Cramer v. Association Life Ins. Co., Inc.
| Decision Date | 15 March 1990 |
| Docket Number | No. CW,CW |
| Citation | 563 So.2d 267 |
| Parties | Charles R. CRAMER, Jr. and Neva Gage Cramer v. ASSOCIATION LIFE INSURANCE COMPANY, INC. 89 0057. 563 So.2d 267 |
| Court | Court of Appeal of Louisiana — District of US |
Allen M. Posey, Jr., Baton Rouge, for plaintiffs.
Christine Lipsey, Baton Rouge, for defendant.
Before EDWARDS, CARTER, LANIER, LeBLANC and FOIL, JJ.
This is a suit in contract to recover health insurance benefits.
On September 24, 1986, plaintiffs, Charles and Neva Cramer, Jr., filed suit against defendant, Association Life Insurance Company, Inc. (ALIC), claiming benefits due under a health insurance policy purchased by Mr. Cramer's employer, Advertising By Computer, Inc. (ABC). In their petition, the Cramers alleged the following facts, in pertinent part:
2.
On or about July of 1985, ADVERTISING BY COMPUTER, INC., (herein after sometimes referred to as "Advertising"), a Louisiana domestic corporation, made an application for health and medical insurance benefits with Defendant, Association Life Insurance Company, Inc.
3.
The group insurance application by Advertising was approved by Defendant effective August 1, 1985. The assigned group number of that policy is 11709 and the unit number is 9425.
4.
Plaintiff, Charles R. Cramer, Jr., as an employee of Advertising, together with his wife, Neva Gage Cramer (Plaintiff) and minor daughter, Noel Cramer, were covered under the health and medical insurance benefits of defendant's group policy.
5.
After the effective date of August 1, 1985, Plaintiffs' minor daughter, Noel Cramer, became very ill and was treated first at Earl K. Long Memorial Hospital in Baton Rouge, Louisiana and was later transferred to Texas Children's Hospital, Houston, Texas, for treatment.
6.
On September 14, 1985 Noel was diagnosed as suffering from severe combined immune deficiency.
7.
On September 24, 1985 Noel first received treatment for the severe combined immune deficiency, undergoing bone marrow transplantation. 8.
On November 16, 1985, Noel passed away as a result of this severe combined immune deficiency.
....
12.
From September through December, 1985, Plaintiffs submitted copies of all the [medical] bills ... [incurred by Noel], with requests that Defendant pay those medical expenses.
13.
Despite this amicable demand Defendant has failed and/or refused to pay any of the foregoing medical expenses.
In addition to their claim for unpaid benefits, the Cramers alleged that ALIC was arbitrary and capricious in its failure to pay their claim, thereby entitling them to recover a penalty of 100% of the principal amount sued on and reasonable attorney's fees, pursuant to LSA-R.S. 22:657. ALIC, in its original answer, denied any obligation to the Cramers. ALIC filed an amended and supplemental answer pleading that the Cramers do not have a cause of action for penalties and mandatory attorney's fees under LSA-R.S. 22:657 because such claims are preempted by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.A. Sec. 1001, et seq. (ERISA).
On December 15, 1988, ALIC filed a peremptory exception raising the objection of no cause of action, or, alternatively, a motion for partial summary judgment claiming that the Cramers' claim for statutory penalties under LSA-R.S. 22:657 was preempted by ERISA. ALIC also filed a motion in limine requesting that the trial court deny the Cramers' demand for a jury trial because the case is governed by ERISA and the federal common law interpreting ERISA, which precludes a trial by jury. ALIC further moved for an in limine order limiting the evidence admissible at trial to that evidence which was before ALIC at the time its final claim decision was rendered, as provided for by ERISA.
The Cramers filed a cross motion for partial summary judgment, opposing ALIC's exception and motion for summary judgment, and requested an order of the court declaring that ERISA is inapplicable to the case.
The trial court ruled that ERISA was inapplicable to this case and rendered judgment, which overruled ALIC's exception, denied ALIC's motion for summary judgment and motions in limine, and granted the Cramers' motion for summary judgment. ALIC sought supervisory writs. This court issued a writ of certiorari to review the trial court's ruling on the following issues:
A. Does the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C.A. Secs. 1001, et seq., apply to the case at bar, thus requiring the application of ERISA's civil enforcement provisions contained in 29 U.S.C.A. Sec. 1132 and thereby preempting and displacing the plaintiffs' state law claims for breach of contract and penalties and mandatory attorneys' fees under La.R.S. 22:657?
B. If ERISA applies to the case at bar, are the plaintiffs precluded from having a jury trial?
C. If ERISA applies to the case at bar, shouldn't the evidence at trial be limited to that before ALIC at the time of its final claims decision, thus precluding a de novo trial court review, and requiring application of an arbitrary and capricious standard of review to the claims decision made by ALIC?
ALIC contends that ERISA applies to the health insurance policy purchased by ABC, thus requiring the application of ERISA's civil enforcement provisions contained in 29 U.S.C.A. Sec. 1132 and, thereby, preempting the Cramers' state law claims for breach of contract and statutory penalties under LSA-R.S. 22:657.
To determine whether an insurance plan is governed by ERISA, the following analysis set forth in Donovan v. Dillingham 688 F.2d 1367 (11th Cir.1982), should be followed:
I.
Congress enacted ERISA to protect working men and women from abuses in the administration and investment of private retirement plans and employee welfare plans. Broadly stated, ERISA established minimum standards for vesting of benefits, funding of benefits, carrying out fiduciary responsibilities, reporting to the government and making disclosures to participants. See generally H.R.Rep. No. 93-533, 93d Cong. 2d Sess., reprinted in [1974] U.S. Code Cong. & Ad. News 4639.
With a few specific exceptions ..., Title I of ERISA applies to any "employee benefit plan" if it is established or maintained by any employer or employee organization engaged in commerce or in any industry or activity affecting commerce, or by both an employer and an employee organization. ERISA Sec. 4(a), 29 U.S.C. Sec. 1003(a). "Employee benefit plan" or "plan" means an "employee welfare benefit plan" or an "employee pension benefit plan" or a plan which is both a welfare plan and a pension plan. ERISA Sec. 3(3), 29 U.S.C. Sec. 1002(3).
....
II.
ERISA Sec. 3(1), 29 U.S.C. Sec. 1002(1), defines "employee welfare benefit plan" or "welfare plan" as
any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in Sec. 302(c) of the Labor Management Relations Act, 1947 (other than pensions on retirement or death, and insurance to provide such pensions). 4
By definition, then, a welfare plan requires (1) a "plan, fund, or program" (2) established or maintained (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits (5) to participants or their beneficiaries.
Prerequisites (3), (4) and (5) are either self-explanatory or defined by statute. A plan, fund, or program must be established or maintained "for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise," health, accident, disability, death, or unemployment or vacation benefits or apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits. 5
The gist of ERISA's definitions of employer, 6 employee organization, 7 participant, 8 and beneficiary 9 is that a plan, fund, or program falls within the ambit of ERISA only if the plan, fund, or program covers ERISA participants because of their employee status in an employment relationship, and an employer or employee organization is the person that establishes or maintains the plan, fund, or program. Thus, plans, funds, or programs under which no union members, employees or former employees participate are not employee welfare benefit plans under Title I of ERISA. See 29 C.F.R. 2510.3-3(b),(c).
....
Not so well defined are the first two prerequisites: "plan, fund, or program" and "established or maintained." Commentators and courts define "plan, fund, or program" by synonym--arrangement, scheme, unitary scheme, program of action, method of putting into effect an intention or proposal, design--but do not specify the prerequisites of a "plan, fund, or program." At a minimum, however, a "plan, fund, or program" under ERISA implies the existence of intended benefits, intended beneficiaries, a source of financing, and a procedure to apply for and collect benefits.
"Established or maintained" appears twice in the definition of an employee welfare benefit plan: first, an employer or employee organization or both must establish or maintain a plan, fund, or program, and, second, the plan, fund, or program must be...
To continue reading
Request your trial
-
Encompass Office Solutions, Inc. v. La. Health Serv. & Indem. Co.
...So.2d 351, 358 (La. 1996) )).22 Hymel v. HMO of La., Inc. , 951 So.2d 187, 199 (La. Ct. App. 2006) (citing Cramer v. Ass'n Life Ins. Co., Inc. , 563 So.2d 267, 275 (La. Ct. App.), rev'd on other grounds , 569 So.2d 533 (La. 1990) ) (interpreting predecessor La. Stat. Ann. § 22:657 ); see Ca......
-
Cramer v. Association Life Ins. Co.
... ... and Neva Gage Cramer ... ASSOCIATION LIFE INSURANCE COMPANY ... No. 90-CC-0804 ... 569 So.2d 533, 59 U.S.L.W. 2340 ... Supreme Court of Louisiana ... Nov. 8, 1990 ... Christine Lipsey, Breazeale, Sachse & Wilson, Baton Rouge, for Association Life Ins. Co., Inc., defendant-applicant ... Allen M. Posey, Jr., Baton Rouge, for Charles Cramer and Neva Cramer, plaintiff-respondent ... Richard Tyler, amicus curiae ... David Radlauer, amicus curiae ... Woodrow E. Eno, amicus curiae ... ...
-
Hymel v. Hmo of Louisiana, Inc.
...22:657 is separate and distinct from the cause of action for the breach of the insurance contract. See Cramer v. Ass'n Life Ins. Co., Inc., 563 So.2d 267, 275 (La.App. 1st Cir.1990), reversed on other grounds, 569 So.2d 533 (La.1990), cert. denied, 499 U.S. 938, 111 S.Ct. 1391, 113 L.Ed.2d ......
-
Brown v. Hartford Life Companies
...of this issue. See Reinking v. Philadelphia American Life Ins. Co., 910 F.2d 1210 (C.A. 4th Cir.1990); Cramer v. Association Life Ins. Co., Inc., 563 So.2d 267 (La.App. 1st Cir.1990), reversed on other grounds, Cramer, In evaluating Hartford's actions however, we do agree that they were arb......