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Bates v. Hartford Life And Accident Insurance Co.

United States District Court, D. Idaho

December 19, 2019

PAULA BATES, Plaintiff,
v.
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill, U.S. District Court Judge.

         INTRODUCTION

         Plaintiff, Paula Bates, obtained long term disability insurance under a group insurance plan administered by Defendant, Hartford. The Parties dispute whether that plan and this action are governed by Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. Following the agreement reached on the telephonic scheduling conference held on January 18, 2019, the Court ordered the parties to submit briefing addressing ERISA applicability. Briefing has been completed and the issue is ripe for resolution.

         BACKGROUND

         Ms. Bates worked for American Family Insurance as an independent agent from October 2008 to November 2011. While employed by American she was covered by American Family's long-term disability plan. Pl.'s Br. at 1, Dkt. 24; American Plan, Def.'s Ex. A, Dkt. 23-1. When Bates resigned from American Family, she was no longer eligible for insurance under the American Plan, and her coverage under that plan terminated on November 3, 2011. Jan 28, 2012 Letter, Dkt. 24-1 at 41. The American Plan contains a conversion provision that allows an employee who no longer meets the eligibility requirements for the plan to obtain “personal insurance under another group policy called the group long term disability conversion policy.” American Plan at 12, Dkt. 23-1. Following her departure from American, Bates used the conversion provision of the American Plan to obtain insurance through the Group Long Term Disability Plan of Insurance. Approval Notice, Dkt. 24-1 at 59-61. The policyholder for this group plan was The Northern Trust Company.[1] Dkt. 24-1 at 61; Def.'s Ex. B, Dkt. 23-2.

         Hartford is the administrator for both the American Plan and the Northern Plan.

         Bates alleges that as of December 10, 2014 she became totally disabled, as that term is defined by the Northern Plan. Compl. ¶ 18. She further alleges that she attempted to file disability claims with Hartford in 2015 but it ignored them or refused to process them. Id. ¶¶ 21-22. In September 2017, Hartford denied her disability claim. Id. ¶ 24. Bates appealed the denial in March 2018, which was denied in May 2018. Id. ¶¶ 25-27. Bates commenced the instant action alleging multiple state law claims, including breach of contract and bad faith. Id. ¶¶ 31-51.

         In her complaint, Bates alleges that the Northern Plan is not governed by ERISA. Id. ¶ 16. Hartford disagrees and argues that the Northern Plan is governed by ERISA. Def.'s Br. at 8, Dkt. 23. The Parties agree that if the Northern Plan is governed by ERISA then Bates' state law claims are preempted and her sole remedy is under ERISA. See Id. at 16; Compl. ¶ 60.

         LEGAL STANDARD

         ERISA broadly preempts state law that relates to “any employee benefit plan” as described in the statute. 29 U.S.C. § 1144(a); see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987). The parties dispute, and this Court must decide, whether the Northern Plan is an “employee benefit plan” that is governed by ERISA.

         Whether an ERISA plan exists is a question of fact, requiring consideration of all the surrounding circumstances from the point of view of a reasonable person. Zavora v. Paul Revere Life Insurance Company, 145 F.3d 1118, 1120 (9th Cir. 1998) (citations omitted). The burden to establish the existence of an ERISA plan is on the party advocating its existence. Id. n.2.

         An “employee benefit plan” is defined, in relevant part, as “an employee welfare benefit plan.” 29 U.S.C. § 1002(3). An “employee welfare benefit 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 Gen. Life Ins. Co., 867 F.2d 489, 492 (9th Cir. 1988) (citing Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir.1982) (en banc)); 29 U.S.C. § 1002(1). Further, an employee benefit plan must cover at least one employee to constitute an ERISA benefit plan. Waks v. Empire Blue Cross/Blue ...


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