Andrus v. UNUM Life Insurance Company of America

Filing 35

ORDER AND REASONS denying 20 Motion for Partial Summary Judgment. Signed by Judge Susie Morgan on 5/31/2017. (clc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BRENDA ANDRUS,
Plaintiff

CIVIL ACTION

VERSUS

NO. 16-1112

UNUM LIFE INSURANCE
COMPANY OF AMERICA,
Defendant

SECTION: “E” (1)

ORDER AND REASONS
Before the Court is Defendant Unum Life Insurance Company of America’s motion
for partial summary judgment that the group long-term disability policy at issue is subject
to ERISA.1 The Plaintiff opposes the motion, arguing the Opelousas General Health
System is a governmental entity exempt from ERISA.2 For the reasons below, the motion
for partial summary judgment is DENIED.
BACKGROUND
The Plaintiff, Brenda Andrus, worked as a case manager at Opelousas General
Hospital.3 The Defendant, Unum Life Insurance Company of America (“Unum”) issued a
group long-term disability policy to employees of Opelousas General Health System (“the
Plan.”)4 The Plaintiff alleges she suffers from a number of medical conditions that prevent
her from continuing to work, and that she is disabled under the terms of the Plan.5 Unum
denies the Plaintiff is eligible for long-term disability benefits. The Plaintiff also alleges
her medical condition qualifies her for waiver of life insurance premium benefits under
the Plan’s terms. The Plaintiff seeks penalties against Unum under the Louisiana

R. Doc. 20.
R. Doc. 21.
3 R. Doc. 1 at 2.
4 R. Doc. 20-2 at 2; id. at 12–51.
5 R. Doc. 1 at 2.
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Insurance Code, alleging Unum’s failure to pay her claims is arbitrary and capricious.6
Plaintiff also brings a state-law claim for emotional distress.
Unum seeks judgment as a matter of law that the Plan is an ERISA plan and that,
as a result, the Plaintiff’s state-law claims are preempted, the evidence is constrained to
the administrative record, discovery is limited, and the matter may not be submitted to a
jury.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate only “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.”7 “An issue is material if its resolution could affect the outcome of the action.”8
When assessing whether a material factual dispute exists, the Court considers “all of the
evidence in the record but refrains from making credibility determinations or weighing
the evidence.”9 All reasonable inferences are drawn in favor of the nonmoving party.10
There is no genuine issue of material fact if, even viewing the evidence in the light most
favorable to the nonmoving party, no reasonable trier of fact could find for the nonmoving
party, thus entitling the moving party to judgment as a matter of law.11
If the dispositive issue is one on which the moving party will bear the burden of
persuasion at trial, the moving party “must come forward with evidence which would
‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’” 12 If the

R. Doc. 1 at 3.
FED. R. CIV. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
8 DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2005).
9 Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008); see also
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51 (2000).
10 Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
11 Smith v. Amedisys, Inc., 298 F.3d 434, 440 (5th Cir. 2002).
12 Int’l Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263–64 (5th Cir. 1991) (quoting Golden Rule Ins. Co.
v. Lease, 755 F. Supp. 948, 951 (D. Colo. 1991)).
6
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moving party fails to carry this burden, the motion must be denied. If the moving party
successfully carries this burden, the burden of production then shifts to the nonmoving
party to direct the Court’s attention to something in the pleadings or other evidence in the
record setting forth specific facts sufficient to establish that a genuine issue of material
fact does indeed exist.13
If the dispositive issue is one on which the nonmoving party will bear the burden
of persuasion at trial, the moving party may satisfy its burden of production by either (1)
submitting affirmative evidence that negates an essential element of the nonmovant’s
claim, or (2) demonstrating there is no evidence in the record to establish an essential
element of the nonmovant’s claim.14 When proceeding under the first option, if the
nonmoving party cannot muster sufficient evidence to dispute the movant’s contention
that there are no disputed facts, a trial would be useless, and the moving party is entitled
to summary judgment as a matter of law.15 When, however, the movant is proceeding
under the second option and is seeking summary judgment on the ground that the
nonmovant has no evidence to establish an essential element of the claim, the nonmoving
party may defeat a motion for summary judgment by “calling the Court’s attention to
supporting evidence already in the record that was overlooked or ignored by the moving

Celotex, 477 U.S. at 322–24.
Id. at 331–32 (Brennan, J., dissenting); see also St. Amant v. Benoit, 806 F.2d 1294, 1297 (5th Cir. 1987)
(citing Justice Brennan’s statement of the summary judgment standard in Celotex Corp. v. Catrett, 477 U.S.
317, 322–24 (1986), and requiring the movants to submit affirmative evidence to negate an essential
element of the nonmovant’s claim or, alternatively, demonstrate the nonmovant’s evidence is insufficient
to establish an essential element); Fano v. O’Neill, 806 F.2d 1262, 1266 (citing Justice Brennan’s dissent in
Celotex, and requiring the movant to make an affirmative presentation to negate the nonmovant’s claims
on summary judgment); 10A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL
PRACTICE AND PROCEDURE §2727.1 (2016) (“Although the Court issued a five-to-four decision, the majority
and dissent both agreed as to how the summary-judgment burden of proof operates; they disagreed as to
how the standard was applied to the facts of the case.” (internal citations omitted)).
15 First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288–89 (1980);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986).
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party.”16 Under either scenario, the burden then shifts back to the movant to demonstrate
the inadequacy of the evidence relied upon by the nonmovant.17 If the movant meets this
burden, “the burden of production shifts [back again] to the nonmoving party, who must
either (1) rehabilitate the evidence attacked in the moving party’s papers, (2) produce
additional evidence showing the existence of a genuine issue for trial as provided in Rule
56(e), or (3) submit an affidavit explaining why further discovery is necessary as provided
in Rule 56(f).”18 “Summary judgment should be granted if the nonmoving party fails to
respond in one or more of these ways, or if, after the nonmoving party responds, the court
determines that the moving party has met its ultimate burden of persuading the court that
there is no genuine issue of material fact for trial.”19
LAW AND ANALYSIS
The Plaintiff seeks to recover from Unum benefits allegedly due to her under the
Plan. In its motion, Unum seeks a determination that the Plan is governed by ERISA
section 502(a)(1)(B), codified at 29 U.S.C. § 1132(a)(1)(B).20 In response, the Plaintiff
argues the Plan is exempt from ERISA pursuant to 29 U.S.C. § 1003(b)(1), which expressly
excludes government plans.
It is undisputed that the Opelousas General Hospital System obtained the group
long-term disability policy for its eligible employees from Unum.21 The material facts
surrounding the creation of OGHS also are undisputed.

Celotex, 477 U.S. at 332–33.
Id.
18 Celotex, 477 U.S. at 332–33, 333 n.3.
19 Id.; see also First National Bank of Arizona, 391 U.S at 289.
20 See McCall v. Burlington N./Santa Fe Co., 237 F.3d 506, 512 (5th Cir. 2000) (“When a beneficiary wants
what was supposed to have been distributed under a plan, the appropriate remedy is a claim for denial of
benefits under § 502(a)(1)(B) of ERISA rather than a fiduciary claim brought pursuant to § 502(a)(3).”).
21 R. Doc. 20-2
16
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In 1953, the St. Landry Parish Police Jury, now known as the St. Landry Parish
Council,22 created the Hospital Service District No. 2, which is a political subdivision of
the State of Louisiana.23 The Hospital Service District No. 2 is statutorily authorized to
enter into an agreement with a third party for the third party to manage and operate a
hospital for the benefit of the service district.24 On September 21, 1954, the citizens of
Opelousas voted to pass a one-mill ad valorem tax for 20 years to pay for part of the
hospital construction.25 Pursuant to its statutory authority, the Hospital Service District
No. 2 entered into a lease agreement with the Hospital Corporation of the Sisters of
Marianites of the Holy Cross for it to operate the newly constructed hospital. 26 In 1971,
the Hospital Service District No. 2 submitted another bond proposal to fund the
expansion of the hospital, but the proposal was defeated by the voters. 27 In response, a
number of members of the Board of Commissioners of the Hospital Service District No. 2
created a public trust—Opelousas General Hospital Authority d/b/a Opelousas General
Hospital System (“OGHS”).28 The Hospital Service District No. 2 is the beneficiary of the
public trust. Pursuant to the Trust Indenture, the five Commissioners for the Hospital
Service District No. 2 serve as five of the nine Trustees of OGHS.29
Because the Court finds the material facts in this matter not to be in dispute, the
Court will determine whether Unum is entitled to judgment as a matter of law that
Plaintiff’s long-term disability plan is an ERISA plan.

The Court will refer to the St. Landry Parish Police Jury by its current name, the “Parish Council.”
R. Doc. 20-5; Bertrand v. Sandoz, 255 So. 2d 754, 755 (La. 1971).
24 LA. REV. STAT. ANN. § 46:1055.
25 Bertrand, 255 So. 2d at 756.
26 Id.
27 Id.
28 Id. at 757.
29 Bertrand, 255 So. 2d at 758.
22
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ERISA comprehensively regulates employee benefit plans. 30 If a participant in an
employee benefit plan could have brought her claim under ERISA, ERISA completely
preempts her other causes of action.31 Whether a participant could have brought her suit
under ERISA turns on whether the plan is an “ERISA plan.”32 Although ERISA’s scope is
expansive, certain types of employee benefit plans are excluded from coverage.
Title 29, United States Code, Section 1003(b)(1) provides that ERISA “shall not”
apply to any employee benefit plan if such a plan is a “governmental plan.”33 ERISA
defines a “governmental plan” as “[a] plan established or maintained for its employees by
the Government of the United States, by the government of any State or political
subdivision thereof, or by any agency or instrumentality of the foregoing.”34
The Court must therefore determine whether OGHS, which established and now
maintains the Plaintiff’s long-term disability plan, is (1) a political subdivision of the State
of Louisiana, or (2) an agency or instrumentality of a political subdivision of the State of
Louisiana. If OGHS is either a political subdivision of the State of Louisiana or an agency
or instrumentality of a political subdivision of the State of Louisiana, the employee benefit
plan it established and maintains is a “governmental plan” exempt from ERISA.
I.

Political Subdivision
The Court will first examine whether OGHS is a political subdivision of the State

of Louisiana. ERISA does not define the term “political subdivision.”35 For the purpose of

Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004).
Id. at 209–10.
32 Hanson v. Continental Ins. Co., 940 F.2d 971, 976 (5th Cir. 1991).
33 29 U.S.C. § 1003(b)(1).
34 29 U.S.C. § 1002(32). There is no statutory language in ERISA that defines the terms “political
subdivision,” “agency” or “instrumentality.”
35 Smith, 2015 WL 6442337 at *7 (E.D. La. Oct. 23, 2015) (citing Koval v. Wash. Cnty. Redevelopment
Auth., 574 F.3d 238, 240 (3d Cir. 2009)).
30
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discerning whether an entity is a political subdivision under ERISA, the Fifth Circuit has
adopted the Hawkins test formulated by the Supreme Court in NLRB v. Natural Gas
Utility District of Hawkins County.36 Under the Hawkins test, an entity is a political
subdivision if it is either “(1) created directly by the state, so as to constitute departments
or administrative arms of the government, or (2) administered by individuals who are
responsible to public officials or to the general electorate.”37
The Plaintiff need only establish that OGHS fits the definition of a political
subdivision under one prong or the other of the Hawkins test. The Court will first address
the second prong, whether OGHS is “administered by individuals who are responsible to
public officials or to the general electorate.”38
Unum argues OGHS is not a political subdivision because it “is not administered
by individuals who are responsible to public officials or to the general public.” 39 Unum
further contends the members of the Board of Trustees of OGHS are all individual citizens
serving in their private capacities.40 The Plaintiff, on the other hand, argues there is little
difference between the administration of the Hospital Service District No. 2, which the
parties agree is a political subdivision of the State of Louisiana, and OGHS.41 To determine
whether OGHS is administered by individuals who are responsible to public officials or
the general electorate, the Court will examine OGHS’s governance structure.

Smith v. Reg’l Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016); 402 U.S. 600 (1971).
Smith, 827 F.3d at 417 (quoting Hawkins Cnty., 402 U.S. at 604–05).
38 Hawkins Cnty., 402 U.S. at 604–05.
39 R. Doc. 20-1 at 21.
40 Id. at 24.
41 R. Doc. 21 at 13.
36
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The governing body of St. Landry Parish is the St. Landry Parish Council (“Parish
Council”).42 The publicly elected members of the Parish Council appoint five
Commissioners to the Commission of the Hospital Service District No. 2.43 These five
Commissioners of the Hospital Service District No. 2 are a majority of the Trustees on the
Board of Trustees of OGHS.44 The original Trust Indenture states “the Trustees of this
Trust shall be . . . the persons presently constituting the members of the governing
Commission of the [Hospital Service District No. 2].”45 The Amended Trust Indenture
increased the number of Trustees of OGHS to nine, but these additional Trustees also are
appointed by the Commissioners of the Hospital Service District No. 2.46 The only
limitation on the appointments by the Hospital Service District No. 2 is the additional
four Trustees must be residents of St. Landry Parish.47 The Trust Indenture provides that
officers of the Commission and OGHS are identical.48
See ST. LANDRY PARISH, Home Rule Charter, available at http://stlandryparish.org/government/homerule-charter.
43 R. Doc. 20-5 at 1. The members of the Commission of the Hospital Service District No. 2 are appointed
by the St. Landry Parish Council. LA. REV. STAT. ANN. § 46:1053(A) (“Any hospital service district formed or
created under the provisions of this Chapter shall be governed by a board of five commissioners, hereafter
referred to as commission, who shall be qualified voters and residents of the district. The commission shall
be appointed by the police jury of the parish.”). It is undisputed that both the St. Landry Parish Council and
the Hospital Service District No. 2 are political subdivisions of the State of Louisiana. R. Doc. 20-11 at 3, ¶¶
12–13; R. Doc. 21-1 at 4, ¶¶ 12–13; LA. REV. STAT. ANN. § 46:1055.
44 R. Doc. 21-3 at 1, ¶ 6. The Trust Indenture provides “[t]he Trustees of this Trust shall be the same persons
who are the Chairman and members of the governing body (Commission) of the Hospital Service District
No. 2, and shall remain as Trustees until such person or persons shall have been succeeded and replaced by
some other person or persons as Chairman and members of the governing body (Commission) of the
Hospital Service District No. 2, and such latter person or persons shall without any further act or deed
automatically become Trustees of this Trust.” R. Doc. 21-2 at 4. Each of the Trustees of OGHS is required
to “take the oath of office required of public officials.” LA. REV. STAT. ANN. § 9:2343(A)(1).
45 R. Doc. 21-2 at 3–4.
46 R. Doc. 21-5.
47 R. Doc. 21-5 at 2 (“The Trustees who shall constitute the Board of Trustees of the Trust shall be appointed
by the governing body of the Beneficiary . . . .”); id. at 3 (“The governing body of the Beneficiary shall appoint
four (4) additional Trustees.”).
48 R. Doc. 21-2 at 4–5 (“The person who shall be the Chairman of the governing body (Commission) of the
Hospital Service District No. 2, shall become automatically the Chairman of the Trustees and shall preside
at all meetings and perform other duties designated by the Trustees. The person who shall be the Vice
Chairman of the Hospital Service District No. 2 shall be automatically the Vice Chairman of the Trustees
. . . . The person who shall be the Secretary of the Hospital Service District No. 2 shall act as Secretary of the
Trustees.”).
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The Commission of the Hospital Service District No. 2, as the governing authority
of the beneficiary of the Trust, has the power remove a Trustee of OGHS for cause.49 The
Board of Trustees of OGHS is required to adopt bylaws, but the bylaws must be submitted
to the “governing authority of the beneficiary”—in this case, the Commission of Hospital
Service District No. 2.50 The Commission has the power to veto OGHS’s bylaws or any
proposed changes to its bylaws.51 The Trust Indenture was required to be approved by the
Commission of the Hospital Service District No. 2 and by the Louisiana State Bond
Commission.52 Amendments to the Trust Indenture also must be approved by the
Commission of the Hospital Service District No. 2 and by the Louisiana State Bond
Commission.53 In sum, neither OGHS’s bylaws nor its Trust Indenture may be changed
without the consent of the Commission of the Hospital Service District No. 2, which is
appointed by the Parish Council.
The Court finds that OGHS is administered by individuals who are responsible to
public officials, namely the Commissioners of the Hospital Service District No. 2, which

LA. REV. STAT. ANN. § 9:2343(F)(3) (“In the case of persons appointed by the governing authority of the
beneficiary or by the governor, as the case may be, such persons shall be appointed for a term not in excess
of six years, and shall be subject to removal for cause, as aforesaid, by or at the will of the beneficiary.”).
50 LA. REV. STAT. ANN. § 9:2341(C).
51 Id. “[T]he governing authority of the beneficiary shall have the power to veto all or part of the proposed
bylaws.” The Court notes that all meetings of the Board of Trustees of OGHS are open to the public, and the
minutes of each meeting are public record to the same extent required by law for the beneficiary—Hospital
Service District No. 2. LA. REV. STAT. ANN. § 19:2342(D) (“Meetings of the trustees of all public trusts shall
be open to the public and the records of all public trusts shall be public records to the same extent as is
required by law for the beneficiary.”). Books, records, and minutes of each OGHS Board of Trustees meeting
are considered public records and are available for inspection by the legislative auditor or any accountant
or official representative of the St. Landry Parish Council. R. Doc. 21-2 at 5.
52 LA. REV. STAT. ANN. § 9:2341(A) (A public trust may be created with the “(1) express approval of the
governor and two-thirds of the elected members of each house of the legislature if the state of Louisiana or
any state agency is the beneficiary; (2) express approval of a majority of the membership of the governing
authority of the beneficiary and the State Bond Commission or its successor if a parish or municipality or
a political or governmental subdivision thereof is the beneficiary; and (3) express approval of a majority of
the membership of the governing authority of the beneficiary and the State Bond Commission or its
successor, in all other cases.” (emphasis added)).
53 See R. Doc. 21-6 at 5, Section 3.
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is a political subdivision. The Commissioners of the Hospital Service District No. 2 are
responsible to the Parish Council, which also is a political subdivision. OGHS is a political
subdivision of the State of Louisiana for the purposes of ERISA because it is “administered
by individuals who are responsible to public officials or the general electorate.”54
Because the Court finds OGHS is a political subdivision of the State of Louisiana,
the employee benefit plan established and maintained by OGHS is a “governmental plan,”
which is exempt from ERISA coverage pursuant to 29 U.S.C. § 1003(b)(1).55
II.

Agency or Instrumentality
Alternatively, if OGHS is not itself a political subdivision of the State of Louisiana,

the Plaintiff’s plan may nevertheless be a governmental plan exempt from ERISA if OGHS
is an agency or instrumentality of the Hospital Service District No. 2, a political
subdivision of the State of Louisiana. ERISA does not define “agency or instrumentality”
Hawkins, 4002 U.S. at 604–05. Both OGHS and the State of Louisiana treat OGHS as a governmental
entity. First, OGHS completed a Client Information Form in connection with its application for a long-term
disability plan with Unum, which indicated OGHS is exempt from ERISA. R. Doc. 20-2 at 6. The Court—
not the benefit plan—determines whether ERISA applies. Stern v. IBM Corp., 326 F.3d 1367 (11th Cir.
2003) (an employer’s labeling of a plan does not determine whether it is an ERISA plan). Although OGHS’s
labeling is not dispositive of whether the Plaintiff’s plan is an ERISA plan, the Court finds it telling that
OGHS considers itself exempt from ERISA and has not submitted the Form 5500 annual report with the
Secretary of Labor, as required by ERISA for all ERISA plans. R. Doc. 21-3. Second, the 2015 legislative
audit of OGHS states “The Opelousas General Hospital Authority (the “Hospital”) was created under the
laws of the State of Louisiana pursuant to a Trust Indenture executed . . . for the benefit of the [Hospital
Service] District [No. 2] and is a public instrumentality of the State of Louisiana.” LOUISIANA LEGISLATIVE
AUDITOR, Hospital Service District No. 2 of St. Landry Parish, Louisiana and Opelousas General Hospital
Authority,
Financial
Report
(Jun.
30,
2015),
available
at
https://
app.lla.state.la.us/PublicReports.nsf/05802C0CCCEC002E862580E2006C4718/$FILE/00012B98.pdf.
Third, OGHS—as a public trust—is exempt from state and federal taxes, and the property of the Trust is
considered public property. LA. REV. STAT. ANN. § 9:2347(M) (“The property of any public trust . . . is hereby
declared to be public property used for essential public and governmental purposes. . . . [S]uch public trust,
and all of its properties at any time owned by it and the income therefrom and all bonds issued by it and the
income therefrom, shall be exempt from all taxes of the parish or municipality, the state, or any political
subdivision thereof or any other taxing body.”). Finally, all meetings of the Board of Trustees of OGHS are
open to the public, and the minutes of each meeting are public record to the same extent required by law
for the beneficiary—Hospital Service District No. 2. LA. REV. STAT. ANN. § 19:2342(D) (“Meetings of the
trustees of all public trusts shall be open to the public and the records of all public trusts shall be public
records to the same extent as is required by law for the beneficiary.”).
55 Because OGHS need only meet one prong of the Hawkins test for the Court to make a finding that OGHS
is a political subdivision for the purposes of ERISA, the Court will not consider whether OGHS was created
directly by the state, so as to constitute a department or administrative arm of the government.
54

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for the purposes of determining whether a plan is exempt as a governmental plan. 56 The
Fifth Circuit has adopted the six-factor test provided in Internal Revenue Service Revenue
Ruling 57-128, as refined by Internal Revenue Service Revenue Ruling 89-49, as the
appropriate test for determining whether an entity is an agency or instrumentality of a
governmental entity.57 In Revenue Ruling 57-128, the IRS set forth the following six
factors to be considered in determining whether a particular entity is an agency or
instrumentality of a state or political subdivision:
(1) whether it is used for a governmental purpose and performs a
governmental function; (2) whether performance of its function is on behalf
of one or more states or political subdivisions; (3) whether there are any
private interests involved, or whether the states or political subdivisions
involved have the powers and interests of an owner; (4) whether control and
supervision of the organization is vested in public authority or authorities;
(5) if express or implied statutory or other authority is necessary for the
creation and/or use of such an instrumentality, and whether such authority
exists; and (6) the degree of financial autonomy and the source of its
operating expenses.58
Revenue Ruling 89-49 refined Revenue Rule 57-128, stating:
One of the most important factors to be considered in determining whether
an organization is an agency or instrumentality of the United States or any
state or political subdivision is the degree of control that the federal or state
government has over the organization’s everyday operations. Other factors
include: (1) whether there is specific legislation creating the organization;
(2) the source of funds for the organization; (3) the manner in which the
organization’s trustees or operating board are selected; and (4) whether the
applicable governmental unit considers the employees of the organization
to be employees of the applicable governmental unit. Although all of the
above factors are considered in determining whether an organization is an
agency of a government, the mere satisfaction of one or all of the factors is
not necessarily determinative.59

Smith, 827 F.3d at 417–18.
Id. at 420.
58 Rev. Rul. 57-128, 1957-1 C.B. 311.
59 Rev. Rul. 89-49, 1989-1 C.B. 117.
56
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The Court must consider the factors provided in these Revenue Rulings to
determine whether OGHS is either an agency or instrumentality of the Hospital Service
District No. 2.
First, OGHS was created “for the public purposes hereinafter set forth as a public
instrumentality of the state or a subdivision or agency thereof, under the provisions of
Act. No. 135, 1970, [Louisiana Revised Statutes] 9:2341, et seq.”60 Louisiana’s public trust
statute states that a public trust may be created “to issue obligations and to provide funds
for the furtherance and accomplishment of any authorized public functions”61 such as
“hospital, medical, health, nursery care, nursing care, clinical, ambulance, laboratory and
related services and entities.”62 The Court finds Unum’s argument that providing hospital
services is not a “traditional government function” unpersuasive.63 Louisiana’s public
trust statute expressly provides that a public trust may be created for the “public function”
of administering hospital and medical services. Accordingly, the Court finds this factor
weighs in favor of finding OGHS is an agency or instrumentality of the Hospital Service
District No. 2, a political subdivision of the State of Louisiana.
Second, OGHS performs its functions on behalf of the Hospital Service District No.
2, a political subdivision of Louisiana. Pursuant to the Trust Indenture, the Hospital
Service District No. 2 is the beneficiary of the public trust, and is the owner of the hospital.
OGHS provides the day-to-day operations of the hospital, but the hospital exists “for the
use and benefit” of the Hospital Service District No. 2.64 This factor weighs in favor of

R. Doc. 21-2 at 1.
LA. REV. STAT. ANN. § 9:2341(A).
62 LA. REV. STAT. ANN. § 9:2341(B)(1)(a).
63 R. Doc. 20-1.
64 R. Doc. 21-2 at 1.
60
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finding OGHS is an agency or instrumentality of the Hospital Service District No. 2, a
political subdivision of the State of Louisiana.
Third, although there are private interests involved, as the members of the Board
of Trustees serve in their capacities as citizens of St. Landry Parish, the Hospital Service
District No. 2 has the powers and interests of an owner. Although OGHS runs the day-today operations of the hospital, the Hospital Service District No. 2 is the owner. The
January 25, 1972 Resolution of Hospital Service District No. 2 transferred the
management and supervision of the Opelousas General Hospital to “the Opelousas
General Hospital Authority, a Public Trust, . . . pursuant to the terms and conditions of a
Management Contract executed by and between the Hospital Service District No. 2 of St.
Landry Parish, Louisiana, as Owner and the Opelousas General Hospital Authority, a
Public Trust, as Manager.”65 Further, as discussed above, the Hospital Service District No.
2 has the power to appoint and remove members of the OGHS Board of Trustees, a
majority of whom are Commissioners of the Hospital Service District No. 2. This factor
weighs in favor of finding OGHS is an agency or instrumentality of the Hospital Service
District No. 2, a political subdivision of the State of Louisiana.
Consideration of the fourth factor—whether control and supervision of the
organization is vested in public authority—is highly contested by the parties, as there are
facts that support both arguments. On the one hand, neither the St. Landry Parish Council
nor the Hospital Service District No. 2 controls the finances or day-to-day operations of
the hospital. OGHS generates its own funding, hires its own employees, and provides its

R. Doc. 21-7 at 1 (emphasis added). Further, the statutory purpose of the Hospital Service District No. 2
is “to own and operate hospitals.” LA. REV. STAT. ANN. § 46:1052.
65

13

own benefits.66 The Trust Indenture provides the Hospital Service District No. 2 has no
“authority, power or right, whatsoever, to do or transact any business for, or on behalf of,
or binding upon the Trustees or upon the Trust Estate.”67 On the other hand, as discussed
above, the Board of Trustees, which conducts the affairs of the OGHS, is appointed by the
Hospital Service District No. 2. Five of the nine Trustees are Commissioners of the
Hospital Service District No. 2, who are appointed by the St. Landry Parish Council. In
reality, control of OGHS is vested the Hospital Service District No. 2 as the Commission
controls the governing board of OGHS. This factor weighs in favor of finding OGHS is an
agency or instrumentality of the Hospital Service District No. 2, a political subdivision of
the State of Louisiana.
The fifth factor directs the Court to consider whether express or implied statutory
authority is necessary “for the creation and/or use of . . . an instrumentality.”68 The statute
governing the Hospital Service District No. 2 authorizes it “to enter into lease agreements
with recognized and duly constituted nonprofit associations which are primarily engaged
in the operation of hospitals,”69 such as OGHS. Although no special act of the legislature
brought OGHS into existence, the use of OGHS to manage, operate, and administer a
hospital is legislatively authorized.70 This factor weighs in favor of finding OGHS is an
agency or instrumentality of the Hospital Service District No. 2, a political subdivision of
the State of Louisiana.

The parties agree that employees of OGHS are not employees of the Hospital Service District No. 2 or
the Parish Council.
67 R. Doc. 21-2 at 11.
68 Rev. Rul. 57-128, 1957-1 C.B. 311.
69 LA. REV. STAT. ANN. § 46:1055(A)(9).
70 Id. at § 1055(B) (“[T]he commission may enter into a special services agreement with any person,
including but not limited to a hospital management firm or hospitals, to manage, operate, and administer
a hospital or hospitals, or any part thereof, under the control of the commission for the benefit of the
hospital service district.”).
66

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The sixth factor—degree of financial autonomy—weighs against OGHS being an
agency or instrumentality of a political subdivision. Under the terms of the Trust
Indenture, all debts of OGHS are payable solely from the Trust Estate.71 The Trust
Indenture provides the Hospital Service District No. 2, as beneficiary, “shall have no
liability for any bonds, notes, or indebtedness of any type whatsoever of the Trust” and
will have no “liability for costs incurred in the operation of the Trust, or for any actions or
omission of the Trustees or others representing the Trust.”72 Further, the Hospital Service
District No. 2 has “no legal title, claim or right to the Trust Estate, its income, or to any
part thereof, or to demand or require any partition or distribution thereof.”73 The Court
finds OGHS to be financially autonomous with respect to the Hospital Service District No.
2, and this factor weighs against finding OGHS is an agency or instrumentality of a
political subdivision.
Examining the factors to be considered in determining whether an entity is an
agent or instrumentality of a state or political subdivision, the Court concludes that OGHS
is an agency or instrumentality of the Hospital Service District No. 2, which is a political
subdivision of the State of Louisiana.74 Therefore, the Court finds the Plaintiff’s plan is a
governmental plan exempt from ERISA’s coverage pursuant to 29 U.S.C. § 1003(b)(1).75
Accordingly;

R. Doc. 21-2 at 11.
R. Doc. 21-2 at 11.
73 R. Doc. 21-2 at 11.
74 The Court recognizes that Revenue Ruling 89-49 refined Revenue Ruling 57-128 by stating the “control”
factor is the most important. The Court has given due weight to this factor in its analysis.
75 Although the Court lacks federal question subject matter jurisdiction because of the finding that ERISA
does not apply, the Court maintains subject matter jurisdiction over this matter because the parties are
diverse. Accordingly, this matter will remain on the Court’s docket, the Court will apply Louisiana law, and
the Plaintiff is entitled to a jury trial.
71

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CONCLUSION
IT IS ORDERED that the motion for partial summary judgment filed by Unum
Life Insurance Company of America is DENIED.
New Orleans, Louisiana, this 31st day of May, 2017.
_________ __ _______ ___________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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