Summary
The Fifth Circuit affirmed summary judgment for the Texas Commissioner of Insurance in a dispute over whether a multiple employer welfare arrangement was "fully insured" under ERISA. The court held that, under 29 U.S.C. § 1144(b)(6)(D), a MEWA qualifies as fully insured only upon a determination by the Secretary of Labor, and that no such determination had been made for CREW. The court rejected CREW’s reliance on a Department of Labor guide, concluding that the guide permitted but did not require state regulators to treat a MEWA as fully insured.
Topics
Practice areas
Questions Presented
- Whether CREW qualified as a fully insured multiple employer welfare arrangement under 29 U.S.C. § 1144(b)(6)(D) when the Secretary of Labor had not determined that the arrangement's benefits were guaranteed under a qualifying insurance contract.
- Whether the Department of Labor's MEWA Guide allowed CREW to establish its fully insured status without a determination by the Secretary of Labor.
Holdings
- A MEWA is considered fully insured only when the Secretary of Labor determines that all of its benefits are guaranteed under a qualifying insurance contract or policy. Because the Secretary had not made such a determination for CREW, CREW was not fully insured within the meaning of the statute.
- The MEWA Guide did not require a state regulator to treat a MEWA as fully insured and did not itself establish CREW's fully insured status. The Guide merely allowed a state, in its discretion, to impose a reduced level of regulation while the Secretary had not spoken.
- Summary judgment was proper because there was no genuine issue of material fact and the Commissioner was entitled to judgment as a matter of law on CREW's statutory preemption claim.
Key quotations
“Thus because the Secretary has not spoken, CREW is not "fully insured" within the meaning of the statute and we affirm the district court's grant of summary judgment to the Commissioner.” (at 234)
“The Guide only provides that a state may exercise its discretion in determining the degree of regulatory control it will assert over MEWAs, so long as the Secretary of Labor has not spoken to the subject.” (at 236)
“More central to our analysis, however, this reading contradicts the plain meaning of the statute, which in unambiguous terms requires a determination by the Secretary for MEWAs to be declared "fully insured."” (at 237)
Factual background
Custom Rail Employer Welfare Trust Fund is an employee welfare benefit plan and multiple employer welfare arrangement providing medical, disability, and death benefits to employees of members of the Small Railroad Business Owners Association of America. CREW's insurance contract with Certain Underwriters at Lloyd's, London guaranteed covered claims, but Lloyd's was not authorized to conduct business in Texas. After the Texas Department of Insurance refused to allow CREW to operate as a MEWA in Texas, CREW claimed that its Lloyd's contract made it fully insured for purposes of ERISA preemption.
Procedural history
CREW sought a Certificate of Authority from the Texas Department of Insurance to operate as a multiple employer welfare arrangement in Texas. After the Department declined to permit CREW to operate, CREW filed a federal action seeking an injunction and declaratory judgment that it was fully insured and therefore subject to limited state regulation under ERISA. The parties filed cross-motions for summary judgment, and the district court ruled for the Commissioner. The Fifth Circuit affirmed.