Opinion ID: 760937
Heading Depth: 2
Heading Rank: 3

Heading: Was Baig's disability coverage a plan under ERISA?

Text: 11 New England Mutual argues that an employer's reimbursement of premiums paid directly by an employee should constitute substantial evidence of the existence of an ERISA plan. 3 The policy at issue here was not initially established by a contractual arrangement between Cardiology Associates and New England Mutual; rather, Baig made the initial purchase directly. Baig paid the premiums directly to New England Mutual. The policy was an individual policy covering only Baig himself. Under these particular circumstances, the reimbursement by his employer of premiums paid directly by Baig did not create a plan under ERISA. As the district court stated: 12 When an employer deals directly with the insurer and actually purchases an insurance policy for an employee, there may be sufficient participation to meet the established or maintained requirement under ERISA. On the other hand, an employer who simply pays its employees enough so that the employees are encouraged on their own to buy insurance policies could not be thought to have established or maintained any policy that any individual employee might purchase. Cash reimbursement after the fact presents no different case. 13 Baig, 985 F.Supp. at 14. Even where an employer actually purchases an insurance policy, 4 or makes payments directly, 5 there may not be a plan for ERISA purposes. In this case even these elements are absent, and nothing else about the coverage at issue implicates any of the policy concerns underlying ERISA. The administrative burdens on Cardiology Associates were nearly nonexistent, and its financial obligations were limited to after-the-fact reimbursement, such that there was little chance for abuse, carelessness or misappropriation of funds of the sort that might escape Baig's oversight or threaten his benefits. 14 New England Mutual also argues that Cardiology Associates evidenced its intention ... to provide benefits on a regular and long term basis, Wickman, 908 F.2d at 1083, by the terms of Baig's employment agreement, which required Cardiology Associates to provide disability coverage for Baig, and by the fact that after New England Mutual rescinded Baig's policy, Cardiology Associates purchased a group disability policy covering Baig and other employees. In Wickman we stated that if an employer's purchase of the insurance policy constituted an express intention by the employer to provide benefits on a regular and long term basis, such intention would be a crucial factor in determining the existence of a plan. Id. Where there is such a purchase, evidence demonstrating the express intention of an employer to provide continuing benefits is among those factors [which] tend to be more indicative of the existence of a plan than others. Belanger, 71 F.3d at 455. Here, however, the employer did not purchase the insurance. Indeed, the policy itself did not bear any relationship to Baig's employment, and would have continued in effect as long as Baig continued to pay the premiums, regardless of any changes in his employment situation. Moreover, Cardiology Associates' post-hoc actions provide, at most, only limited evidence of its intent, under Wickman, to cover Baig on a regular and long term basis at the time the policy with New England Mutual was purchased. 6 15 We conclude based on the undisputed facts of this case that the district court correctly found that Baig's disability insurance coverage was not an employee welfare benefit plan governed by ERISA. Because there was no other basis claimed for federal subject matter jurisdiction, the district court properly dismissed the case. 16 Affirmed.