Opinion ID: 689981
Heading Depth: 2
Heading Rank: 1

Heading: Existence of an ERISA Plan

Text: 8 An employee welfare benefit plan governed by ERISA is: 9 any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits ... 10 29 U.S.C. Sec. 1002(1) (emphasis added). 11 The regulations implementing this section provide that a plan under which no employees are participants does not constitute an ERISA employee benefit plan. 29 C.F.R. Sec. 2510.3-3(b). Neither an owner of a business nor a partner in a partnership can constitute an employee for purposes of determining the existence of an ERISA plan. 29 C.F.R. Sec. 2510.3-3(c)(1), (2); see also Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 264 (9th Cir.1991) (ERISA does not govern a plan whose only fully vested beneficiaries are a company's owners). 12 Peterson maintains that the American policy does not constitute an ERISA employee benefit plan because, at the time of his bypass surgery, it covered only him, a partner in the Quivira partnership. However, the fact that the American policy covered only a Quivira partner at the time of Peterson's surgery is not determinative. 2 We conclude that the American policy was just one component of Quivira's employee benefit program and that the program, taken as a whole, constitutes an ERISA plan. 13 At all times relevant to this action, Quivira continued to provide insurance to at least one non-partner employee, albeit not under the American policy. See Kennedy, 952 F.2d at 264 (coverage of even one non-owner employee is sufficient to bring a policy within ERISA's scope); Madonia v. Blue Cross & Blue Shield of Virginia, 11 F.3d 444, 448 (4th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1401, 128 L.Ed.2d 74 (1994) (coverage of non-owner employees rendered policy an ERISA plan). Quivira not only paid its partners' and employees' insurance premiums but also played an active role in the administration of the coverage, including choosing the insurance, adding and deleting employees and partners from various policies, contacting insurance companies for employees and partners, and distributing information relevant to the coverage. 14 Moreover, the American policy originally covered a non-partner employee in addition to Peterson and his partner. A policy is governed by ERISA if it is established or maintained by an employer ... for the purpose of providing [medical insurance] for its participants or their beneficiaries. 29 U.S.C. Sec. 1002(1) (emphasis added). That the American policy is governed by ERISA finds further support in our cases addressing conversion policies, where an employee converts his group policy to an individual policy when he leaves his employment. We have held repeatedly that, because these policies are derived from ERISA plans, they continue to be governed by ERISA even after conversion. Qualls v. Blue Cross of California, Inc., 22 F.3d 839, 843 n. 4 (9th Cir.1994); Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812, 817 (9th Cir.1992); Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1132-33 (9th Cir.1992). 15 Because the American policy was purchased by Quivira for the purpose of fulfilling its plan to provide benefits to its employees as well as its partners, the policy is part of an ERISA plan and is governed by ERISA.