Summary
The Second Circuit held that the factual record was insufficient to determine whether the plaintiffs' health insurance policy constituted an ERISA employee welfare benefit plan or fell within the Department of Labor's regulatory safe harbor. Because Blue Cross bore the burden of establishing the propriety of removal and had not done so on the sparse record, the court vacated the judgment and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the district court erred in denying the motion to remand where the record was insufficient to establish that the Blue Cross policy was part of an ERISA employee welfare benefit plan.
- Whether prior employer contributions to employee insurance costs, without more, preclude application of the Department of Labor's ERISA safe-harbor regulation or establish that the employer established or maintained an ERISA plan.
Holdings
- The district court erred in denying remand because the sparse and ambiguous factual record did not establish that Twin State established or maintained an ERISA employee welfare benefit plan or that the policy fell outside the regulatory safe harbor.
- An employer contribution made in the past, regardless of how long ago or under what circumstances, does not by itself preclude application of 29 C.F.R. § 2510.3-1(j)(1) or demonstrate that the employer established or maintained an ERISA plan under 29 U.S.C. § 1002(1).
Key quotations
“We emphasize that we hold only that any employer contribution made in the past, no matter how long ago or under what circumstances, does not preclude application of 29 C.F.R. Sec. 2510.3-(j)(1) or demonstrate that an employer has "established or maintained" the plan under 29 U.S.C. Sec. 1002(1).” (34 F.3d at 152)
Factual background
Twin State Typewriter, Inc. subscribed through the Small Business Service Bureau to a multiple-employer trust offering Blue Cross health insurance to employees. Diana Grimo was covered as Gerald Grimo's dependent under a Blue Cross policy. Blue Cross initially approved three days of inpatient treatment for Diana in Texas but denied continued coverage after October 30, 1992, concluding that the treatment was not medically necessary and fell within policy exclusions. The record concerning the employer's contributions, the program's funding, and the employer's role in establishing or maintaining the coverage was sparse and disputed.
Procedural history
The Grimos filed six state-law claims in Vermont state court after Blue Cross denied continued coverage for Diana Grimo's inpatient treatment. Blue Cross removed the action to federal district court under 28 U.S.C. § 1441, asserting that the policy was part of an ERISA plan. The district court denied remand, dismissed five claims as preempted, construed the sixth as an ERISA claim, and granted Blue Cross summary judgment. The Second Circuit held that the factual record was insufficient to sustain the denial of remand, vacated the judgment, and remanded for further proceedings.
Remand instructions
The judgment was vacated and the case remanded for further proceedings. If the matter remained in federal court, the lower court was instructed to consider the possible apportionment of conventional medical-care costs, although the appellate court expressed no view on that issue.