Brundage-Peterson v. Compcare Health Services Ins. Corp.

Decision Date05 June 1989
Docket NumberP,BRUNDAGE-PETERSO,No. 88-3032,88-3032
Citation877 F.2d 509
Parties, 11 Employee Benefits Ca 1649 Brigettelaintiff-Appellant, v. COMPCARE HEALTH SERVICES INSURANCE CORP., Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Michael T. Hopkins, Milwaukee, Wis., for plaintiff-appellant.

W. Charles Jackson, David V. Meany, Michael, Best & Friedrich, Milwaukee, Wis., for defendant-appellee.

Before CUDAHY, POSNER, and RIPPLE, Circuit Judges.

POSNER, Circuit Judge.

This appeal requires us to consider the meaning of the term "employee welfare benefit plan" in ERISA. The statutory definition is "any plan, fund, or program ... established or maintained by an employer or by an employee organization ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment [etc.]." 29 U.S.C. Sec. 1002(1)(A). The plaintiff, an employee of United Community Center in Wisconsin, was enrolled in a medical insurance plan offered through her employer by a Blue Cross-Blue Shield subsidiary called Compcare. She brought a suit against Blue Cross-Blue Shield in a Wisconsin state court, charging that Compcare had both broken its contract with her, and acted in bad faith, in refusing to reimburse her for medical expenses incurred in connection with an unusual ailment that she had contracted. Why she sued Blue Cross-Blue Shield instead of Compcare, a corporation in its own right, is unclear; in any event the parties agreed to substitute Compcare for Blue Cross-Blue Shield as the defendant.

Compcare removed the case to the district court on the ground that the plan in which the plaintiff was enrolled was an employee welfare benefit plan within the meaning of ERISA. The parties agree, as they must, that a suit for benefits allegedly due under an ERISA plan arises under ERISA, and therefore under federal law, and hence is removable to federal district court. 29 U.S.C. Sec. 1132(a)(1)(B); H.R.Conf.Rep. No. 1280, 93d Cong., 2d Sess. 326-27 (1974), U.S.Code Cong. & Admin.News 1974, 4639, 5106-07; Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Reiherzer v. Shannon, 581 F.2d 1266, 1269-72 (7th Cir.1978). They also agree that if the plaintiff's claim arises under ERISA, her state breach of contract claim is preempted. See 29 U.S.C. Sec. 1144(a). It makes no difference that the defendant is the insurer rather than the employer. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987).

The plaintiff's petition to remand the case to state court on the ground that it wasn't really an ERISA plan was denied, and the district judge went on to grant the defendant's motion for summary judgment and dismiss the case on the merits, finding no abuse of discretion in Compcare's determination that the benefits the plaintiff was seeking were not within the scope of the plan. The plaintiff appeals, arguing only that the plan is not an ERISA plan, and that the case should therefore be remanded to state court to allow her to pursue her remedies under Wisconsin law.

If an employer offers no welfare benefit plan to its employees but leaves each employee free to shop around for his or her own health (accident, disability, life, etc.) insurance, ERISA does not apply. And we may assume, in accordance with the Department of Labor's regulation attempting to clarify the statutory definition of an employee welfare benefit plan, 29 C.F.R. Sec. 2510.3-1(j), that the employer could take a few steps beyond this and still remain outside the scope of the Act--such steps as distributing advertising brochures from insurance providers, or answering questions of its employees concerning insurance, or even deducting the insurance premiums from its employees' paychecks and remitting them to the insurers. At the other extreme, the employer who provides welfare benefits directly to its employees has by virtue of doing so an ERISA plan. This is an intermediate case. The employer made contracts with two insurance companies whereby those companies agreed to offer health insurance to its employees on the terms specified in the contracts, including the price of the insurance. This left each employee free to choose between the two providers. All employees were eligible except probationary employees, that is, those who had been employed for fewer than thirty days. And the employer paid for the worker's (but not dependents') share of the insurance premiums. So the "plan" (if that is what it was) had three components: the contractual arrangements between the employer and the insurance companies whereby the latter agreed to insure the former's employees; the eligibility requirement of being an employee of more than thirty days' standing; and the employer's contribution of the worker's share of the insurance premiums. The employer also collected and remitted the premiums that the workers themselves paid for their dependents; but that is done, as we have said, in many arrangements that are not ERISA plans.

Is this rather barebones plan an ERISA plan? We think it is. The approach followed by the United Community Center appears to be (with the sole and, we shall see, irrelevant exception of the presence of two insurers) a common method by which employers provide health and other welfare benefits to their employees, and not one that has heretofore been thought to take a benefits plan out of ERISA. The statute by its express terms encompasses the provision of such benefits by means of insurance, and once the employer elects that route his participation in the actual provision of the benefits is unlikely to be any greater than the employer's in this case. If this employer's arrangement is less common than we suppose, it was the plaintiff's burden to enlighten the district judge and us by presenting evidence...

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