Tigner v. Lea C. Paslay Ins., Inc.

• Decision Date: 03 September 2008
• Docket Number: Civil Action No. 1:08CV9-SA-JAD.
• Citation: 575 F.Supp.2d 766
• Parties: Angela TIGNER, Plaintiff v. LEA C. PASLAY INSURANCE, INC., et. al., Defendants.
• Court: U.S. District Court — Northern District of Mississippi

575 F.Supp.2d 766

Angela TIGNER, Plaintiff v. LEA C. PASLAY INSURANCE, INC., et. al., Defendants.

Civil Action No. 1:08CV9-SA-JAD.

United States District Court, N.D. Mississippi, Eastern Division.

September 3, 2008.

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Gregory M. Hunsucker, Hunsucker Law Firm, PLLC, Tupelo, MS, for Plaintiff.

Gayla L. Carpenter, Wells, Marble & Hurst, PLLC, Ridgeland, MS, Kelly D. Simpkins, Wells Marble & Hurst, PLLC, Jackson, MS, for Defendants.

MEMORANDUM OPINION ON REMAND

SHARION AYCOCK, District Judge.

This cause comes before the Court on the Plaintiffs Motion to Remand this case to the Circuit Court of Lee County. Defendants Lea C. Pasley Insurance, Inc., and Evelyn Pasley Corbett (used collectively throughout as "Pasley Defendants")¹ have responded in opposition to the motion, and the Court, having considered the memoranda and submissions of the parties, along with other pertinent authorities, concludes that the motion should be denied.

Factual and Procedural Background

H.M. Richards, Inc., Plaintiffs employer, established and maintained for the benefit of its employees a welfare benefit plan entitled Blue Cross & Blue Shield Employee Health Protection Plan. Aside from medical coverage, H.M. Richards also offered its employees dental coverage, short-term disability benefits, long-term disability benefits, life insurance, cancer coverage, and critical illness insurance. Department of Labor regulations require employers that maintain employee benefit plans to submit certain documentation each year outlining the particular coverage and contracts the employer has entered for the insurance coverage. In the 2006 Summary Annual Report for the H.M. Richards, Inc., Insurance Plan, only the contracts with EMC National Life Company and Citizens Security Life Insurance Company are listed as part of the H.M. Richards employee benefits plan. At issue here is whether the critical illness insurance Plaintiff signed up for on December 6, 2006, was part of the employee welfare benefit plan of H.M. Richards, Inc., such that the Plaintiffs claims are subject to the jurisdiction of this federal court.

Plaintiff filed suit against H.M. Richards, Inc., the Lea C. Pasley Insurance Company, Evelyn Pasley Corbett, an individual insurance agent, and the insurance company who issued the policy in the Lee County Circuit Court on November 5, 2007. Plaintiff suffered a heart attack on December 10, 2006, approximately four days after signing up for critical illness insurance. She incurred over $40,000 in medical expenses related to that incident. Plaintiff claims that she was denied coverage by the Pasley Defendants. Further, Plaintiff contends that the independent insurance agent, Evelyn Pasley Corbett, misrepresented to her that the effective date of the policy was the date it was purchased. Plaintiff specifically alleges claims against the Pasley Defendants on the grounds of breach of contract, promissory estoppel, breach of duty of good faith and fair dealing, fraud, misrepresentation, and civil conspiracy. H.M. Richards, Inc., has been dismissed as a party defendant by agreed order dated August 11, 2008.

The Defendants removed this action to the federal court on January 11, 2008, alleging that Plaintiffs claims involve a federal question under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. Plaintiff then filed a Motion to Remand on the basis that all of her claims were premised on state law and, thus, outside the federal question jurisdiction of this court.

Standard for Federal Question Removal and Remand

The Judiciary Act of 1789 provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Original federal question jurisdiction exists in "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331; MSOF Corp. v. Exxon Corp., 295 F.3d 485, 489 (5th Cir.2002). The Fifth Circuit has held that the removal statutes are to be construed "strictly against removal and for remand." Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir.1996); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). After removal of a case, a plaintiff may move for remand, and "[if] it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). Once a motion to remand has been filed, the burden is on the removing party to establish that federal jurisdiction exists. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir.1995).

Whether a claim arises under federal law so as to confer federal question jurisdiction under 28 U.S.C. § 1331 is governed by the well-pleaded complaint rule, which provides that "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). While federal law itself creates the cause of action in the majority of federal question cases, federal question jurisdiction may also exist where "the vindication of [the subject state law cause of action] necessarily turn[s] on some construction of federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); see also Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804, 808-09, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Here, the propriety of the Defendants' removal depends upon whether any of the Plaintiffs claims arise under federal law, thereby giving this court original federal question jurisdiction over those claims.

ERISA Governance

We are presented with the threshold question of whether H.M. Richard's critical illness policy is a benefit plan regulated by ERISA. To determine the answer, "we ask whether a plan: (1) exists; (2) falls within the safe-harbor provision established by the Department of Labor; and (3) satisfies the primary elements of an ERISA `employee benefit plan'—establishment or maintenance by an employer intending to benefit employees." House v. Am. United Life Ins. Co., 499 F.3d 443, 448 (5th Cir.2007) (citing Meredith v. Time Ins. Co., 980 F.2d 352, 355 (5th Cir.1993)).

With respect to the first Meredith inquiry (existence of a plan), the Fifth Circuit has adopted an Eleventh Circuit test devised to measure the materiality of a purported plan:

In determining whether a plan, fund, or program (pursuant to a writing or not) is a reality a court must determine whether from the surrounding circumstances a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits.

Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.1982) (en banc). Moreover, "[a] formal document designated as `the Plan' is not required to establish that an ERISA plan exists; otherwise, employers could avoid federal regulation merely by failing to memorialize their employee benefit programs in a separate document so designated." Vega v. Nat'l Life Ins. Servs., 145 F.3d 673, 677 (5th Cir.1998) (citing Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 241 (5th Cir. 1990)).²

According to the Plaintiff's critical illness insurance policy, her intended benefit is insurance coverage for any of the medical conditions or surgical treatments listed in that document, including cancer, heart bypass, heart attack, major organ transplant, renal failure, and stroke. Moreover, a reasonable person could ascertain from Plaintiff's insurance application that Angela Tigner was the beneficiary. Also looking at the enrollment form attached to Plaintiffs application, the Plaintiffs signature is located in a box titled "Payment Deduction Authorization and Acknowledgments of Proposed Insured." That capitalized paragraph notes that the premiums for the insurance policy will be deducted from the Plaintiffs paycheck and "none of the premium is paid by [the] employer." Further, the application itself is titled "Application to Mutual of Omaha Insurance Company." Thus, a reasonable person could ascertain the source of financing for the insurance. Last, a quick review of the critical illness insurance policy reveals a section entitled "How to File a Claim" followed by "Payment of Claims." Accordingly, a reasonable person could determine the procedures for receiving those benefits. Therefore, this analysis establishes that according to Meredith, a plan does exist in regard to Plaintiff's critical illness insurance policy. See Vega, 145 F.3d at 676 (finding that where all four requisites are present, a plan does exist).

The second Meredith factor to consider in order to qualify as an ERISA plan, is whether the plan falls within the Department of Labor's safe harbor exclusion. The safe harbor provision states that a group or group-type insurance program will not be considered an ERISA Plan if (1) the employer does not contribute to the plan; (2) participation is voluntary; (3) the employer's role is limited to collecting premiums and remitting them to the insurer; and (4) the employer receives no profit from the plan. 29 C.F.R. § 2510.3-1(j). The plan must meet all four criteria to be exempt from ERISA.

Here is it undisputed that H.M. Richards does not contribute to the plan and that employee participation is voluntary. Moreover, H.M. Richards acknowledged that they do not receive any profit from the plan. There is, however, a dispute regarding the employer's role in the plan. As noted by the Fifth Circuit in Hansen v. Continental Insurance Company, to meet the...