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries." 29 U.S.C. § 1002 (40). MEWAs may or may not be governed by ERISA. MDPhysicians Associates, Inc. v. State Board of Insurance, 957 F.2d 178, 181 (5th Cir.), cert. denied, 506 U.S. 861 (1992). The Fifth Circuit has most commonly found that a MEWA not governed by ERISA exists where a multiple employer trust or other independent venture offers benefits in order to attract smaller businesses that would otherwise not be eligible for group insurance rates. See, e.g., Meredith v. Time Insurance Co., 980 F.2d 352, 353 (5th Cir. 1993); MDPhysicians, 957 F.2d at 185.

Central to the court's analysis of the motion to remand is the issue of whether the Plan is an employee welfare benefit plan subject to regulation under ERISA, and specifically, whether Eagle Companies qualifies as an "employer" as defined by the statute. Even if the court assumes, without deciding, that the Plan in this case is a MEWA, the court believes it is still an ERISA plan. 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," including "a group or association of employers acting for an employer in such capacity." 29 U.S.C. § 1002 (5). Here, Eagle Companies is a group of affiliated employers. The question then becomes whether Eagle Companies is acting as an employer, or indirectly in the interest of an employer, in relation to the Plan.

In MDPhysicians, the Fifth Circuit found that the term "group or association of employers" is not defined in ERISA, and thus the court examined the legislative history of this portion of ERISA for purposes of determining whether the sponsoring entity in that case was acting indirectly in the interest of an employer with respect to the plan, thus satisfying the definition of employer contained in ERISA. 957 F.2d at 184. The legislative history reveals that benefit plans marketed by commercial enterprises for the purpose of marketing insurance and other services are not established or maintained by the appropriate parties to implicate ERISA. Id., citing H.R. Rep. No. 1785, 94th Cong., 2d Sess. 48 (1977). There, the court found an unrelated entrepreneurial entity established and managed the plan, not the subscribing employers. Id. at 185. That entity's primary interest was in profiting from the provision of the medical services provided by the plan, and the plan was widely sold and marketed to over 100 independent and unrelated employers. Id.

The court also focused on the relationship between the sponsoring entity and the employees who received benefits under the plan, stating that "the entity that maintains the plan and the individuals that benefit from the plan should be tied by a common economic or representational. interest. Id. at 185-86. The court noted that the "most common example" of such a relationship is a direct employer-employee relationship, but further noted that a group of employers in the same industry who establish a trust for the benefit of employees would supply the needed connection. Id. In that case, there was no relationship between the sponsoring entity and the employees of the employers who subscribed to the plan, other than that of providing benefits under the plan. Id. at 186. For all of the above reasons, the court held that the sponsoring entity in that case was not an employer as defined by ERISA, and thus the plan was subject to state insurance regulation because it did not qualify as an employee welfare benefit plan under ERISA. Id.

Here there is no evidence that Eagle Companies is an enterprise whose purpose is to profit from the provision of the benefits and services offered under the Plan. Plaintiffs petition shows that his own employer, John Eagle, was involved in administering the claim. Most compelling is the fact that Eagle Companies is a group of related employers, as stated by the Plan itself. This is analogous to the Fifth Circuit's example in MDPhysicians of a trust established by a group of employers in the same industry. Although the record does not clearly establish the precise relationship between the Eagle Companies, it does show that they are related to each other, and that each employer is affiliated with Eagle Companies. Therefore, the court finds that Eagle Companies does have the type of economic relationship with Plaintiff that would qualify it as an employer under ERISA, and the Plan itself as an employee benefit plan.

III. Conclusion

Because Eagle Companies is an employer as defined by ERISA, the court finds that the plan at issue here is subject to regulation under ERISA, in that it is established and maintained by an employer for the purpose of providing medical and/or other benefits to plan participants or their beneficiaries. 29 U.S.C. § 1002 (1). The court thus finds that it has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331. Plaintiff's Motion to Remand is denied.

It is so ordered this 17th day of March, 2000.