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REVELLO v. PAUL REVERE LIFE INS. CO.

September 26, 2002

JEFFREY A. REVELLO, DPM
V.
THE PAUL REVERE LIFE INSURANCE COMPANY



The opinion of the court was delivered by: Joyner, District Judge

MEMORANDUM AND ORDER

This case has been brought before the Court on motion of the defendant, Paul Revere Life Insurance Company to dismiss the plaintiff's complaint on the grounds that the claims raised therein are pre-empted by the terms of the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et. seq. ("ERISA"). For the reasons which follow, that motion is denied.

Factual Background

In October, 1995, the defendant issued a disability insurance policy to the plaintiff, a podiatrist, under which benefits would be paid in the event he should become totally disabled from working as the result of injury or sickness. Plaintiff contends that he thereafter paid the premiums on the policy in full each year such that the policy was in full force and effect when he was forced to terminate his employment as a podiatrist due to psychiatric illness on September 15, 1998. Although the defendant company initially denied Plaintiff's claim for benefits via letters dated June 4 and August 31, 1999, it did eventually accept the claim and sent Plaintiff a check for past due benefits on March 23, 2000. Nevertheless, Plaintiff brought this action for breach of contract, breach of fiduciary duty, breach of the duty of good faith and fair dealing, fraud, bad faith, breach of statutory duties under the Pennsylvania Unfair Insurance Practices Act and for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law.

Defendant now moves to dismiss all of the plaintiff's claims against it on the grounds that the disability insurance policy at issue was an "employee benefit" within the meaning of ERISA. Consequently, Defendant argues, these claims are preempted.

Standards for Ruling on 12(b)(6) Motions

Under Fed.R.Civ.P. 12(b)(6), a motion to dismiss may be granted only when it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spaulding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Quarles v. Germantown Hospital & Community Health Services, 126 F. Supp.2d 878, 880 (E.D.Pa. 2000) (quoting Hishon). The Court must accept all well-pleaded allegations as true and construe the complaint in the light most favorable to the plaintiff when determining whether, under any reasonable reading of the pleadings, the plaintiff may be entitled to relief. See: Lake v. Arnold, 232 F.3d 360, 365 (3d Cir. 2000); Allah v. Seiverling, 229 F.3d 220, 223 (3d Cir. 2000). A Rule 12(b)(6) motion should be granted only if it appears to a certainty that no relief could be granted under any set of facts which could be proved. Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997).

Discussion

It is the general purpose and policy of ERISA to regulate and protect the interests of participants and beneficiaries of employee benefit and pension plans by, inter alia, establishing standards of conduct, responsibility and obligation for fiduciaries of these plans and by providing for "appropriate remedies, sanctions and ready access to the Federal courts." 29 U.S.C. § 1001(b), (c). To that end and except under certain limited circumstances, ERISA's provisions supercede or preempt "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title." 29 U.S.C. § 1144(a). Under 29 U.S.C. § 1002,

(1) The terms "employee welfare benefit plan" and "welfare plan" mean 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 section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions).
(5) The term "employer" means any person acting directly as an employer or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.
(6) The term "employee" means any individual employed by an employer.

In this case, Defendant avers that Dr. Revello's disability insurance policy was "part of an employee welfare benefit plan, as it was issued pursuant to an Employee Security Plan whereby Plaintiff and the other employees on the plan, identified in the Application as Michelle Revello and Julius Meister, were given a 15% group discount on the premiums under the Employee Security Plan." (Defendant's Motion to Dismiss at ¶ 7). Plaintiff denies that his disability insurance was part of a benefit plan provided by his employer and argues that even if the Court should find that a "plan" existed, the evidence demonstrates that it was not established or maintained by an employer and is thus exempt from ERISA under the Safe Harbor Provision set forth in the Department of Labor's regulations at 29 C.F.R. § 2510.3-1(j).*fn1

The existence of an ERISA plan is a question of fact, to be answered in light of all of the surrounding circumstances from the point of view of a reasonable person. Schneider v. Unum Life Insurance Company of America, 149 F. Supp.2d 169, 175 (E.D.Pa. 2001). A plan will be found to exist when, from the surrounding circumstances a reasonable person could ascertain the intended benefits, a class of beneficiaries, the source ...


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