UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

RAYMOND OLIVER, 

Plaintiff, 

Case No. 09-11040

v. Hon. Lawrence P. Zatkoff

NATIONAL LIFE INSURANCE CO., 

Defendant. 

 /

OPINION AND ORDER

AT A SESSION of said Court, held in the United States Courthouse,

in the City of Port Huron, State of Michigan, on January 13, 2010

PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF

UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This case arises out of the alleged non-payment of disability-insurance benefits. Following

a scheduling conference, the Court ordered the parties to conduct a 60-day discovery period, limited

to the issue of whether Plaintiff’s state-law claims are preempted by the Employee Retirement

Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The Court also instructed the

parties to brief the issue following the discovery period. The parties have each filed such a brief,

and they have also each filed a reply brief to the other party’s brief. Although the Court did not

specifically request reply briefs, it will consider the arguments presented therein. Thereafter,

Plaintiff filed a motion to file a supplemental brief [dkt 11], representing that he had obtained new

evidence in support of his position. As Defendant has not responded to Plaintiff’s motion, the Court

GRANTS Plaintiff’s motion [dkt 11], and it will consider Plaintiff’s supplement brief. 

The Court finds that the facts and legal arguments are adequately presented in the parties’

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papers such that the decision process would not be significantly aided by oral argument. Therefore,

pursuant to E.D. Mich. L.R. 7.1(e)(2), it is hereby ORDERED that the ERISA-preemption issue be

resolved on the briefs submitted. For the following reasons, the Court finds that ERISA does not

preempt Plaintiff’s state-law claims. 

II. BACKGROUND

Plaintiff is a majority owner and former president of Bristol Steel (“Bristol”), located in

Burton, Michigan. In 1988, Plaintiff entered into a disability-insurance policy with Defendant. The

policy application indicates that Bristol was to pay 100% of the premiums and that all notices were

to be sent to Bristol. According to Plaintiff, the policy premiums were to be automatically deducted

from Bristol’s business account, and Plaintiff would reimburse the company for those sums. This

arrangement was designed to ensure that the premiums were always paid in full and so that a

payment was not inadvertently missed. 

On February 5, 2004, Plaintiff was involved in an automobile accident that caused him

injuries such that he could no longer perform his duties at Bristol. As a result, Plaintiff sought

benefits pursuant to his policy with Defendant. Defendant allegedly made some initial payments

but has now refused to continue disbursing benefits. In response, Plaintiff filed the current lawsuit

demanding damages for breach of contract and intentional infliction of emotional distress.

Defendant timely removed the case from the Genesee County Circuit Court to this Court based on

diversity jurisdiction. See 28 U.S.C. § 1332(b). The issue before the Court is whether ERISA

preempts Plaintiff’s state-law claims—a question important for purposes of discovery. 

III. LEGAL STANDARD

The Sixth Circuit employs a three-step factual inquiry to determine whether a benefit plan

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Defendant notes that a second name, James Kirby, appears on many of the early

statements from Defendant to Bristol. Defendant, however, has advanced no argument regarding

Kirby’s role with Bristol, the details of Kirby’s insurance plan or payments, or the legal

significance of Kirby’s involvement. 

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is governed by ERISA: 

First, the court must apply the so-called “safe harbor” regulations

established by the Department of Labor to determine whether the

program was exempt from ERISA. 

Second, the court must look to see if there was a “plan” by inquiring

whether “from the surrounding circumstances a reasonable person

[could] ascertain the intended benefits, the class of beneficiaries, the

source of financing, and procedures for receiving benefits.” 

Finally, the court must ask whether the employer “established or

maintained” the plan with the intent of providing benefits to its

employees. 

Thompson v. Am. Home Assurance Co., 95 F.3d 429, 434–35 (1996) (citations omitted). 

The existence of an ERISA plan is a question of fact, to be answered in light of all the

surrounding circumstances and facts from the point of view of a reasonable person. Id. at 434.

Defendant bears the burden of proof in showing that Plaintiff’s state-law claims are preempted. See

Great-West Life & Annuity Ins. Co. v. Info. Sys. & Networks Corp., 523 F.3d 266, 270 (4th Cir.

2008); Bank of Louisiana v. Aetna U.S. HeathCare Inc., 468 F.3d 237 (5th Cir. 2006). 

IV. ANALYSIS

Plaintiff maintains that the policy at issue was an individual policy1, and that the premiums

were deducted from Bristol’s account for convenience only. Plaintiff further avers that Bristol took

none of the steps necessary to comply with ERISA, such as filing required documents, and that

Bristol was not named the administrator of the plan. Plaintiff also notes that when some premiums

were returned, they were mailed directly to Plaintiff, rather than to Bristol. In his supplemental

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brief, Plaintiff elaborates that there was not a plan administrator, and he submits that Defendant did

not withhold FICA taxes as it would have if this were an employer-sponsored plan. 

Defendant contends that the financial arrangement and actions taken by Bristol transformed

the policy into one governed by ERISA, albeit perhaps unintentionally. Defendant cites to the

payment plan and the administrative functions performed by Bristol staff members in support of its

argument. Defendant also attaches several items of correspondence sent by Defendant to Bristol

regarding the policy. 

A. Safe Harbor

The federal regulations enacting ERISA provide for a “safe harbor” for certain types of

insurance programs. Those programs falling within the safe-harbor exemption need not conform

to ERISA. To qualify for the safe-harbor designation, a plan must be designed such that: 

(1) No contributions are made by an employer or employee

organization; 

(2) Participation in the program is completely voluntary for

employees or members; 

(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 or members,

to collect premiums through payroll deductions or dues checkoffs and

to remit them to the insurer; and 

(4) The employer or employee organization 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 or dues checkoffs.

29 C.F.R. § 2510.3-1(j). 

The first prong of the safe-harbor analysis is hotly contested. Plaintiff insists that since he

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was personally responsible for the premiums, Bristol acted only as a “conduit” when it submitted

payments. Defendant maintains that Bristol’s actions amounted to interest-free loans to Plaintiff

with no required payment schemes or dates, and that these “loans” equate to contributions to the

plan. See Spillane v. AXA Fin., Inc., 648 F. Supp. 2d 690, 699 (E.D. Pa. 2009); Stone v. Disability

Mgmt. Servs., Inc., 288 F. Supp. 2d 684 (M.D. Pa. 2003). 

The fact that Bristol submitted the premiums does not, by itself, require a finding that an

ERISA plan exists. See New England Mut. Life Ins. Co., Inc. v. Baig, 166 F.3d 1, 5 n.5 (1st Cir.

1999). If Bristol’s involvement was limited to simply submitting premiums, the safe-harbor

requirement would be satisfied. See Ames v. Jefferson Pilot Fin. Co., 515 F. Supp. 2d 1050, 1055

(D. Ariz. 2007) (employer collected premiums and forwarded a single check); Schwartz v. Provident

Life & Accident Ins. Co., 280 F. Supp. 2d 937, 941 (D. Ariz. 2003) (employer charged premium

costs to employees as taxable income); B-T Dissolution, Inc. v. Provident Life & Accident Ins. Co.,

175 F. Supp. 2d 978, 983 (S.D. Ohio 2001) (full amount of premiums included on employee’s W-2

income-tax form); Jones v. Pioneer Life Ins. Co. of Ill., 858 F. Supp. 164, 165 (M.D. Ala. 1994)

(employer reimbursed in full each month). 

In his deposition, Plaintiff represented that he would “take a distribution” and pay taxes on

the premium amounts as a method of reimbursement to Bristol. Plaintiff has, however, offered no

documentary evidence confirming this practice. Plaintiff’s 2003 tax return (i.e., the year before

Plaintiff’s automobile accident) does not explicitly reference the insurance premiums. See Spillane,

648 F. Supp. 2d at 699 (no documentation to support the plaintiff’s assertion that he paid income

taxes on premium amounts); Cowart v. Metro. Life Ins. Co., 444 F. Supp. 2d 1282, 1290–91 (M.D.

Ga. 2006) (only evidence of tax payments was the plaintiff’s affidavit). Moreover, Plaintiff admitted

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that he would defer payments if he was not “doing well” financially and “put it off . . . to the next

accounting year.” Pl.’s Dep. at 21. Such a statement suggests that this situation is more akin to

those cases construing the premium payments to be an interest-free loan, as it appears that Plaintiff

could reimburse the company at his convenience. See, e.g., Stone, 288 F. Supp. 2d at 692 (“The

shareholders were free to pay back that money at their leisure.”). 

The Court finds that these disputed facts preclude a determination whether Bristol

“contributed” to the plan insofar as the safe-harbor provision is concerned. Because all four factors

must be met for the policy to qualify for the safe-harbor exception, see, e.g., Thompson, 95 F.3d at

435, the Court need not continue the analysis. The Court will instead proceed with the remaining

Thompson factors. 

B. Existence of Plan 

This prong is not explicitly debated, primarily because the requisite factors are easily

ascertained: (1) the benefits are identified (disability benefits for Plaintiff); (2) the beneficiary is

known (Plaintiff); (3) the financing has been described (automatic deductions from Bristol’s account

to be repaid by Plaintiff); and (4) the procedures for receiving benefits are delineated in the policy.

See Pemberton v. Reliance Standard Life Ins. Co., No. 08-86-JBC, 2008 WL 4498811, at *6 (E.D.

Ky. Sept. 30, 2008) (finding ERISA plan on similar facts). Therefore, the Court finds that the

second Thompson factor is met. 

C. Established or Maintained

The final Thompson factor requires the Court to determine whether the employer

“established or maintained” the plan with the intent to provide its employees with benefits. 

 “Under Thompson, when an employer determines which employees will be eligible for

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coverage, negotiates the terms or benefits of the policy, is named as the plan administrator, and

provides a summary plan description describing the plan as an ERISA plan, the plan is governed by

ERISA.” Nicholas v. Standard Ins. Co., 48 Fed. Appx. 557, 564 (6th Cir. 2002) (finding ERISA

plan based on the preceding factors). 

There is no evidence on the record that any of the above factors are present in this case.

Instead, the undisputed facts show that the actions taken by Bristol’s employees amounted to: (1)

ensuring that the direct-deposit system was functioning properly; (2) updating Plaintiff’s personal

information; and (3) tracking Plaintiff’s arrearage to the company for the premiums. The Court finds

that these tasks do not amount to “establishing or maintaining” an ERISA plan as a matter of law.

See Bailey v. Minn. Life Ins. Co., No. 07-196-JBC, 2009 WL 803701, at *7 (E.D. Ky. 2009) (“Nestle

was not nearly so active, going only so far as to make the insurance available and assisting with

enrollment and the transfer of documents between its employees and the defendant.”); see also B-T

Dissolution, 101 F. Supp. 2d at 948; Schwartz, 280 F. Supp. 2d at 944. 

Moreover, Defendant’s cited cases finding ERISA preemption under similar circumstances

involved either a higher level of employer involvement or a greater number of participating

employees than is present here. See Spillane, 648 F. Supp. 2d at 697 (plaintiff and co-owner

contemporaneously applied for a disability-insurance policy for the benefit of the company and

received discounts for purchasing together); Pittinos v. Provident Life & Accident Ins. Co., No. CA

08–662-KDC, 2009 WL 424317, at *7 (S.D. Ala. Feb. 17, 2009) (employer established plan for

employees); Acuna v. Conn. Gen. Life. Ins. Co., 572 F. Supp. 2d 713, 726 (E.D. Tex. 2008)

(employer paid premiums and provided bookkeeping functions for six physicians); Crooms v.

Provident Life & Accident Ins. Co., 484 F. Supp. 2d 1286, 1291–92 (N.D. Ga. 2007) (subsequent

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insurance agreements covered additional employees). 

This court recently held that ERISA did not preempt state-law claims when there was “no

evidence that [the plaintiff] pursued this benefit in his capacity as President of [the employer] for

himself as an employee.” Roberts v. Principal Life Ins., No. 07-11936, 2009 WL 691872, at *5

(E.D. Mich. Mar. 12, 2009). Likewise, the Court concludes that Plaintiff individually sought out

the insurance policy, and he arranged the payments and bookkeeping through Bristol as a matter of

personal convenience. That is, Plaintiff brought the policy to Bristol, rather than Bristol advocating

the policy to Plaintiff. Therefore, Defendant has not shown that Bristol intended to establish or

maintain an ERISA plan. 

V. CONCLUSION

Accordingly, and for the above reasons, IT IS HEREBY ORDERED that Plaintiff’s state-law

claims are not preempted by ERISA. The Court, however, retains jurisdiction of this matter based

on its diversity jurisdiction as pleaded by Defendant in its notice of removal. 

IT IS SO ORDERED. 

S/Lawrence P. Zatkoff 

LAWRENCE P. ZATKOFF

UNITED STATES DISTRICT JUDGE

Dated: January 13, 2010

CERTIFICATE OF SERVICE

The undersigned certifies that a copy of this Order was served upon the attorneys of record

by electronic or U.S. mail on January 13, 2010.

S/Marie E. Verlinde 

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Case Manager

(810) 984-3290

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