Cruz v. Standard Insurance Company

Filing 12

MEMORANDUM OPINION & ORDER: That Cruz's Motion to Remand be, and is hereby, DENIED. Signed by Judge William O. Bertelsman on 1/11/2022.(ECO)cc: COR

Case: 2:21-cv-00139-WOB-EBA Doc #: 12 Filed: 01/11/22 Page: 1 of 5 - Page ID#: 244

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON
CIVIL ACTION NO. 2:21-CV-139 (WOB-EBA)
JULIE CRUZ

PLAINTIFF

VS.

MEMORANDUM OPINION AND ORDER

STANDARD INSURANCE COMPANY

DEFENDANT

Plaintiff Julie Cruz (“Cruz”) brought this action for breach
of

contract

against

Defendant

Standard

Insurance

Company

(Standard). Standard characterizes Cruz’s claim as one falling
under ERISA, 29 U.S.C.S. § 1001 et seq., permitting its removal to
this

Court

with

federal

question

jurisdiction,

disputes Standard’s characterization.

although

Cruz

This matter is before the

Court on Cruz’s Motion to Remand. (Doc. 9).

Having reviewed the

parties’ pleadings, the Court now issues the following Memorandum
Opinion and Order.
I.

BACKGROUND
St.

Elizabeth

Healthcare

(“St.

Medical

Center,

Elizabeth”)

Inc.

sponsors

d/b/a
the

St.

group

Elizabeth
long-term-

disability plan in question, Group Policy Number 759036-C (“the
plan”), and Standard Insurance Company issued and administered the
claims under the policy. (Doc. 7, Answer at ⁋ 8).

1

Cruz was an

Case: 2:21-cv-00139-WOB-EBA Doc #: 12 Filed: 01/11/22 Page: 2 of 5 - Page ID#: 245

insured member of the plan as an employee of St. Elizabeth.

(Id.

at ⁋ 9).
In May 2021, Cruz claimed to have been disabled under the
terms of the policy and submitted a claim for benefits. (Doc. 1-3,
State Court Compl. at ⁋ 11).

Standard denied Cruz’s claim in

September 2021. (Doc. 7, Answer at ⁋ 12).
Cruz commenced this action in Boone County on October 7, 2021,
characterizing her claim as a state claim for breach of contract.
(Doc. 1-3, State Court Complaint at ⁋⁋ 14–18). Standard thereafter
removed

the

case

to

federal

court

on

November

2,

2021,

characterizing the claim as one under ERISA, 29 U.S.C. § 1001 et
seq. (Doc. 1).

Cruz filed the immediate Motion to Remand on

November 19, 2021. (Doc. 9).
II.

ANALYSIS
The main issue before the Court is whether Cruz’s claim sounds

under state law as a conventional breach of contract claim, thus
requiring remand to state court, or whether the claim arises under
ERISA such that the Court has federal question jurisdiction.
The first and fundamental question in every case in federal
court is whether jurisdiction exists. Douglas v. E.G. Baldwin &
Assocs., 150 F.3d 604, 606 (6th Cir. 1998), abrogated on other
grounds by Thomas v. Miller¸ 489 F.3d 293 (6th Cir. 2007).
action

is

removed

to

federal

court

2

without

subject

If an
matter

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jurisdiction, however, the action must be remanded to the state
court from which it originated. 28 U.S.C. § 1447(c) (“If at any
time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.”).
ERISA is a federal statutory and regulatory scheme that
creates, with preemptive effect, a cause of action to enforce
beneficiary rights under certain employment-benefits plans and
pensions.
(1983).
of

See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90
Thus, if a putative state action falls within the scope

ERISA,

federal

subject

matter

jurisdiction

exists,

and

a

defendant may remove an action brought in state court to a federal
district court.

See id. at 91–92.

Excluded from the scope of ERISA are “church plans” under the
“church-plan

exception,”

which

typically

applies

to

plans

maintained by churches or church associations for their employees.
29 U.S.C. § 1003(b)(2).

If the plan is not established and

maintained by a church or association of churches, it may be a
“church plan” if it is maintained by an eligible “principal-purpose
organization” under a broader statutory definition:
A plan established and maintained for its employees (or
their beneficiaries) by a church or by a convention or
association of churches includes a plan maintained by an
organization, whether a civil law corporation or
otherwise, the principal purpose or function of which is
the administration or funding of a plan or program for
the provision of retirement benefits or welfare
benefits, or both, for the employees of a church or a
convention or association of churches, if such
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organization is controlled by or associated with
church or a convention or association of churches.
29 U.S.C. § 1002(33)(C)(i).

a

Noting that this provision is a

mouthful for lawyers and non-lawyers alike, Advoc. Health Care
Network v. Stapleton, 137 S. Ct. 1652, 1656 (2017), clarified that
the “church plan” exception simply applies to plans established
and maintained by (a) a church or association of churches, or
maintained by (b) an organization with the principal purpose of
administering or funding the plan for a church or association of
churches. Id.; 29 U.S.C. § 1002(33)(C).
The analysis here can be brief.

The plan documents show that

St. Elizabeth “maintains” the plan in question as sponsor. (See
Doc. 1-5, Insurance Policy).

While it is associated with the

Catholic Church, St. Elizabeth is not itself a church or an
association of churches.

It must, then, qualify as a principal-

purpose organization to enjoy the church-plan exception, i.e., its
principal purpose must be to maintain a plan or program of benefits
on behalf of a church or church association.
“The language of the exemption indicates that a principalpurpose organization is an ‘organization’ with the ‘principal
purpose’ or ‘function’ of ‘administering’ or ‘funding’” the plan.
Boden v. St. Elizabeth Med. Ctr., Inc., 404 F.Supp.3d 1076, 1092
(E.D. Ky. 2019) (quoting 29 U.S.C. § 1002(33)(C)(i)).

This Court

in Boden discussed the word “purpose,” finding it means “[a]n
4

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objective, goal, or end; spec., the business activity that a
corporation is chartered to engage in” and “function” as an
“[a]ctivity

that

is

appropriate

to

a

particular

business

or

profession.” Id. (emphasis added) (quoting Black’s Law Dictionary
(11th ed. 2019)).
healthcare

St. Elizabeth’s principal purpose is to provide

according

the

clear

mandate

of

its

articles

of

incorporation, (see Doc. 10-2, Art. of Incorp., Sixth Art.), not
to provide benefits to employees of a church.

Thus, St. Elizabeth

is not a principal-purpose organization.
III.

CONCLUSION

The church-plan exception under ERISA does not apply.

The

Court has federal question jurisdiction, justifying Standard’s
removal of the case to this Court.

Accordingly, it is ORDERED

that Cruz’s Motion to Remand be, and is hereby, DENIED.
This 11th day of January 2022.

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