Combined Management, Inc. v. Superintendent of Bureau of Ins. of State of Me., 93-1874

• Citation: 22 F.3d 1
• Decision Date: 06 January 1994
• Docket Number: No. 93-1874,93-1874
• Parties: , 18 Employee Benefits Cas. 1208 COMBINED MANAGEMENT, INC., Plaintiff, Appellant, v. SUPERINTENDENT OF THE BUREAU OF INSURANCE OF THE STATE OF MAINE, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1

22 F.3d 1

62 USLW 2669, 18 Employee Benefits Cas. 1208

COMBINED MANAGEMENT, INC., Plaintiff, Appellant, v. SUPERINTENDENT OF THE BUREAU OF INSURANCE OF THE STATE OF MAINE, Defendant, Appellee.

No. 93-1874.

United States Court of Appeals First Circuit.

Heard Jan. 6, 1994.

Decided April 22, 1994.

Richard G. Moon with whom Ralph A. Dyer, Portland, ME, was on brief for appellant.

James M. Bowie, Asst. Atty. Gen., Dept. of the Atty. Gen., with whom Michael E. Carpenter, Atty. Gen., Linda M. Pistner, Director, Regulatory Agency Unit, Dept. of the Atty. Gen., and Thomas D. Warren, Director, Litigation Unit, Dept. of the Atty. Gen., Augusta, ME, were on brief for appellee.

Robert Abrams, Atty. Gen., of the State of New York, Jerry Boone, Sol. Gen., Jane Lauer Barker, Asst. Atty. Gen. in Charge of Labor Bureau, and Jennifer S. Brand, Asst. Atty. Gen., New York City, on brief for State of NY, et al., amici curiae.

John M. Rea, Chief Counsel, Vanessa L. Holton, Sr. Counsel, James D. Fisher, Staff Counsel, Gary J. O'Mara, Staff Counsel, Dept. of Industrial Relations, and Lloyd Aubry, Jr., Director, Dept. of Industrial Relations State of CA, San Francisco, CA, on brief for State of CA, amicus curiae.

Marsha S. Berzon, Michael Rubin, Indira Talwani, Altshuler, Berzon, Nussbaum, Berzon & Rubin on brief, San Francisco, CA, for the American Federation of Labor and Congress of Industrial Organizations and the International Ladies' Garment Workers' Union, AFL-CIO, amici curiae.

Thomas S. Williamson, Jr., Sol. of Labor, Marc I. Machiz, Associate Sol., Plan Benefits Sec. Div., Karen L. Handorf, Counsel for Special Litigation, Plan Benefits Sec. Div., and Elizabeth A. Goodman, Trial Atty., Plan Benefits Sec. Div., U.S. Dept. of Labor, on brief, Washington, DC, for the Secretary of Labor, amicus curiae.

Allan M. Muir and Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, ME, on brief for Maine Employers' Mut. Ins. Co., amicus curiae.

Michael M. Sykes, General Counsel, Oklahoma Dept. of Labor, and Kayla A. Bower, Attorney, Oklahoma Dept. of Labor, on brief, Oklahoma City, OK, for State of Oklahoma ex rel. Dave Renfro, Commissioner of Labor, Oklahoma Dept. of Labor, amicus curiae.

Before TORRUELLA, ALDRICH and CYR, Circuit Judges.

TORRUELLA, Circuit Judge.

Plaintiff-Appellant, Combined Management, Inc. ("CMI"), brought an action to enjoin Brian K. Atchinson, in his representative capacity as Superintendent of the Bureau of Insurance for the State of Maine (the "Superintendent"), from enforcing certain provisions of Maine's workers' compensation statute. 39-A M.R.S.A. Sec. 101 et seq. CMI claimed that because CMI provides workers' compensation benefits through a welfare benefit plan that is covered by the Employee Retirement Income Security Act ("ERISA"), the Superintendent's efforts to apply the workers' compensation law to CMI are preempted by Sec. 514(a) of ERISA, 29 U.S.C. Sec. 1144(a). The district court dismissed CMI's complaint, finding that ERISA did not preempt Maine law. We affirm.

I. BACKGROUND

CMI is an employee leasing company that leases the services of its workers' to a variety of businesses on a long-term basis. CMI provides employee benefits, including occupational injury and disability benefits, to the leased employees through a subscription to the International Association of Entrepreneurs of America Welfare Benefit Plan (the "IAEA Plan"). The workers' compensation portion of the IAEA Plan is not separately insured or administered.

Maine state law, 32 M.R.S.A. Sec. 14055(1)(B), mandates that employee leasing companies or their client businesses must arrange for the payment of workers' compensation benefits in accordance with the requirements of the Maine Workers' Compensation Act, 39-A M.R.S.A. Sec. 101 et seq. The Workers' Compensation Act requires that all employers provide workers' compensation either through an insurance carrier authorized by the state or through a self-insurance plan that meets the state's qualifications. 39-A M.R.S.A. Sec. 403.2. ¹ Maine requires authorized insurance carriers and self-insurers to provide evidence of their financial solvency and meet certain funding requirements. See, e.g., 24-A M.R.S.A. Secs. 221-A, 410, 4431-4452; 39-A M.R.S.A. Secs. 403, 404.

On January 29, 1993, the Maine Bureau of Insurance sent a letter to CMI stating that CMI's subscription to the IAEA Plan did not satisfy its obligation under state law to provide workers' compensation benefits through one of the methods authorized by 39-A M.R.S.A. Sec. 403. The letter did not "constitute a formal order or action of the Superintendent" but it did warn that failure of CMI to comply with the law could prompt some action in the future.

One month later, CMI filed suit to enjoin the Superintendent from requiring CMI to obtain separate workers' compensation insurance or to establish a qualified program of self-insurance pursuant to 39-A M.R.S.A. Sec. 403. CMI also sought a declaratory judgment stating that any enforcement of 39-A M.R.S.A. Sec. 403 against CMI is preempted by ERISA.

In response to CMI's request for a preliminary injunction, the magistrate judge suggested that he first address the issue of whether ERISA preempted Maine's workers' compensation laws. Although CMI would have to establish that its benefit plan, the IAEA Plan, was an ERISA covered plan under 29 U.S.C. Secs. 1002(3) and 1002(37)(A) before it could invoke the protections of ERISA's preemption provision, the magistrate noted that determining the status of the IAEA Plan would involve a fact intensive inquiry requiring additional discovery. Instead, with the agreement of the parties, the magistrate ordered that the preemption issue be addressed first on the understanding that if he found ERISA did not preempt Maine law, he would then dismiss the case. Thus, for purposes of this threshold question only, the IAEA Plan is assumed to be a valid ERISA benefit plan.

On June 15, 1993, the magistrate recommended a denial of the requested preliminary injunction and a dismissal of the case on the grounds that ERISA did not preempt Maine's workers' compensation law. The magistrate found that the workers' compensation law did not "relate to" the IAEA Plan offered by CMI because the law is a matter of general application affecting all private employers, whether or not they have adopted ERISA plans, and because the law does not affect the structure, administration, or type of benefits provided by any ERISA plan. On August 2, 1993, the district court affirmed and adopted the magistrate's recommended decision. CMI now appeals this decision.

II. ERISA PREEMPTION

ERISA preempts state laws that "relate to" an ERISA covered welfare benefit plan. ERISA Sec. 514(a), 29 U.S.C. Sec. 1144(a). ² A state law "relates to" an ERISA covered plan " 'if it has a connection with or reference to such a plan.' " District of Columbia v. Greater Washington Bd. of Trade, --- U.S. ----, ----, 113 S.Ct. 580, 583, 121 L.Ed.2d 513 (1992) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983)); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990). A state law may "relate to" a benefit plan "even if the law is not specifically designed to affect such plans, or the effect is only indirect." Greater Washington Bd. of Trade, --- U.S. at ----, 113 S.Ct. at 583 (quoting Ingersoll-Rand, 498 U.S. at 139, 111 S.Ct. at 483). However, preemption will not occur where the state law has only a "tenuous, remote, or peripheral" connection with covered plans, "as is the case with many laws of general applicability." Id. --- U.S. at ---- n. 1, 113 S.Ct. at 583 n. 1 (citing Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21); see also Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 830-38, 108 S.Ct. 2182, 2185-90, 100 L.Ed.2d 836 (1988).

State laws that do not "relate to" an ERISA covered plan but instead "relate to" a benefit plan established solely to comply with state workers' compensation laws are not preempted by ERISA. Section 514(a); ERISA Sec. 4(b)(3), 29 U.S.C. Sec. 1003(b)(3). ³ As Maine's workers' compensation law falls within this special exemption, we affirm the district court's determination that ERISA does not preempt any efforts by the Superintendent to require CMI to provide workers' compensation benefits through an authorized insurance provider or qualified self-insurance. See Employee Staffing Servs., Inc. v. Aubry, 20 F.3d 1038 (9th Cir.1994) (holding that California's workers' compensation law, which is quite similar to Maine's, is not preempted by ERISA).

A. The Workers' Compensation Exemption

Congress explicitly exempted state workers' compensation schemes from ERISA's purview, see H.R.Rep. No. 93-1280, 93d Cong., 2d Sess. 383 (1974), reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 5038, 5162, leaving intact the states' traditional regulation and oversight of this specialized system of insurance. See also 28 U.S.C. Sec. 1445(c) (forbidding removal of workers' compensation benefits claims to federal court). In the statute, Sec. 4(b)(3) excludes benefit plans created solely to comply with state workers' compensation statutes from coverage under ERISA, and Sec. 514(a) excludes from preemption state laws that relate to those plans described in Sec. 4(b). 29 U.S.C. Secs. 1003(b) and 1144(a). Some state workers' compensation laws might "relate to" ERISA covered benefit plans, instead of, or in addition to, plans exempt under Sec. 4(b)(3), and thus fall under the broad sweep of ERISA's preemption clause. Greater Washington Bd. of Trade, --- U.S. at ----, 113 S.Ct. at 584-85. Laws which relate only to welfare benefit plans exempt from ERISA's coverage, however, fit safely under the umbrella of Sec. 4(b)'s exemption. Id.

In Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 106-09, 103 S.Ct. 2890, 2905-06, 77 L.Ed.2d 490 (1983), the...