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Manjit Singh v. United of Omaha Life Insurance Company

September 14, 2011

MANJIT SINGH,
PLAINTIFF,
v.
UNITED OF OMAHA LIFE INSURANCE COMPANY, AND DOES 1 TO 40, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER

Defendant moves under Federal Rule of Civil Procedure 12(b)(6) for dismissal of Plaintiff's state claims, arguing the motion should be granted because the state claims are preempted by the Employee Retirement Income Security Act ("ERISA"). (Def.'s Notice of Mot. 2:7-11, ECF No. 4.) Each state claim contains the allegation that Defendant wrongfully denied Plaintiff's disability claim. (Compl. ¶¶ 16, 19.) Defendant argues this disability claim was submitted under a group disability policy under which Plaintiff had disability coverage, and that this disability coverage was through Plaintiff's employer-sponsored ERISA plan ("the Plan"). (Def.'s Mot. 1:8-10, ECF No. 4-1.) Defendant also argues that a "Summary Plan Description" attached to Plaintiff's Complaint evinces that the Plan is an "employee welfare benefit plan" under ERISA; and since Plaintiff's state claims relate to the Plan, each state claim is preempted by ERISA. Id. 1:12-22.

Plaintiff counters the Plan is not within ERISA's preemptive scope because it "falls into the regulatory safe harbor, which excludes from ERISA's jurisdictional ambit certain group or group-type insurance programs offered by an insurer to employees or members of an employee organization." Anderson v. UNUM Provident Corp., 369 F.3d 1257, 1263 n.2 (11th Cir. 2004).

ERISA broadly preempts state law that relates to "any employee benefit plan" as described in the [ERISA] statute. Insofar as relevant to this case, an employee welfare benefit plan is a plan, fund or program "established or maintained by an employer" to provide benefits in the event of illness, disability or certain other conditions.

Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1120 (9th Cir. 1998) (quoting 29 U.S.C. §§ 1002(1)(A) and 1144(a)) (internal citations omitted). "'[T]he existence of an ERISA plan is a question of fact, to be answered in the light of all the surrounding circumstances from the point of view of a reasonable person.'" Id. (quoting Credit Managers Ass'n v. Kennesaw Life & Accident Ins. Co., 809 F.2d 617, 625 (9th Cir. 1987)). "Because . . . ERISA preemption is a federal defense . . . , the burden is on the defendant to prove the facts necessary to establish it." Kanne v. Conn. Gen. Life Ins. Co., 867 F.2d 489, 492 n.4 (9th Cir. 1988) (internal citation omitted).

"To aid in the determination [of whether a plan is an ERISA employee welfare benefit plan], the Secretary of Labor has issued an interpretive regulation that creates for certain employer practices a 'safe harbor' from ERISA coverage." Zavora, 145 F.3d at 1120. This safe harbor regulation prescribes, in pertinent part:

[T]he term[] "employee welfare benefit plan" . . . shall not include a[n] . . . insurance program offered by an insurer to employees . . . , under which

(1) No contributions are made by an employer . . . ;

(2) Participation [in] the program is completely voluntary for employees . . . ;

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

(4) The employer . . . 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 . . .

29 C.F.R. § 2510.3-1(j). An insurance plan is considered an employee welfare benefit plan under ERISA "when [the] employer fails to satisfy any one of the four requirements of the safe harbor regulation." Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1153 (9th Cir. 2000). Defendant argues the Plan is an employee welfare benefit plan

under ERISA since Plaintiff's employer did not satisfy the third safe harbor requirement because it endorsed the Plan. Specifically, Defendant contends Plaintiff's employer endorsed the Plan since the Summary Plan Description attached ...


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