Silvera v. Mutual Life Ins. Co. of New York

Summary

The Ninth Circuit held that the City of Oroville established or maintained an employee welfare benefit plan when it purchased a group health insurance policy for its employees. Because the City was a political subdivision of California, the plan qualified as a governmental plan exempt from ERISA. The court reversed the district court’s dismissal and directed remand to state court unless another basis for federal jurisdiction existed.

Holdings

1. A municipal employer establishes or maintains an employee welfare benefit plan when it endorses and automatically provides a group insurance plan to its employees and pays the premiums directly to the insurer, even though the insurer designs, administers, and underwrites the plan.
2. A group insurance plan purchased by a political subdivision for its employees is a governmental plan within the meaning of ERISA and is exempt from ERISA coverage, notwithstanding that a private insurer designed, administered, and underwrote the plan.
3. The district court's dismissal was reversed, and the action was to be remanded to state court unless another basis for federal jurisdiction could be asserted.

Questions Presented

1. Whether the City's purchase of a group benefits insurance policy for its employees established or maintained an employee welfare benefit plan under ERISA.
2. Whether the plan qualified as a governmental plan exempt from ERISA coverage.
3. Whether the district court's dismissal of the state-law claims should be reversed and the action remanded to state court absent another basis for federal jurisdiction.

Disposition

reversed_and_remanded