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Richard Mastaler, An Individual v. Unum Life Insurance Company

February 22, 2012


The opinion of the court was delivered by: Hon. Dana M. SABRAWUnited States District Judge


[Docket Nos. 13, 28]

This matter comes before the Court on Defendants The Paul Revere Life Insurance Company and Unum Group's motion to confirm ERISA's application and preemption. Plaintiff filed an opposition to the motion, and Defendants filed a reply. For the reasons discussed below, the motion is granted.


Plaintiff Richard Mastaler is a former executive employee of Magellan Health Services, Inc. Magellan is a large publicly held corporation in the health care industry and employs approximately 4,900 people. At some time prior to 1997, Magellan entered into an arrangement with The Paul Revere Life Insurance Company ("Paul Revere") designated as an "Employee Security Program," or "ESP." Pursuant to the ESP, Paul Revere agreed to issue individual disability income policies to specified classes of Magellan executive employees that included specific coverage options and a substantial premium discount of thirty percent (later increased to thirty-five percent).

On February 9, 1997, Plaintiff applied for disability insurance with Paul Revere under the ESP. Paul Revere issued a policy to Plaintiff on April 1, 1997. The policy does not include any mention of the Employee Retirement Income Security Act ("ERISA") or ERISA requirements.

While Plaintiff was employed at Magellan, Magellan paid the premiums on Plaintiff's policy. In September 1997, Plaintiff left Magellan's employ and moved to San Diego. Plaintiff elected to continue his coverage under the Paul Revere policy, and thereafter paid the premiums directly to Paul Revere.

In April 2002, Plaintiff suffered a heart attack while participating in strenuous exercise. The following month, Plaintiff submitted a claim under the policy. Defendants paid the claim, but advised Plaintiff they would only pay benefits until Plaintiff reached the age of 65 on January 31, 2011. Plaintiff appealed that decision, but his appeal was denied.

On April 27, 2011, Plaintiff filed the present Complaint in San Diego Superior Court. In the Complaint, Plaintiff alleges the following claims for relief: (1) breach of contract, (2) bad faith, (3) violation of California Business and Professions Code § 17200, and (4) declaratory relief. Defendants removed Plaintiff's Complaint to this Court on June 2, 2011. The present motion followed.


Defendants move to confirm ERISA's application to this case. They argue the policy is part of an "employee welfare benefit plan" under ERISA, therefore ERISA preempts Plaintiff's claims. Plaintiff disputes that the policy is part of an "employee welfare benefit plan," and thus whether his claims are preempted.

Under ERISA § 3(1), 29 U.S.C. § 1002(1), an "employee welfare benefit plan" or "welfare plan" is: "(1) a 'plan, fund or program' (2) established or maintained (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits (5) to the participants or their beneficiaries."

Kanne v. Connecticut General Life Ins. Co., 867 F.2d 489, 492 (9th Cir. 1989) (quoting Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982) (en banc)). The parties do not dispute that elements (1), (3), (4) and (5) are met in this case. However, they do dispute element (2). Because ERISA preemption is an affirmative defense, Defendants bear the burden of establishing that element (2) is satisfied. Id. at 492 n.4.

In an effort to meet that burden, Defendants rely on the following facts. First, they assert Magellan arranged for the insurance coverage by entering into the ESP. Notably, Defendants do not provide a copy of the ESP because it "no longer exists[.]" (Decl. of Roxanne Kaminski in Supp. of Mot. ("Kaminski Decl.") ΒΆ 9.) Plaintiff does not appear to dispute the existence of the ESP, but the mere existence of the ESP does not prove that Magellan established or maintained an employee welfare benefit plan. Indeed, without the ESP, it is impossible for the Court to determine the details of the Plan ...

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