United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
Lynn Winmill, U.S. District Court Judge.
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
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. Dkt. 24-1 at 61; Def.'s Ex.
B, Dkt. 23-2.
is the administrator for both the American Plan and the
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.
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.
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
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.
“employee benefit plan” is defined, in relevant
part, as “an employee welfare benefit plan.” 29
U.S.C. § 1002(3). An “employee welfare benefit
(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