Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02721/USCOURTS-caed-2_06-cv-02721-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1391 Personal Injury

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 Defendant has alternately styled the motion as a Motion to 1

Dismiss under Fed. R. Civ. P. 12(b)(6). Because materials beyond

the four corners of the pleading have been submitted in support

of the motion, including both the Jefferson Pilot policies and

(continued...)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

LANSING STENSON, M.D., No. 2:06-cv-2721-MCE-GGH

Plaintiff,

v. MEMORANDUM AND ORDER

JEFFERSON PILOT FINANCIAL

INSURANCE COMPANY, a

corporation,

Defendant.

----oo0oo----

Lansing Stenson, M.D. (“Plaintiff”), brought this action

against Jefferson Pilot Financial Insurance Company (“Defendant”)

for recovery under a long term disability insurance plan. 

Plaintiff’s First Amended Complaint asserts state law claims

under that long term disability policy in addition to claims

falling within the federal purview of the Employee Retirement

Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”) . 

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(...continued) 1

the insurance applications submitted by Plaintiff’s employer, the

court will consider the motion as one for summary adjudication.

 Because oral argument will not be of material assistance, 2

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

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Defendant now seeks partial summary judgment, or summary

adjudication, as to the state law claims on grounds they are preempted by the provisions of ERISA. For the reasons set forth

below, Defendant’s Motion for Partial Summary Judgment is

granted.2

BACKGROUND

In November of 2002, Sutter West Medical Group (“SWMG”),

Plaintiff’s employer, applied to Defendant for group insurance. 

SWMG indicated that it was seeking short term disability (“STD”),

long term disability (“LTD”) and life and accidental death and

dismemberment (“AD&D”) coverage. SWMG specified the terms for

the policies it requested, including eligible classes of

employees, coverages, benefit amounts and the maximum benefit

period. Additionally, SWMG agreed to pay the premiums for the

STD and AD&D policies. 

Plaintiff filed his original complaint asserting common law

and state law claims, or in the alternative, claims for recovery

of benefits under ERISA, although he disputed that ERISA applied.

After learning that SWMG paid the employee premiums for the STD

and AD&D policies, Plaintiff amended his complaint. 

In this First Amended Compaint (“FAC”) Plaintiff continues to

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assert the same common law and state law claims under the LTD

policy. Plaintiff claims the LTD policy is not included with the

STD and AD&D benefit plan and that ERISA does not apply.

Defendant asserts that the LTD is part and parcel of SWMG’s

employee benefit plan and likewise subject to ERISA provisions. 

STANDARD

The Federal Rules of Civil Procedure provide for summary

judgment when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment

as a matter of law.” Fed. R. Civ. P. 56(c). One of the

principal purposes of Rule 56 is to dispose of factually

unsupported claims or defenses. Celotex Corp. v. Catrett, 477

U.S. 317, 325 (1986).

Rule 56 also allows a court to grant summary adjudication on

part of a claim or defense. See Fed. R. Civ. P. 56(a) (“A party

seeking to recover upon a claim ... may ... move ... for a

summary judgment in the party’s favor upon all or any part

thereof.”); see also Allstate Ins. Co. v. Madan, 889 F. Supp.

374, 378-79 (C.D. Cal. 1995); France Stone Co., Inc. v. Charter

Township of Monroe, 790 F. Supp. 707, 710 (E.D. Mich. 1992).

The standard that applies to a motion for summary

adjudication is the same as that which applies to a motion for

summary judgment. See Fed. R. Civ. P. 56(a), 56(c); Mora v.

ChemTronics, 16 F. Supp. 2d. 1192, 1200 (S.D. Cal. 1998).

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Under summary judgment practice, the moving party

always bears the initial responsibility of informing

the district court of the basis for its motion, and

identifying those portions of “the pleadings,

depositions, answers to interrogatories, and admissions

on file together with the affidavits, if any,” which it

believes demonstrate the absence of a genuine issue of

material fact.

Celotex Corp. v. Catrett, 477 U.S. at 323(quoting Rule 56(c)).

If the moving party meets its initial responsibility, the

burden then shifts to the opposing party to establish that a

genuine issue as to any material fact actually does exist. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

585-87 (1986); First Nat’l Bank v. Cities Serv. Co., 391 U.S.

253, 288-89 (1968).

In attempting to establish the existence of this factual

dispute, the opposing party must tender evidence of specific

facts in the form of affidavits, and/or admissible discovery

material, in support of its contention that the dispute exists. 

Fed. R. Civ. P. 56(e). The opposing party must demonstrate that

the fact in contention is material, i.e., a fact that might

affect the outcome of the suit under the governing law, and that

the dispute is genuine, i.e., the evidence is such that a

reasonable jury could return a verdict for the nonmoving party. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52

(1986); Owens v. Local No. 169, Assoc. of Western Pulp and Paper

Workers, 971 F.2d 347, 355 (9th Cir. 1987). Stated another way,

“before the evidence is left to the jury, there is a preliminary

question for the judge, not whether there is literally no

evidence, but whether there is any upon which a jury could

properly proceed to find a verdict for the party producing it,

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upon whom the onus of proof is imposed.” Anderson, supra, 477

U.S. at 251 (quoting Improvement Co. v. Munson, 14 Wall. 442,

448, 20 L.Ed. 867 (1872)). As the Supreme Court explained,

“[w]hen the moving party has carried its burden under Rule 56(c),

its opponent must do more than simply show that there is some

metaphysical doubt as to the material facts .... Where the record

taken as a whole could not lead a rational trier of fact to find

for the nonmoving party, there is no ‘genuine issue for trial.’” 

Matsushita, supra, 475 U.S. at 586-87.

In resolving a summary judgment motion, the evidence of the

opposing party is to be believed, and all reasonable inferences

that may be drawn from the facts placed before the court must be

drawn in favor of the opposing party. Anderson, supra, 477 U.S.

at 255. Nevertheless, inferences are not drawn out of the air,

and it is the opposing party’s obligation to produce a factual

predicate from which the inference may be drawn. Richards v.

Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal.

1985), aff’d, 810 F.2d 898 (9th Cir. 1987). 

ANALYSIS

As indicated above, summary judgment is appropriate where

the moving party demonstrates that there is no genuine issue of

material fact and is entitled to judgment as a matter of law. 

Fed. R. Civ. P. 56(c). Normally, the existence of an ERISA plan

is a question of fact, to be answered in the light of all the

surrounding circumstances from the perspective of a reasonable

person. Stuart v. UNUM Life Ins. Co. Of Am., 217 F.3d 1145, 1149

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(9th Cir. 2000). However, the Ninth Circuit has determined that

ERISA status for employee benefit plans can be made as a matter

of law. See id.; Crull v. Gem Ins. Co., 58 F.3d 1386 (9th Cir.

1995); Pacificare Inc. v. Martin, 34 F.3d 834 (9th Cir. 1994);

Qualls v. Blue Cross of California, Inc., 22 F.3d 839 (9th Cir.

1994). Accordingly, determination of ERISA status is appropriate

on Defendant’s Motion for Partial Summary Judgment.

ERISA applies broadly to employee benefit plans that are

established or maintained by an employer as defined in 29 U.S.C.

§ 1002(1). An employer can establish an ERISA plan if it does no

more than arrange for a group type insurance program. Kanne v.

Connecticut General Life Ins. Co., 867 F.2d 489, 492 (9th Cir.

1989). Even minor, ministerial economic or administrative

functions by the employer are enough to establish or maintain an

ERISA plan. Id. 

Under employee benefit programs subject to ERISA, state law

and common law actions are pre-empted. 29 U.S.C. § 1144(a). 

This pre-emptive language is broadly construed, and has been

extended to tort and contract actions. See Pilot Life Ins. v.

Dedeaux, 481 U.S. 41, 48 (1987) (overturned on other grounds).

In the present case, SWMG’s acts in establishing the group

insurance plan surpass the threshold required to create an ERISA

benefit plan. After receiving notice of increased policy

premiums under their old insurance plan, SWMG sought a new

provider for an insurance package that included all three types

of plans. SWMG, through their insurance agent, chose Defendant’s

policies over those of other providers. Additionally, SWMG

established eligibility requirements and selected the benefit

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 Plaintiff contends that Jefferson Pilot or SWMG’s 3

insurance agent chose the policy coverages and benefits because

the application itself was not drawn up by SWMG. However, the

application was reviewed by SWMG’s Director of Administrative

Services and found to reflect SWMG’s choices. Additionally, the

application was signed by Dr. Harris Levin, the authorized

representative for SWMG.

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amounts, coverages and maximum benefit period.3

For Plaintiff to defeat the motion for partial summary

judgment, the insurance package must fall within the so-called

“Safe Harbor” provision of ERISA. The group insurance program

must meet all four of the criteria delineated below to be exempt

from ERISA coverage:

(1) No contributions are made by an employer;

(2) Participation is completely voluntary for

employees;

(3) The only permissible functions of the employer with

respect to the program are to allow the insurer to

publicize the program without endorsing it and to

collect premiums through payroll deductions;

(4) The employer receives no consideration other than

reasonable compensation for administrative services

actually rendered in connection with payroll

deductions.

Kanne, supra, 867 F.2d at 492 (relying on 29 C.F.R. § 2510.3-1(j)).

SWMG’s actions with respect to the benefit package as a

whole clearly does not meet the Safe Harbor requirements. By

choosing the plan provider, the terms of the plan and paying the

premiums for the STD and AD&D plans, SWMG goes well beyond merely

allowing the insurer to advertise its coverage. Additionally,

participation in the STD and AD&D programs is not voluntary. 

Consequently, SWMG’s plan as a whole falls within the purview of

ERISA. 

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Plaintiff nonetheless argues that the LTD coverage contained

within the SWMG plan is separate from the components of the

Plaintiff’s benefit package governed by ERISA, thereby allowing

suit on state law grounds as to the LTD coverage. Even assuming

that the LTD plan is separable, this argument fails, as SWMG’s

endorsement of the LTD plan runs afoul of the third Safe Harbor

requirement delineated above. Regardless, the contention that it

is possible to divide ERISA plans into ERISA and non-ERISA

portions has been universally rejected. Employee benefit

programs are construed as a whole. Peterson v. American Life &

Health Ins. Co., 48 F.3d 404, 407 (9th Cir. 1994). Thus, to the

extent that any portion of SWMG’s employee benefit plan is

subject to ERISA, any claims under the plan are entirely preempted by ERISA.

 Here, Plaintiff’s First, Second and Third Claims for Relief

in the Plaintiff’s FAC are common law and state law causes of

action for breach of contract, bad faith dealing and violation of

California’s Unfair Competition Law. CAL. CODE BUS. & PROF § 17200

(Deering 2007). These claims are plainly pre-empted by ERISA for

the reasons set forth above. Hence, the Court finds the

Defendant’s Motion for Partial Summary Judgment to be well taken.

CONCLUSION

This Court finds that the LTD plan is part of Sutter West

Medical Group’s employee benefit plan, which is an ERISA plan. 

This Court further finds Plaintiff’s First, Second and Third

claims for relief in his First Amended Complaint to be pre-empted

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by ERISA. Accordingly, partial summary judgment on these claims

is GRANTED in favor of Jefferson Pilot Financial Insurance

Company.

Dated: June 21, 2007

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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