Opinion ID: 77462
Heading Depth: 4
Heading Rank: 3

Heading: Safe Harbor Exemption

Text: 14 The United States Department of Labor explicitly exempts from ERISA governance certain group or group-type insurance programs offered by an insurer to employees. 29 C.F.R. § 2510.3-1(j). There are four elements necessary to satisfy the safe harbor exemption: (1) [n]o contributions are made by an employer or employee organization; (2) [p]articipation in the program is completely voluntary for employees or members; (3) [t]he sole functions of the employer ... 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) [t]he employer 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. Id. 15 B. Whether the District Court Made Specific Errors in Determining that ERISA Governs the Plan 16 1. Whether the District Court Improperly Limited Discovery 17 Moorman complains that the district court improperly limited his discovery regarding questions of ERISA governance and preemption when it denied his motion for leave to depose Appellees' witnesses and for additional time to submit summary judgment materials. However, Moorman never specifically identifies in his brief the issues on which he sought discovery. In denying Moorman's motion, the district court correctly noted that this new discovery request related to the issue of whether the Southeastern Steam had contributed to the plan. The court then observed that the Appellees had withdrawn any contention that Southeastern Steam had contributed to the plan. Mindful that the standard of review for denials of a discovery order is abuse of discretion, we conclude that Moorman's argument on this issue fails. 18 2. Whether ERISA Governance Is a Question of Fact for the Jury 19 In addition, Moorman argues that the district court erred because it stated that the issue of whether ERISA governs the plan is a fact question for the district court to determine. According to Moorman, because the district court already has jurisdiction based on other claims, the district court has no need to determine the factual existence of ERISA governance for jurisdictional purposes, and therefore this question of fact should be determined by a jury. In its order, however, the district court indicated that it would follow the general restrictions placed on it at the summary judgment stage, resolving issues based on material undisputed facts. R7-59 at 5. Notwithstanding any arguable errors in applying this standard by the district court, this issue need not be resolved on appeal because the appeal concerns only our de novo review of the threshold question of whether there is a genuine issue of material fact as to whether ERISA governs the plan. This question is necessarily for courts, and not juries, to decide. See Mackenzie v. City of Rockledge, 920 F.2d 1554, 1558 (11th Cir. 1991). 20 3. Whether the District Court Made an Impermissible Credibility Determination and Improperly Construed and Disregarded Other Evidence 21 Insofar as the district court may have erred in making an impermissible credibility determination, 1 or in improperly construing and disregarding other evidence favorable to Moorman, this analysis is subsumed within our overall de novo review of whether there is a genuine issue of material fact on ERISA governance, which is examined below. 22 C. Whether There Is a Genuine Issue of Material Fact on ERISA Governance 23 In his brief on appeal, Moorman argues that the controlling questions of law in this case are the alleged laundry list of errors by the district court in applying the summary judgment standard of review. See Appellant's Br. at 4-5. This misses the point. In applying de novo review, we review the judgment, not the soundness of the district court's explanation for it. Collado v. United Parcel Serv., Co., 419 F.3d 1143, 1151 (11th Cir. 2005); see also SEC v. ETS Payphones, Inc., 408 F.3d 727, 736 n. 10 (11th Cir. 2005) (per curiam) (We review the district court's judgments; we do not grade the opinions.). Thus, even if the district court erred by improperly making a credibility determination or by misconstruing and disregarding certain evidence, Moorman still must show that there is a genuine issue of material fact as to ERISA governance. 1. Safe Harbor Analysis 24 The requirements for a safe harbor exception under 29 C.F.R. § 2510.3-1(j) are strict. See Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1213 (11th Cir.1999) (noting that the safe harbor regulation explicitly obliges the employer who seeks its safe harbor to refrain from any functions other than permitting the insurer to publicize the program and collecting premiums). Thus, the safe harbor analysis is usually conducted before considering whether the plan is governed by ERISA using the more factor-intensive analysis under 29 U.S.C. § 1002(1). Anderson, 369 F.3d at 1263 n. 2. 25 Appellees concede that three of the four elements of the safe harbor exemption are met. The only element in contention is whether (3) [t]he sole functions of the employer ... 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. 29 C.F.R. § 2510.3-1(j) (emphasis added). According to the Department of Labor: 26 An employee organization will be considered to have endorsed a group or group-type insurance program if the employee organization expresses to its members any positive, normative judgment regarding the program. An employee organization may, in the course of permitting an insurer, insurance agent, or insurance broker to market the group or group-type insurance program to its employees or members, facilitate the publicizing and marketing of the program, but only to an extent short of endorsing the program. An endorsement within the meaning of [§] 2510.3-1(j) occurs if the employee organization urges or encourages member participation in the program or engages in activities that would lead a member reasonably to conclude that the program is part of a benefit arrangement established or maintained by the employee organization. 27 ERISA Op. Letter No. 94-26A, 1994 WL 369282 (July 11, 1994) (emphasis added). For our purposes, the safe-harbor analysis turns on whether the employer endorsed or undertook any additional function[ ] ... with respect to the plan within the meaning of § 2510.3-1(j). 28 In Butero, we determined that the employer had endorsed the plan because it had chosen the insurer, decided on key terms, deemed certain employees ineligible for participation, incorporated the policy terms into the . . . summary plan description for its cafeteria plan, and retained the [ability] to alter compensation reduction for tax purposes. 174 F.3d at 1213-14. While the issue was not appealed to our court, the district court in Anderson concluded that an employer's actions rose to the level of endorsement when it singled out the UNUM Plan as the sole plan it offers to its hourly employees, played a role in selecting the premium rates, restricted employee eligibility, displayed its corporate logo on the policy documents which it provided to [its] employees, was named in the policy documents as the plan administrator, and provided a summary plan description to its employees that specifically referred to ERISA. Anderson, 369 F.3d at 1262 (citing Anderson v. UnumProvident Corp., 322 F.Supp.2d 1272, 1276-79 (M.D.Ala. 2002)). 29 Under the mandate of Butero, which states that  any functions by the employer apart from the two listed exceptions disqualify a plan from the safe harbor exception, the plan at issue in this case does not qualify for this exception. See Butero, 174 F.3d at 1213. Here, even though only one nonlisted employer function would disqualify the plan under the safe harbor exception, several actions by Southeastern Steam stand out as endorsement for the purposes of § 2510.3-1(j). 30 First, as the district court noted, it is undisputed that Southeastern Steam decided on at least one of the eligibility terms under the Plan, the waiting period. R7-41 at 24. Moorman himself concedes in his brief on appeal that Southeastern Steam determined the waiting period. Appellant's Br. at 34. 31 Second, similar to the district court's analysis in Anderson, the plan at issue in this case was the sole long term disability plan offered by Southeastern Steam to its employees. See 322 F.Supp.2d at 1277. Specifically, there is no dispute that Southeastern Steam identified the plan in its employee handbook as part of the company's employee benefits. The employee handbook stated that [d]isability insurance is available to all full-time employees. R.Exh., Exh. 5 at 23. Carter testified that Southeastern Steam did not offer disability insurance prior to the plan at issue in this case, that no other plans were then offered, and that the provision in the handbook was added to account for that policy. Id. at 10-11, 45-46. In addition, all but one of the employees of Southeastern Steam enrolled for disability coverage at the time of the original enrollment. Id. at 57. The enrollment forms were signed by the employees, including Carter and Moorman, and included the following language:  Southeastern Steam, Inc., is offering a comprehensive Disability program. . . . R4-30 Exh. 2B at unnumbered 3, 23. 32 Third, it is undisputed that Southeastern Steam maintained a limited supply of claim forms and that Carter assisted with the filings of at least one or two claim forms to Unum Life on behalf of employees. R.Exh. at 44, 102-04; R4-30 Exh. 1 at 15-16. Moorman argues that this was only a ministerial function, and that any submissions to Unum Life for claims on the part of Southeastern Steam were the employer verification forms, which were required by the insurer. Nevertheless, given Butero 's low threshold for disqualification under the safe harbor exception, i.e., the fact that any additional function by the employer with regard to the plan bars the application, this accumulation of extraneous functions by Southeastern Steam has rendered the safe harbor inapplicable in this case. Our discussion in the next section regarding establishment and maintenance incorporates this safe harbor analysis and addresses more fully the depth of Southeastern Steam's involvement with the plan. 33 2. Establishment and Maintenance: Statutory Coverage under 29 U.S.C. § 1002(1) 34 Even if the safe harbor is barred, that does not necessarily mean that the insurance policy is part of an ERISA plan. Butero, 174 F.3d at 1214; see also Anderson, 369 F.3d at 1263 n. 2 ([A] plan that falls outside of the safe harbor exception does not necessarily fall within the jurisdiction of ERISA.). 35 The defendants must show five things to establish that an ERISA plan governs its relationship with Plaintiff: (1) a plan, fund, or program (2) [that has been] established or maintained (3) by an employer ... (4) for the purpose of providing ... disability ... benefits (5) to participants or their beneficiaries. Donovan, 688 F.2d at 1371 (internal quotations omitted). The only contested factor is the third, whether the employer, Southeastern Steam, established or maintained the plan within the meaning of 29 U.S.C. § 1002(1). Our inquiry thus necessarily focuses on `the employer . . . and [its] involvement with the administration of the plan.' Anderson, 369 F.3d at 1263. 36 In Butero, we suggested seven factors that may be relevant in determining whether an employee welfare benefits program has been established [by an employer]. These factors are equally important in determining whether an employer has maintained the plan: `(1) the employer's representations in internally distributed documents; (2) the employer's oral representations; (3) the employer's establishment of a fund to pay benefits; (4) actual payment of benefits; (5) the employer's deliberate failure to correct known perceptions of a plan's existence; (6) the reasonable understanding of employees; and (7) the employer's intent.' Id. at 1265 (quoting Butero, 174 F.3d at 1215). 37 We cannot help but note that the facts in this case are similar to those in Anderson, in which we determined that the employer established and maintained the plan. See id. at 1259-62. In applying Butero 's seven listed factors to the facts in this case and incorporating our previous analysis concerning the safe harbor exception, we conclude, as we did in Anderson, that almost all of the ... factors provide powerful reasons to conclude as a matter of law that [the employer] both established and maintained an employee welfare benefit plan governed by ERISA. See id. at 1267. 38 With regard to the first Butero factor, as noted previously, Southeastern Steam stated in its employee handbook that disability insurance was an available benefit. Some courts have concluded that this alone is enough to trigger ERISA governance. See, e.g., Cockey v. Life Ins. Co. of N. Am., 804 F.Supp. 1571, 1575 (S.D.Ga.1992) (Where a plan is presented to employees as one belonging to the employer's benefits package, however, as opposed to merely permitting the insurer to publicize the program to employees, the plan is an `employee welfare benefit plan' under ERISA, 29 U.S.C. § 1002(1), even though the employees pay the premiums.). 39 With the possible exceptions of the disclosure of Unum Life's 1-800 number to certain employees and the word-of-mouth publicity for the Unum Life representative's visit to the company, which are not particularly probative of whether Southeastern Steam established or maintained the plan, there are no relevant facts discussed on appeal regarding Southeastern Steam's oral representations to its employees, so we move on to the third Butero factor. Here, Southeastern Steam, similar to the employer in Anderson, established a fund to pay benefits [and] selected the UNUM plan as the sole long term disability plan . . . and limited eligibility to [certain employees]. See Anderson, 369 F.3d at 1265 (citation omitted). By applying for UNUM Life coverage on behalf of its employees, and deciding on key terms in the plan agreement, Southeastern Steam made the plan a benefit closely tied to the employer-employee relationship. Id. at 1265-66. 40 With regard to fourth factor, Anderson is once again on point. While Southeastern Steam did not actually pay benefits, it [was] directly involved in the payment process because it maintain[ed] a supply of claim forms and facilitated the payment of benefits. See id. at 1266. Moorman disputes the level of participation by Southeastern Steam and argues that the claim forms were filed away. However, Carter admitted that she helped employees who had questions regarding their claims and benefits and that she wrote a check on Southeastern Steam's account to pay for all of the coverages. R.Exh. at 33-34, 52. Carter also assisted at least one or two employees in the filing of an actual claim. Id. at 44, 102-04; R4-30 Exh. 1 at 15-16. 41 The fifth and sixth Butero factors also favor the Appellees. It is not simply the subjective understanding of individual employees like Carter (who admitted she did not read the enrollment form) and Moorman, who maintained that they believed Southeastern Steam was not offering the plan, but rather the viewpoint of the objectively reasonable employee that is the primary consideration in this analysis. See Anderson, 369 F.3d at 1266-67; Johnson v. Watts Regulator Co., 63 F.3d 1129, 1135 (1st Cir.1995) (conducting ERISA analysis from the viewpoint of an objectively reasonable employee). Here, Southeastern Steam created and distributed the employee handbook, which referenced the plan in question as an available benefit for all its full-time employees. 2 Moreover, the employees signed the enrollment forms that indicated Southeastern Steam was offering the program. Though there is no affirmative evidence that Southeastern Steam knew of any misconceptions regarding the disability plan, there is likewise no evidence that Southeastern Steam company officials, including Carter and Moorman, who signed the enrollment forms and who received the ERISA plan booklet and certificates, took any steps, over the course of several years, to refute the indications that Southeastern Steam was offering the plan or to provide any necessary clarifications. See Anderson, 369 F.3d at 1267 (finding relevant the fact that company officials did nothing to change the ERISA language in any of the documents until after the claim had been filed). Thus, it is clear that the Southeastern Steam employees who signed and read the enrollment form and the employee handbook could have reasonably believed that Southeastern Steam was offering the plan in question. 42 The seventh Butero factor favors Moorman. More specifically, while some of the actions of Southeastern Steam suggest otherwise, it does not appear, based on Carter and Moorman's affidavits, that Southeastern Steam company officials had the intent to establish or maintain the plan at issue. This factor is not dispositive, however, because ERISA can apply regardless of the intent of the plan administrators and fiduciaries if the plan satisfies the statutory definition. Anderson, 369 F.3d at 1264. 43 Even if the Butero factors demonstrate that Southeastern Steam established or maintained the plan, Moorman makes four other arguments that ERISA governance is improper in this case. First, he alleges that ERISA was not intended to cover such small employers as Southeastern Steam. This argument is unpersuasive because we have said that an ERISA plan may consist of only a single employee. See, e.g., Williams v. Wright, 927 F.2d 1540, 1545 (11th Cir.1991). Second, Moorman alleges that the Appellees fraudulently inserted language regarding ERISA into plan documents and enrollment forms. Notwithstanding the fact that Southeastern Steam officials signed the enrollment forms and did nothing to refute the conspicuous ERISA language in the plan documents after the company received them, this allegation is without support from the evidence in the record. Third, Moorman argues that Appellees never discussed the issue of ERISA governance with Southeastern Steam employees or officials. Even assuming that Appellees had such a duty to explain, this argument also fails in light of the failure of Southeastern Steam to correct or clarify language in the enrollment forms and plan documents that reflects ERISA governance. Moreover, ERISA does not require that a beneficiary have any knowledge of a written plan's terms. Henglein v. Informal Plan for Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 401 (3d Cir.1992). Fourth, Moorman appears to argue that any relevant actions by Southeastern Steam regarding the ERISA plan governance were taken at the behest of the Appellees. This argument fails for two reasons: As already discussed, there were several actions that Southeastern Steam undertook on its own initiative, most notably the inclusion of the disability plan in the employee handbook and the assistance provided by Carter to Southeastern Steam employees. Furthermore, even if Southeastern Steam undertook actions at the behest of the Appellees, our primary inquiry must be from the vantage point of the objectively reasonable understanding of the employees, who may be unaware of the motivations behind their employer's actions. See Anderson, 369 F.3d at 1266-67. 44 While there may be fewer facts to show that the employer established or maintained the plan than there were in Anderson and Butero, insofar as the plan booklets in this case were not widely distributed and few employees submitted claims, those cases do not represent the absolute minimum of what must be proven to show establishment or maintenance. We do not believe that Congress established ERISA to prejudice the rights of employees or to needlessly squelch state law actions that would otherwise provide a superior avenue for the vindication of such rights. Instead, as noted previously, the raison d'etre of ERISA was to promote the interests of employees and their beneficiaries and to protect contractually defined benefits. Firestone Tire & Rubber Co., 489 U.S. at 113, 109 S.Ct. at 956. The bar triggering ERISA governance, therefore, should not be set too high. 45 Thus, reviewing the Butero factors previously discussed, and keeping in mind the underlying purposes of ERISA, we conclude that the plan in this case is governed by ERISA. In reaching this decision, we note that Moorman does not forfeit his rights against the Appellees; rather, he must litigate most, if not all, of his claims under ERISA, a statutory scheme enacted by Congress to protect the rights of employees such as Moorman. 3 D. Moorman's Federal RICO Claims 46 Appellees seek dismissal of Moorman's federal RICO claims on grounds that it was inconsistent with ERISA's exclusive remedial scheme. The district court denied that portion of the motion, stating: Defendants provide the court with no legal authority that allowing a plaintiff to proceed under RICO would frustrate the exclusive remedial scheme Congress devised for ERISA claims, and the court will not dismiss the claim on grounds for which Defendants have presented no legal authority. R7-41 at 33. In its 25 July 2005 order, which expressly refused to certify the question for appeal, the district court stated: 47 [T]he court is generally unable to certify a question for interlocutory appeal when the question has not been considered by the district court. In this case, the court previously determined it would not be proper to grant Defendants' motion to dismiss Plaintiff's federal RICO claim because Defendants had not presented legal authority supporting their position. It is only now that Defendants provide the court with such authority. An issue presented for the first time on appeal will be considered only in extraordinary circumstances. The court does not believe the inclusion or exclusion of Plaintiff's federal RICO claim presents an extraordinary circumstance warranting the court's certification of the question, therefore the court will decline Defendant's request for it to do so. 48 R7-59 at 27 (citations omitted). 49 The scope of review on appeal under 28 U.S.C. § 1292(b) is not limited to the precise question certified by the district court because the district court's order, not the certified question, is brought before the court. Aldridge v. Lily-Tulip, Inc. Salary Ret. Benefits Comm., 40 F.3d 1202, 1207 (11th Cir.1994). Under § 1292(b), appellate review, even for certified questions, is discretionary. McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1259 (11th Cir.2004). The proper division of labor between the district courts and the court of appeals and the efficiency of judicial resolution of cases are protected by the final judgment rule, and are threatened by too expansive use of the § 1292(b) exception to it. Because permitting piecemeal appeals is bad policy, permitting liberal use of § 1292(b) interlocutory appeals is bad policy. Id. By extension, review by appellate courts of noncertified questions is also discretionary. Cf. id. 50 There is no reason why the district court should not be afforded the opportunity to answer this question more fully in the first instance. In their motion to dismiss Moorman's RICO claim, Appellees did raise the issue before the district court, albeit briefly, and cited two cases: Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), and Gilbert v. Alta Health & Life Ins. Co., 276 F.3d 1292 (11th Cir.2001). R1-3 at 24. However, we note that Appellees thereafter did not request reconsideration of that court's ruling on the issue. Rather, in its response to Moorman's motion for certification, Appellees for the first time requested, in the event that the district court certified the ERISA governance question for appeal, that the district court also certify the RICO question. R7-50 at 5. 51 The federal RICO issue is heavily briefed by Appellees on appeal, and includes new theories not raised below (e.g., the proper application of a statute concerning ERISA's preclusive effect, 29 U.S.C. § 1144, on federal laws enacted both before and after ERISA's enactment). However, Appellees failed to afford the district court the same opportunity for review. Even if this issue presents a matter of first impression in our circuit, this is not a circumstance that would warrant preemptive appellate review and resolution of an issue not fully addressed by the district court, and we decline to liberally use § 1292(b) in the manner urged by Appellees. See McFarlin, 381 F.3d at 1259. 52 Appellees also claim that Moorman failed to allege a viable RICO claim because it lacked particularity. This question was also not certified for appeal. For similar reasons regarding our refusal to address Appellees' first RICO argument, we will not address this issue on appeal.