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

Heading: What constitutes a plan under ERISA?

Text: 5 New England Mutual asserts federal jurisdiction and federal preemption pursuant to ERISA on the basis of its claim that Baig's disability insurance coverage constitutes a benefit plan under ERISA. 2 ERISA's statutory definition of a benefit plan states in part: 6 The terms employee welfare benefit plan and welfare plan mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, ... benefits in the event of sickness, accident, disability, death or unemployment,.... 7 29 U.S.C. § 1002(1)(A) (emphasis added). Thus, a disability insurance policy like the one at issue in this case will qualify as an employee welfare benefit plan and will be subject to the strictures of ERISA if it has been established or maintained by an employer. See 29 U.S.C. § 1003(a). In determining whether a plan is established or maintained by an employer, we must look for the undertaking of continuing administrative and financial obligations by the employer to the behoof of employees or their beneficiaries. Belanger, 71 F.3d at 454. 8 We look to an employer's continuing administrative or financial obligations because such obligations implicate the fundamental policy concerns at the heart of the ERISA statutory scheme. These policy concerns can be grouped into two broad (and sometimes overlapping) categories: concerns for the protection of employers, and concerns for the protection of employees. As to the former, the Supreme Court has stated that Congress intended pre-emption to afford employers the advantages of a uniform set of administrative procedures governed by a single set of regulations. This concern only arises ... with respect to benefits whose provision by nature requires an ongoing administrative program to meet the employer's obligation. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). A plan therefore exists under ERISA where periodic demands on [employer] assets ... create a need for financial coordination and control on the part of the employer. Id. at 12, 107 S.Ct. 2211. More recently, the Court has stated that finding a plan requires that the employer have at least some minimal, ongoing 'administrative' scheme or practice.... District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n. 2, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992), quoted in Belanger, 71 F.3d at 454. ERISA was also designed to provide numerous substantive protections to employees. ERISA's substantive protections are intended to safeguard the financial integrity of employee benefit funds, to permit employee monitoring of earmarked assets, and to ensure that employer promises are kept. Belanger, 71 F.3d at 454 (citing Fort Halifax, 482 U.S. at 15, 107 S.Ct. 2211). 9 Although [t]here is no authoritative checklist that can be consulted to determine conclusively if [benefits] rise to the level of [a] plan under ERISA, id. at 455, we will be inclined to find a plan where there are elements that involve administrative activity potentially subject to employer abuse, Fort Halifax, 482 U.S. at 16, 107 S.Ct. 2211. A mere purchase of insurance by an employer is not sufficient to establish a plan under ERISA. See Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1082 (1st Cir.1990). Where insurance has been purchased by an employer, the crucial factor in determining if a 'plan' has been established is whether the purchase of the insurance policy constituted an expressed intention by the employer to provide benefits on a regular and long term basis. Id. at 1083. Similarly, whether a reasonable employee would perceive an ongoing commitment by the employer to provide employee benefits is an important consideration. Belanger, 71 F.3d at 455. 10