Opinion ID: 601877
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 The material facts relevant to the ERISA preemption issue are not in dispute. Bruce Randol was employed as a mechanic at Ed's Tire Center (the Tire Center), a small business wholly owned and operated by Edward Hurt. Hurt employed a total of three people. Before March 1988, Hurt did not offer his employees any insurance benefits. In March 1988, Linda and Bruce Randol decided to purchase major medical insurance for themselves because they were planning to have a child. Mid-West's agent, Daniel Johnson, had originally approached Hurt about buying group coverage for his employees. Hurt was not interested but agreed to allow Johnson to speak with his workers. Bruce Randol subsequently met with Johnson at the Tire Center during business hours and, following their conversation, Randol and another employee decided to purchase medical insurance from Mid-West. 4 Hurt testified that Johnson informed him that the premium payments would have to come from the Ed's Tire Center bank account. It is not clear from the record whether use of this means of payment was an absolute requirement imposed by Mid-West or whether it was simply requested as a convenience to the insurer and to the participating employees. In any event, Hurt agreed to this payment arrangement. In addition, in order to help the employees purchase the insurance and to provide an incentive for them to do so, Hurt decided to contribute $75 toward the cost of the monthly premium for each employee choosing to participate. Hurt wrote a check for the full amount of the first premium payment for each of the two participating employees and then deducted the cost of the premium, less his $75 contribution, from each of the employees' paychecks. This process was repeated each month, with Hurt deducting the participating employees' share of the premium from their pay and permitting Mid-West to debit the Tire Center account for that amount, supplemented by his $75 contribution. Hurt testified that he did not intend to set up an insurance plan or an employee benefit program. Hurt did not comply with any ERISA reporting requirements. 5 A representative of Mid-West testified that although the major medical policy was considered a group policy, the only underwriting criterion was the medical eligibility of the individuals to be insured. Mid-West regarded the Randols as individual applicants for insurance. The insurer never sought or received any application from Ed's Tire Center and Bruce Randol's application mentioned the Tire Center only for the purpose of noting his place of employment. Had the Tire Center failed to make a premium payment, Mid-West would have contacted the Randols rather than the company about the delinquency. When the policy was canceled, Mid-West sent the refund check directly to the Randols.