Soileau & Associates, LLC, et al v. Louisiana Health Service & Indemnity Company

Filing 22

ORDER denying 7 Motion to Remand to State Court. Signed by Chief Judge Nannette Jolivette Brown. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SOILEAU & ASSOCIATES, LLC, et al.

CIVIL ACTION

VERSUS

CASE NO. 18-710

LOUISIANA HEALTH SERVICE & INDEMNITY
COMPANY d/b/a BLUE CROSS AND BLUE SHIELD OF
LOUISIANA

SECTION: “G”(3)

ORDER AND REASONS
Pending before the Court is Plaintiffs Soileau & Associates, LLC, Karen S. Kovach, and
Isaac H. Soileau, Jr.’s (collectively, “Plaintiffs”) “Motion to Remand.”1 Having considered the
motion, the memoranda in support and in opposition, the record, and the applicable law, the Court
will deny the motion.
I. Background
On December 22, 2017, Plaintiffs filed a Petition for Damages in the Civil District Court
for the Parish of Orleans, State of Louisiana.2 In the petition, Plaintiffs allege that Soileau &
Associates, LLC had a policy of medical and hospitalization coverage (“the policy”) insured
through Defendant Louisiana Health Service & Indemnity Company, d/b/a Blue Cross Blue Shield
of Louisiana (“Defendant”).3 Plaintiffs allege that the policy provided coverage for K.S., their
minor child, who was previously diagnosed with “traumatic brain injury, fetal alcohol syndrome,

1

Rec. Doc. 7.

2

Rec. Doc. 1-2.

3

Id.

1

autism, pervasive developmental delays, ADHD-severe, PTSD, anxiety, and several other
neurological conditions.”4
According to the petition, “[i]n November and December of 2014, K.S.’s condition became
so unsafe that both parents were essentially required to stay with her continually, almost 24 hours
a day.”5 Plaintiffs allege that K.S.’s physicians referred her for inpatient treatment at Cumberland
Hospital for Children and Adolescents in New Kent, Virginia, and Defendant authorized inpatient
treatment for K.S. on January 6, 2015.6 Plaintiffs assert that K.S. was admitted to Cumberland
Hospital for inpatient treatment on January 7, 2015 through August 11, 2015, when Defendant
“arbitrarily denied further authority for inpatient treatment.”7
After her premature discharge from Cumberland Hospital, Plaintiffs allege that K.S.’s
condition deteriorated, resulting in several voluntary and involuntary emergency department
admissions between August 2015 and March 2016. 8 According to the petition, Cumberland
Hospital admitted K.S. for inpatient care again on April 8, 2016, but after approximately a year of
treatment, Defendant denied further inpatient treatment on April 18, 2017.9 Plaintiffs assert that
they appealed the decision to deny further treatment.10 Plaintiffs allege that on June 23, 2017

4

Id. at 2–3.

5

Id. at 3.

6

Id.

7

Id.

8

Id. at 4.

9

Id. at 5.

10

Id.

2

Defendant upheld the appeal finding that the treatment was medically necessary but asserted a
policy exclusion for “Custodial Care” to deny impatient treatment effective April 19, 2017.11
Plaintiffs assert that Defendant required them to prepay all charges to Cumberland Hospital
at a rate of $1,192.00 per day, even though the policy does not state that prepayment of
preauthorized services is required.

12

Plaintiffs allege that Defendant repeatedly delayed

reimbursing Plaintiffs.13 At the time the petition was filed, Plaintiffs allege that K.S. was still being
treated at Cumberland Hospital and Plaintiffs were paying the expenses at a rate of $1,192.00 per
day, even though Defendant “has denied further coverage for this inpatient treatment by
retroactively misapplying a policy exception over a year after the claim had been authorized.”14
Plaintiffs “make demand for authorization of treatment and payment for same, as well as for all
penalties associated with any additional payments for treatment by Plaintiffs that [Defendant]
failed to make or reimburse to Plaintiffs within 30 days of the demand for same.”15 Plaintiffs bring
claims for breach of contract, bad faith adjusting, and failure to timely pay claims in violation of
Louisiana Revised Statute § 22:1821(A) and (D).16
On January 23, 2018, Defendant removed the action to this Court. 17 In the Notice of

11

Id.

12

Id. at 7.

13

Id.

14

Id. at 9.

15

Id.

16

Id. at 2.

17

Rec. Doc. 1.

3

Removal, Defendant asserts that this Court has original jurisdiction over this matter under 28
U.S.C. § 1331.18 Specifically, Defendant contends that the policy is an employee welfare benefit
plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974
(“ERISA”) and that Plaintiffs’ claim for benefits arises under Section 502(a)(1)(B) of ERISA and
is completely preempted by ERISA.19
On February 22, 2018, Plaintiffs filed the instant “Motion to Remand.”20 On March 6,
2018, Defendant filed an opposition.21 On March 13, 2018, with leave of Court, Defendant filed
a reply brief in further support of the motion.22
II. Parties= Arguments
A.

Plaintiffs’ Arguments in Support of the Motion to Remand
In the motion to remand, Plaintiffs first argue that remand is proper because Defendant has

failed to meet its burden of proving that removal is proper.23 Plaintiffs contend that Defendant
simply alleged that the Court has jurisdiction but did not come forward with any evidence to
support the claim that ERISA preempts Plaintiffs’ claims. 24 Because any doubts regarding
removal must be resolved in favor of remand and Plaintiffs deny that ERISA applies to the claims,

18

Id. at 4.

19

Id. at 2–3.

20

Rec. Doc. 7.

21

Rec. Doc. 13.

22

Rec. Doc. 17.

23

Rec. Doc. 7-1 at 6.

24

Id.

4

Plaintiffs contend that this matter must be remanded.25
Second, Plaintiffs argue that Defendant has waived the right to remove claims arising out
of the policy at issue here. 26 Plaintiffs cite the “ERISA Rights” section of the policy, which
provides that “[i]f the Member has a claim for Benefits, which is denied or ignored, in whole or in
part, he may file suit in a state or Federal court.”27 Plaintiff asserts that a party may waive its
removal rights by giving the other party the right to choose venue or by establishing an exclusive
venue within the policy.28 Because the policy allows the insured party to file the case in “state or
federal court,” Plaintiffs assert that Defendant has unequivocally waived the right to remove this
case.29
Third, Plaintiffs argue that there is no federal-question jurisdiction over this case because
the policy is not subject to ERISA. 30 Plaintiffs contend that they have retained an insurance
industry expert, Wayne Citron (“Citron”), who has reviewed the policy and opined that it is not
the sort of policy that is covered by ERISA and fails to incorporate the necessary components of
Title I, Part 7 of ERISA. 31 Plaintiffs also note that Citron points out “a fundamental set of
ambiguities in the policy as to whether it is covered by the ERISA,” notably that the policy

25

Id. at 6–7.

26

Id. at 7.

27

Id.

28

Id. at 8 (citing Ensco Int’l, Inc. v. Certain Underwriters at Lloyd’s, 579 F.3d 442 (5th Cir. 2009); City of
New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501 (5th Cir. 2004)).
29

Id.

30

Id.

31

Id. at 9.

5

equivocates on the issue of whether federal or state law applies and the time limits in which a claim
may be filed are not compliant with ERISA.32 Plaintiffs also contend that Defendant has tacitly
admitted that the policy is not covered by the ERISA by: (1) repeatedly interacting with the
Louisiana Department of Insurance in complaints regarding the handling of the claims at issue
without raising ERISA as an issue; (2) sending correspondence to Plaintiffs that does not identify
the policy or claim as arising under ERISA; and (3) using an internal appeal process in the handling
of this claim different from the ERISA appeal process described in the policy.33 Plaintiffs assert
that these actions serve to estop Defendant from now claiming ERISA coverage.34
Next, Plaintiffs assert that ERISA is not applicable because there is no “plan.”35 Plaintiffs
note that pursuant to Fifth Circuit law “[i]n determining whether a plan, fund or program (pursuant
to a writing or not) is a reality a court must determine whether from the surrounding circumstances
a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and
procedures for receiving benefits.” 36 Plaintiffs assert that Defendant is unable to prove the
existence of a plan because “the claims at issue in this case arise out of defendant’s unilateral
imposition of an individualized, non-contractual reimbursement process on plaintiffs, through a
third party intermediary,” which Plaintiffs argue is not part of the normal claims handling

32

Id. at 9–10.

33

Id. at 10.

34

Id.

35

Id. at 10–11.

36

Id. at 11 (quoting Hansen v. Continental Ins. Co., 940 F.2d 971, 977 (5th Cir. 1991)).

6

process. 37 Plaintiffs also argue that Defendant has replaced the claims handling process
established in the policy with “an indeterminate and capricious extraordinary ‘process’ . . . to suit
defendant’s desire to avoid responsibility under the insurance agreement.”38 Moreover, Plaintiffs
assert that “[t]he extraordinary process that defendant has created in its efforts to evade plaintiffs’
claims are so egregious that no reasonable person can possibly determine what benefits are due,
what process to use, who might be a beneficiary of the policy, the source of the funding, and so
forth because of the defendant’s indeterminate reimbursement process through BCBS of
Virginia.”39 Plaintiffs assert that Defendant is not acting as an “administrator” of the plan because
it has ceded administrator duties to BCBS of Virginia.40
Even if the policy and the instant claims are covered by ERISA, Plaintiffs assert that it falls
within the Department of Labor’s “safe harbor” exemption.41 Specifically, Plaintiffs assert that
Soileau & Associates LLC has not endorsed the policy and receives no profit from it; participation
in the insurance contract is voluntary; and Soileau & Associates makes no contributions to a plan
with the exception of premiums collected through payroll deductions, which Plaintiffs contend are
not “contributions.”42
Finally, Plaintiffs “briefly note several other problems that they identify with the removal

37

Id.

38

Id. at 13.

39

Id.

40

Id. at 14.

41

Id.

42

Id. at 15.

7

in this matter, but which they reserve for later argument, if warranted, and preserve for later review,
if necessary.”43 Specifically, Plaintiffs argue that they have an insurance policy, which Plaintiffs
contend is insufficient to show that they have “established or maintained” an employee benefits
welfare plan.44 Plaintiffs also contend that as the owners of Soileau & Associates, LLC, they are
not employees subject to ERISA.45 Plaintiffs further argue that their claims are within the ERISA
savings clause.46 Alternatively, even if ERISA applies to certain claims, Plaintiffs contend that
their detrimental reliance claim is not preempted.47 For these reasons, Plaintiffs assert that the
motion to remand should be granted.48
B.

Defendant’s Arguments in Opposition to Remand
In opposition, Defendant first argues that it has carried its burden of establishing that

federal jurisdiction exists and that removal was proper.49 Defendant contends that the petition
clearly demonstrates that Plaintiffs’ case relates to the denial of health benefits. 50 Therefore,
Defendant argues that Plaintiffs’ claims are preempted by ERISA.51

43

Id. at 17.

44

Id.

45

Id.

46

Id.

47

Id. at 18.

48

Id.

49

Rec. Doc. 13 at 5.

50

Id.

51

Id.

8

Second, Defendant argues that it did not waive its right to removal.52 Defendant notes that
Article XXIV of the policy states, “If the Member has a claim for Benefits, which is denied or
ignored, in whole or in part, he may file suit in state or Federal court.”53 Defendant argues that
ERISA requires that summary descriptions of plan benefits be given to employees including “the
remedies available under the Plan for redress of claims which are denied in whole or in part.”54
Defendant contends that Article XXIV informs an employee of his rights under the policy and
where he may file suit, and this language is taken verbatim from the “model statement” contained
at 29 C.F.R. 2520.102-3(t)(2).55 According to Defendant, other district courts have held that this
exact language does not constitute a waiver of the right to removal.56 Defendants argue that the
cases cited by Plaintiffs are distinguishable because they did not involve an ERISA plan and they
involved mandatory forum selection clauses.57 Accordingly, Defendant asserts that “the federally
mandated Plan language cannot be construed as a waiver to the right to removal.”58
Third, Defendant argues that the policy is governed by ERISA because it is an “employee

52

Id.

53

Id. (quoting Rec. Doc. 7-3 at 101).

54

Id. at 5–6 (quoting 29 U.S.C. § 1022(b)).

55

Id. at 6.

56
Id. (citing Thompson v. Blue Cross Blue Shield of Louisiana, 2001 WL 1223598, at *1 (E.D. La. Oct. 12,
2001); Payne v. Harford Life and Accident Ins. Co., 2007 WL 2262942, at *2 (W.D. La. Aug. 3, 2007)).
57

Id. (citing Ensco Int’l, Inc. v. Certain Underwriters at Lloyd’s, 579 F.3d 442 (5th Cir. 2009); City of New
Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501 (5th Cir. 2004)).
58

Id.

9

welfare benefits plan” covered by ERISA and the state law claims “relate to” the policy. 59
According to Defendant, an insurance arrangement qualifies as an employee welfare benefit plan
under ERISA if it meets the following requirements: (1) it is a “plan”; (2) it does not fall within
the safe-harbor provision established by the DOL; and (3) it was established or maintained by an
employer with the intent to benefit employees.60
Addressing the first requirement, Defendant argues that a ‘“plan exists’ because a
reasonable person could readily determine the intended benefits” as those benefits are laid out
within the policy’s language.61 Moreover, Defendant notes that the beneficiaries under the policy
included Plaintiffs and other members of the law firm.62 Most importantly, Defendant contends
that the application states that the employer would contribute 100% of the policy’s premiums, and
the policy specifically lists the benefits available, the eligible beneficiaries, sources of funding,
and procedures for making a claim.63 Furthermore, Defendant asserts that Plaintiffs’ argument
that the use of a third-party intermediary for the processing of the claims implies that the policy is
not covered by ERISA is unavailing because an ERISA plan fiduciary may delegate its fiduciary
responsibilities.64
Turning to the second requirement, Defendant argues that the policy does not fall under

59

Id. at 8.

60

Id.

61

Id. at 9 (citing Lain, 27 F.Supp.2d at 931).

62

Id.

63

Id. at 10.

64

Id. (citing 29 U.S.C. § 1105(c)(1)).

10

the safe-harbor provisions because the application states that the employer would contribute 100%
of the policy premiums.65 Addressing the third requirement, Defendant asserts that the policy was
established or maintained by an employer with the intent to benefit employees because the
employer: (1) purchased the insurance; (2) selected the benefits; (3) identified the employee
participants; and (4) distributed enrollment and claim forms.66 Therefore, Defendant argues that
it has satisfied its burden of proving that the policy is governed by ERISA.67
Defendant next asserts that Plaintiffs’ state law claims are preempted by ERISA because:
(1) the claims address areas of exclusive federal concern like an insured’s right to receive benefits
under a plan covered by ERISA and (2) the claims directly affect the relationship between the
traditional ERISA entities.68 Defendant notes that the Fifth Circuit has found that ERISA preempts
state law claims for improper processing of claim benefits and breach of contract because these
claims require interpretation and administration of an ERISA plan.69 Moreover, Defendant asserts
that Plaintiffs’ state claims for penalties and attorney fees under Louisiana Revised Statute
§ 22:1821 are preempted as they relate to Plaintiffs’ claim for benefits under the policy.70

65

Id. at 11 (citing Rec. Doc. 13-1).

66

Id. at 12 (citing McDonald v. Provident Indemnity Life Ins. Co., 60 F.3d 234, 236 (5th Cir. 1995)).

67

Id. at 13.

68

Id.

69

Id. at 14 (citing Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir. 1990);
Weaver v. Employers Underwriters, Inc., 13 F.3d 172, 176 (5th Cir. 1994)).
70

Id. (citing Ponstein v. HMO Louisiana Inc., No. 08-663, 2009 WL 1309737 (E.D. La. May 11, 2009);
Taylor v. BlueCross/BlueShield of New York, 684 F.Supp. 1352 (E.D. La. 1988); Cunningham v. Petroleum
Professional Int., 2006 WL 1044153 (W.D. La. Apr. 19, 2006)).

11

Defendant next argues that Plaintiffs are participants and beneficiaries.71 Defendant notes
that in Vega v. National Life Insurance Services, Inc. the Fifth Circuit held that “where a husband
and wife are sole owners of a corporation that has created an employee benefits plan covered by
ERISA, and the husband and wife are also enrolled under the plan as employees of the corporation,
they are employees for ERISA purposes and so our courts have jurisdiction under ERISA to review
a denial of their claims.”72 Defendant asserts that Louisiana law recognizes a limited liability
company, like Soileau & Associates, LLC, as a legal entity separate and distinct from its
shareholders, and the policy covers at least one employee other than the owner.73
Finally, Defendant argues that it is not proper to consider the report of Wayne Citron in
determining the propriety of the removal. 74 Defendant asserts that the issue of whether an
insurance policy is an ERISA plan is a question of law, and an expert cannot give an opinion as to
a legal conclusion. 75 Furthermore, Defendant argues that the report should not be considered
because it was not part of the record at the time the case was removed.76 Therefore, Defendant
asserts that the expert report should not be considered in deciding the motion to remand.77

71

Id. at 15.

72

Id. at 16 (citing 188 F.3d 287, 288–89 (5th Cir. 1999).

73

Id.

74

Id. at 17.

75

Id.

76

Id. at 18.

77

Id. at 19.

12

C.

Plaintiffs’ Arguments in Further Support of the Motion to Remand
In the reply brief, Plaintiffs argue that Defendant improperly assumes that the insurance

policy is a plan covered by ERISA.78 Furthermore, Plaintiffs contend that this Court should not
follow the district court’s holding in Payne v. Hartford Life Insurance Co., finding that the
inclusion of model language regarding the remedies available under an ERISA plan was not a
waiver of the right to removal.79 Plaintiffs assert that this holding was not rational because the
model language itself appears to require waiver of the right to removal.80
Plaintiffs argue that Defendant sidesteps the primary argument set forth in the motion to
remand that “defendant set up a unilateral, non-contractual demand that plaintiffs pre-pay the
provider and then seek reimbursement through a third party.” 81 Regardless of whether the
insurance policy is clear as to benefits, beneficiaries, sources, and procedures, Plaintiffs allege that
Defendant acted outside the terms of the policy “by making a demand that plaintiffs pre-pay for
necessary medical treatment in the amount of approximately $36,000 per month and then seek
reimbursement, waiting many months for same.” 82 Plaintiffs assert that this ‘“process’ is
completely arbitrary and not obviously related to the contract between the parties.”83
Next, Plaintiffs note that Defendant does not address Plaintiffs’ argument that a

78

Rec. Doc. 17 at 1.

79

Id. at 2 (citing 2007 U.S. Dist. LEXIS 57259, *5-6 (W.D. La. Aug. 3, 2007)).

80

Id.

81

Id. at 3.

82

Id.

83

Id.

13

contribution does not include a premium for purposes of determining whether an ERISA plan falls
within the safe harbor provision.84 Furthermore, Plaintiffs contend that Defendant has not met its
burden of proving that Plaintiffs are participants under the test set forth by the Fifth Circuit in
McDonald v. Provident Indemnity. 85 Plaintiffs also assert that the state law claims cannot be
preempted because Defendant has not met its burden of showing that a plan exists.86 Finally,
Plaintiffs argue that Citron’s report can be considered as summary judgment-type evidence and it
is relevant because “Citron is an insurance industry expert who has opined that the insurance
contract at issue herein is quite simply not the sort of insurance contract that is covered by the
ERISA.”87
III. Legal Standard
A defendant may remove a state civil court action to federal court if the federal court has
original jurisdiction over the action.88 Pursuant to 28 U.S.C. § 1331, a district court has subject
matter jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the
United States.” Often called “federal-question jurisdiction,” this type of jurisdiction “is invoked
by and large by plaintiffs pleading a cause of action created by federal law (e.g., claims under 42
U.S.C. § 1983).”89 A single claim over which federal-question jurisdiction exists is sufficient to

84

Id.

85

Id. (citing 60 F.3d 234 (5th Cir. 1995)).

86

Id. at 4.

87

Id. at 5.

88

28 U.S.C. § 1441(a); Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 34 (2002).

89

Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308, 312 (2005);
see also Gunn v. Minton, 133 S. Ct. 1059, 1064 (2013) (“Most directly, a case arises under federal law when federal

14

allow removal.90
Pursuant to the “well-pleaded complaint” rule, “a federal court has original or removal
jurisdiction only if a federal question appears on the face of the plaintiff’s well-pleaded complaint;
generally, there is no federal jurisdiction if the plaintiff pleads only a state law cause of action.”91
Even where a federal remedy is also available, the “plaintiff is the master of his complaint and
may generally allege only a state law cause of action.”92 Further, “[a] defense that raises a federal
question is inadequate to confer jurisdiction.”93
However, the Supreme Court has recognized an exception to the well-pleaded complaint
rule known as the “complete pre-emption corollary to the well-pleaded complaint rule.”94 “ERISA
provides one such area of complete preemption.”95
The removing party bears the burden of demonstrating that federal jurisdiction exists.96 In
assessing whether removal was appropriate, the Court is guided by the principle, grounded in

law creates the cause of action asserted.”).
90
See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 563 (2005); City of Chicago v. Int’l Coll.
of Surgeons, 522 U.S. 156, 164–66 (1997).
91

Bernhard v. Whitney Nat’l Bank, 523 F.3d 546, 551 (5th Cir. 2008) (internal citations omitted).

92

Id.

93
Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986) (citing Louisville & Nashville R. Co. v.
Mottley, 211 U.S. 149 (1908)).
94

Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987). A second exception to the well-pleaded complaint
rule exists in a “special and small” category of cases in which a state law cause of action can give rise to federal
question jurisdiction because the claim involves important federal issues. Empire Healthchoice Assurance, Inc. v.
McVeigh, 547 U.S. 677, 699 (2006). This exception is not raised here.
95

McAteer v. Silverleaf Resorts, Inc., 514 F.3d 411, 416 (5th Cir. 2008) (citing Beneficial Nat’l Bank v.
Anderson, 539 U.S. 1, 8 (2003)).
96

See Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).

15

notions of comity and the recognition that federal courts are courts of limited jurisdiction, that
“removal statute[s] should be strictly construed in favor of remand.”97 Remand is appropriate if
the Court lacks subject matter jurisdiction, and “doubts regarding whether removal jurisdiction is
proper should be resolved against federal jurisdiction.”98
IV. Analysis
In the motion to remand, Plaintiffs first argue that remand is proper because Defendant has
failed to meet its burden of proving that removal is proper. 99 Second, Plaintiffs argue that
Defendant waived its right to remove claims arising out of the insurance policy.100 Third, Plaintiffs
assert that the claims are not preempted by ERISA because the insurance policy is not an ERISA
plan or because the insurance policy falls within the Department of Labor “safe harbor”
provision.101 Finally, Plaintiffs “briefly note several other problems that they identify with the
removal in this matter, but which they reserve for later argument, if warranted, and preserve for
later review, if necessary.”102
Finally, Plaintiffs also contend that as the owners of Soileau & Associates, LLC, they are
not employees subject to ERISA. 103 Specifically, Plaintiffs argue that they have an insurance

97

Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).

98

Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000) (citing Willy v. Coastal Corp., 855 F.2d
1160, 1164 (5th Cir. 1988)).
99

Rec. Doc. 7-1 at 6–7.

100

Id. at 7–8.

101

Id. at 8–17.

102

Id. at 17.

103

Id. at 17.

16

policy, which Plaintiffs contend is insufficient to show that they have “established or maintained”
an employee benefits welfare plan.104 Plaintiffs also contend that as the owners of Soileau &
Associates, LLC, they are not employees subject to ERISA.105 Accordingly, the Court addresses
each of these issues in turn.
A.

Whether Defendant has Met Its Burden of Proving that Removal is Proper
In the motion to remand, Plaintiffs first argue that remand is proper because Defendant has

failed to meet its burden of proving that removal is proper.106 Plaintiffs contend that Defendant
simply alleged that the Court has jurisdiction but did not come forward with any evidence to
support the claim that ERISA preempts Plaintiffs’ claims.107 In opposition, Defendant contends
that it has carried its burden of establishing that federal jurisdiction exists and that removal was
proper.108 Defendant asserts that the petition clearly demonstrates that Plaintiffs’ case relates to
the denial of health benefits.109 Therefore, Defendant argues that Plaintiffs’ claims are preempted
by ERISA.110
“The purpose of ERISA is to provide a uniform regulatory regime over employee benefit

104

Id.

105

Id.

106

Id. at 14–17.

107

Id.

108

Rec. Doc. 13 at 5.

109

Id.

110

Id.

17

plans.”111 Section 514(a) of ERISA states that ERISA “shall supersede any and all State laws
insofar as they may now or hereafter relate to any employee benefit plan. . . .”112 Section 502(a)
of ERISA sets forth the exclusive grounds for relief under ERISA.113 “Hence, ‘causes of action
within the scope of the civil enforcement provisions of § 502(a) [are] removable to federal
court.’”114
“The Supreme Court has stated that a law ‘relates to’ an employee benefit plan and is
preempted if it has a connection with or reference to the plan.”115 “Under Fifth Circuit precedent,
to determine whether a state law relates to a plan for purposes of ERISA preemption, the court
asks ‘(1) whether the state law claims address areas of exclusive federal concern, such as the right
to receive benefits under the terms of an ERISA plan; and (2) whether the claims directly affect
the relationship among the traditional ERISA entities—the employer, the plan and its fiduciaries,
and the participants and beneficiaries.’”116
Section 502(a)(1)(B) of ERISA provides that “a participant or beneficiary” may bring a
civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under
the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”117 In

111

McAteer, 514 F.3d at 417 (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004)).

112

29 U.S.C. § 1144(a).

113

29 U.S.C. § 1132(a).

114

Davila, 542 U.S. at 209.

115

McAteer, 514 F.3d at 417 (citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96–97 (1983)).

116

Id. (quoting Woods v. Tex. Aggregates, L.L.C., 459 F.3d 600, 602 (5th Cir. 2006); Hook v. Morrison
Milling Co., 38 F.3d 776, 781 (5th Cir. 1994)).
117

29 U.S.C. § 1132(a)(1)(B).

18

Aetna Health Inc. v. Davila, the Supreme Court stated that “[t]his provision is relatively
straightforward. If a participant or beneficiary believes that benefits promised to him under the
terms of the plan are not provided, he can bring suit seeking provision of those benefits. A
participant or beneficiary can also bring suit generically to ‘enforce his rights’ under the plan, or
to clarify any of his rights to future benefits.”118 Further, the Court explained that “[i]t follows that
if an individual brings suit complaining of a denial of coverage for medical care, where the
individual is entitled to such coverage only because of the terms of an ERISA regulated employee
benefit plan, and where no legal duty (state or federal) independent of ERISA or the plan terms is
violated, then the suit falls within the scope of ERISA § 502(a)(1)(B).”119
In the petition, Plaintiffs claim, inter alia, that Defendant improperly failed “to timely
accept the claims for treatment,” Defendant made “arbitrary and capricious decisions that were not
based in facts or the policy language which resulted in repeated denials for service,” and “Plaintiffs
have had to bear the cost of this inpatient treatment for which they contracted with [Defendant] for
insurance only to find that [Defendant] would not honor its contract in a timely and appropriate
manner.”120 Plaintiffs bring claims for breach of contract, bad faith adjusting, and failure to timely
pay claims in violation of Louisiana Revised Statute § 22:1821(A) and (D).121 Plaintiffs clearly
bring suit complaining of a denial of coverage for medical care, which they believe they were

118

Davila, 542 U.S. at 210.

119

Id. (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987)).

120

Rec. Doc. 1-2 at 9–10.

121

Id. at 2.

19

entitled to because of the terms of the insurance policy.122 Therefore, for the reasons discussed
infra, because the policy is an employee welfare benefit plan under ERISA, Plaintiffs’ claim for
benefits fall within the scope of Section 502(a)(1)(B) of ERISA and federal-question jurisdiction
exists.123
B.

Whether Defendant Waived the Right to Removal
Plaintiffs argue that Defendant waived the right to remove claims arising out of the policy

at issue here in Article XXIV, the “ERISA Rights” section of the policy. 124 In opposition,
Defendant argues that it did not waive its right to removal because Article XXIV informs an
employee of his rights under the policy and where he may file suit, and this language is taken
verbatim from the “model statement” contained at 29 C.F.R. 2520.102-3(t)(2).125
The Fifth Circuit has consistently held “[f]or a contractual clause to prevent a party from
exercising its right to removal, the clause must give a ‘clear and unequivocal’ waiver of that
right.”126 “There are three ways in which a party may clearly and unequivocally waive its removal
rights: ‘[1] by explicitly stating that it is doing so, [2] by allowing the other party the right to

122

Davila, 542 U.S. at 210.

123
Id. To the extent Plaintiffs argue that their claims are within the ERISA savings clause and that their
detrimental reliance claim is not preempted, Plaintiffs do not provide any briefing or argument in support of these
assertions. The Fifth Circuit “requires arguments to be briefed to be preserved and issues not adequately briefed are
deemed abandoned. . . .” Regmi v. Gonzales, 157 F. App’x. 675, 676 (5th Cir. 2005) (citing Yohey v. Collins, 985 F.2d
222, 224–25 (5th Cir. 1993))
124

Rec. Doc. 7-1 at 7–8.

125

Rec. Doc. 13 at 5–6.

126

Ensco Int’l, Inc. v. Certain Underwriters at Lloyd’s, 579 F.3d 442, 443 (5th Cir. 2009) (quoting City of
New Orleans v. Mun. Admin. Servs., 376 F.3d at 501, 504 (5th Cir. 2004)).

20

choose venue, or [3] by establishing an exclusive venue within the contract.’”127
Plaintiffs contend that Article XXIV, the “ERISA Rights” section of the insurance policy,
unequivocally gives them the right to choose the venue.128 Article XXIV provides in pertinent
part, “If the participant has a claim for Benefits, which is denied or ignored, in whole or in part, he
may file suit in a state or Federal court.”129 29 U.S.C. § 1022 mandates that “[a] summary plan
description of any employee benefit plan shall be furnished to participants and beneficiaries” and
“shall contain . . . remedies available under the plan for the redress of claims which are denied in
whole or in part. . . .” 29 C.F.R. § 2520.102-3 provides a “model statement” to ensure compliance
with 29 U.S.C. § 1022. The model statement includes a section titled “Enforce Your Rights” that
states in pertinent part, “If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or Federal court.” 130 Therefore, Article XXIV substantially
complies with the model statement.
The parties do not cite, and the Court’s independent research has not found a Fifth Circuit
case directly addressing this issue. However, other district courts have found that inclusion of the
model language in an insurance policy does not constitute a waiver of the right to removal.131 In

127

Id. at 443–44.

128

Rec. Doc. 7-1 at 8.

129

Rec. Doc. 7-3 at 100.

130

29 C.F.R. 2520.102-3(t)(2).

131
Payne v. Harford Life and Accident Ins. Co., 2007 WL 2262942, at *2 (W.D. La. Aug. 3, 2007);
Thompson v. Blue Cross Blue Shield of Louisiana, 2001 WL 1223598, at *1 (E.D. La. Oct. 12, 2001); Satterfield v.
Fortis Benefits Ins. Co., 225 F.Supp.2d 1319 1321–22 (M.D. Ala. 2002); Fanney v. Trigon Ins. Co., 11 F.Supp.2d
829, 831 (E.D. Va. 1998); Yurcik v. Sheet Metal Workers’ Int’l Ass’n, 889 F.Supp. 706, 707 (S.D. N.Y. 1995).

21

Payne v. Hartford Life and Accidence Insurance, Co. a district judge in the Western District of
Louisiana found that “the referenced language simply informs plaintiff what his rights are under
the plan, i.e. plaintiff has the right to file suit in state or federal court.”132 Because there is no
language in the clause that waives or restricts the defendant’s right to remove a lawsuit to federal
court, the district court concluded that there was “no clear and unequivocal waiver of the right to
removal.”133
The Seventh Circuit also examined this exact issue in Cruthis v. Metropolitan Life
Insurance.134 There, the plaintiff sued the defendant in state court for refusing to pay her benefits
under the terms of her employee benefit plan, and the defendant removed the case to federal
court.135 The plaintiff filed a motion to remand, arguing that the defendant had waived its right to
remove the case by stating in the plan that a person “may file suit in a state or Federal court.”136
On appeal, the Seventh Circuit stated that the “statement clearly was made to comply with
ERISA’s disclosure requirements. . . . Thus, the plain language of the statement indicates that it is
a disclosure of applicable law rather than a substantive contract provision.”137 Furthermore, the
Seventh Circuit noted that there was “no evidence that the drafters of ERISA intended this
disclosure statement to act as a substantive contract provision and eliminate the right of removal,”

132

Payne, 2007 WL 2262942, at *2.

133

Id.

134

356 F.3d 816 (7th Cir. 2004).

135

Id. at 817.

136

Id. at 818.

137

Id. at 819.

22

and to interpret the phrase otherwise “would result in the virtual elimination of removal in ERISA
cases because every employer covered by ERISA is required to make such a disclosure.”138
Similarly, the language at issue here is taken almost verbatim from the model statement
and informs participants of their right to sue in state or federal court. This language was clearly
included to comply with ERISA disclosure requirements, and is not a substantive contract
provision. Plaintiffs assert that the model language itself appears to require waiver of the right to
removal.139 However, as the Seventh Circuit noted, there is no evidence that the drafters of ERISA
intended this disclosure statement to act as a substantive contract provision and eliminate the right
of removal. Accordingly, the Court finds that it cannot be interpreted as a waiver of Defendant’s
right to removal.
C.

Whether the Insurance Policy is Covered by ERISA
Third, Plaintiffs argue that there is no federal-question jurisdiction over this case because

the policy is not subject to ERISA.140 In support of this argument, Plaintiffs rely on a report by an
insurance industry expert, Wayne Citron, who opines that the policy is not covered by ERISA.141
Plaintiffs contend that Defendant is estopped from arguing that the policy is an ERISA plan.142
Finally, Plaintiffs assert that ERISA is not applicable because there is no “plan,” or if there is a

138

Id.

139

Rec. Doc. 17 at 2.

140

Rec. Doc. 7-1 at 8.

141

Id. at 9.

142

Id. at 10.

23

plan that it falls within the Department of Labor “safe harbor” provision.143 Accordingly, the Court
addresses each of these issues in turn.
1.

Evidentiary Issues

As an initial matter, the Court notes that Plaintiffs rely on a report by an insurance industry
expert, Wayne Citron, who opines that the policy is not covered by ERISA.144 Defendant argues
that the report should not be considered because it was not part of the record at the time the case
was removed.145
Because it is not uncommon for a plaintiff to “inadvertently or intentionally fail[ ] to make
clear that the claim for relief is essentially federal . . . federal courts usually do not limit their
inquiry to the face of the plaintiff’s complaint, but rather consider the facts disclosed on the record
of the case as a whole in determining the propriety of removal.”146 The Court may consider postremoval submissions that set forth facts developed at the time of removal.147 Therefore, in order
to determine whether the insurance policy at issue qualifies as an ERISA plan, the Court may look

143

Id. at 10–17.

144

Id. at 9.

145

Rec. Doc. 13 at 18.

146

C. Wright & A. Miller, 14C Federal Practice and Procedure § 3734 (4th ed. 2018).

147

See Gebbia v. Wal–Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir.2000) (“While post-removal affidavits
may be considered in determining the amount in controversy at the time of removal, such affidavits may be considered
only if the basis for jurisdiction is ambiguous at the time of removal.”); Ditcharo v. United Parcel Service, Inc., 376
F. App’x 432, 436 (5th Cir. 2010) (facts supporting a finding of the requisite amount in controversy “should be set
forth either in the removal petition (the preferred method), or by subsequent affidavit.”). See also Cardiovascular
Specialty Care Center of Baton Rouge, LLC v. United Healthcare of Louisiana, Inc., No. 14-235, 2015 WL 95212, at
*7 (M.D. La. Mar. 4, 2015) (Recognizing that the issue of considering post-removal submissions typically arises in
diversity cases, but courts in the Fifth Circuit “have considered documents attached to opposition to motions to remand
for determining whether the defendants established federal jurisdiction through the complete preemption doctrine.”).

24

to the summary judgment-type evidence in the record, including the sworn affidavit and report of
Citron.148
Defendant also argues that it is not proper to consider the report in determining the
propriety of the removal because the issue of whether an insurance policy is an ERISA plan is a
question of law, and an expert cannot give an opinion as to a legal conclusion.149 As the Fifth
Circuit has recognized, “an expert may never render conclusions of law.” 150 The issue of
“[w]hether a particular set of insurance arrangements constitute an ‘employee welfare benefit plan’
is a question of fact.” 151 However, the question is treated as one of law “where the factual
circumstances are established as a matter of law or undisputed.” 152 Therefore, the Court will
consider Citron’s sworn affidavit and report to the extent that they do not make conclusions of
law.
Nevertheless, Plaintiffs do not explain how Citron’s report is relevant to the issues
presented in this motion to remand. Plaintiffs rely on Citron’s opinion that the policy is not “ERISA
compliant” in that it does not address requirements such as “Michelle’s Law, CHOPRA, FINA,
WHCRA, NEWBORNS and HIPPA.”153 Citron also notes that the policy states that it complies

148
See Smith v. Palafox, 728 F. App’x 270, 276 (5th Cir. 2018) (recognizing that an expert report must be
sworn to be considered competent summary judgment evidence).
149

Rec. Doc. 13 at 17.

150

Goodman v. Harris County, 571 F.3d 388, 399 (5th Cir. 2009)

151
Hansen v. Cont’l Ins. Co., 940 F.2d 971, 976 (5th Cir. 1991), abrogated on other grounds by CIGNA
Corp. v. Amara, 563 U.S. 421 (2011). (internal citations omitted).
152

House v. American United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007) (internal citations omitted).

153

Rec. Doc. 7-4 at 7.

25

with the Affordable Care Act, which he says suggests that it could not be compliant with ERISA.154
Citron also points to the fact that the policy lays out procedures for filing an appeal for both ERISA
and non-ERISA plans.155 The Fifth Circuit has recognized that a “dispute is governed by ERISA
provided an employee welfare plan exists, and without regard to whether other requirements
imposed by ERISA on the employer and others are met.”156 Therefore, Citron’s report appears to
address whether Defendant complied with ERISA, not the issue presented here, which is whether
the policy is an ERISA employee welfare benefits plan.
2.

Estoppel

Plaintiffs contend that Defendant has tacitly admitted that the policy is not covered by
ERISA by: (1) repeatedly interacting with the Louisiana Department of Insurance in complaints
regarding the handling of the claims at issue without raising ERISA as an issue; (2) sending
correspondence to Plaintiffs that does not identify the policy or claim as arising under ERISA; and
(3) using an internal appeal process in the handling of this claim different from the ERISA appeal
process described in the policy.157 Plaintiffs assert that these actions serve to estop Defendant from
now claiming ERISA coverage.158 Defendant does not respond to this argument.
In Mello v. Sara Lee Corporation, the Fifth Circuit adopted “ERISA-estoppel as a

154

Id.

155

Id. at 8.

156

Vega v. National Life Ins. Servs., Inc., 145 F.3d 673, 677 (5th Cir. 1998).

157

Rec. Doc. 7-1 at 10.

158

Id.

26

cognizable theory.”159 “To establish an ERISA-estoppel claim, the plaintiff must establish: (1) a
material misrepresentation; (2) reasonable and detrimental reliance upon the representation; and
(3) extraordinary circumstances.”160 In Mello, the Fifth Circuit determined that the employer made
a material representation to the plaintiff by providing benefits statements misrepresenting the
details of the benefit payments he was to receive.161 However, the Fifth Circuit found that although
the plaintiff’s reliance on those statements may have been detrimental, it was not reasonable, as
the plaintiff relied on the benefits statements and an employee’s assertions rather than the
unambiguous provisions provided in the plan.162 Accordingly, the court held that the doctrine of
ERISA-estoppel was inapplicable to the facts of the case, without reaching the “extraordinary
circumstances” element of the test.163
In High v. E-Systems, Inc., the Fifth Circuit further reasoned that “a ‘party’s reliance can
seldom, if ever, be reasonable or justifiable if it is inconsistent with the clear and unambiguous
terms of plan documents available to or furnished to the party.’”164 This is so because “allowing
‘estoppel to override the clear terms of plan documents would be to enforce something other than
the plan documents themselves. That would not be consistent with ERISA.’”165

159

431 F.3d 440, 444 (5th Cir. 2005).

160

Id. at 444–45.

161

Id. at 445.

162

Id.

163

Id.

164

459 F.3d 573, 580 (5th Cir. 2006) (quoting Sprague v. GMC, 133 F.3d 388, 404 (6th Cir. 1998)).

165

Id. (quoting Sprague v. GMC, 133 F.3d 388, 404 (6th Cir. 1998)).

27

Here, Plaintiffs do not address the factors set forth by the Fifth Circuit. Plaintiffs do not
allege that they reasonably and detrimentally relied upon a material misrepresentation by
Defendant regarding whether the policy is subject to ERISA. Instead, Plaintiffs allege that
Defendant imposed an extra-contractual process on Plaintiffs’ claims for benefits. Therefore,
Plaintiffs have not shown that ERISA-estoppel is applicable here.166
3.

Whether the Policy is an ERISA Plan?

Plaintiffs assert that ERISA is not applicable because there is no “plan.”167 In response,
Defendant argues that the policy is governed by ERISA because it is an “employee welfare benefits
plan.”168
ERISA applies to an “employee benefit plan” if that plan is “established or maintained by
any employer. . . .”169 There are two types of employee benefit plans, “employee welfare benefit
plans” and “employee pension benefit plans.”170 In this case, Defendant argues that the insurance

166

Even under Louisiana law, Plaintiffs have not shown that Defendant would be estopped from claiming
that the policy is covered by ERISA. The Louisiana Supreme Court has defined equitable estoppel as “‘the effect of
the voluntary conduct of a party whereby he is precluded from asserting rights against another who has justifiably
relied upon such conduct and changed his position so that he will suffer injury if the former is allowed to repudiate
the conduct.’” Morris v. Friedman, 663 So. 2d 19, 25 (La. 1995) (quoting John Bailey Contractor v. State Dep’t of
Transp. & Dev., 439 So.2d 1055, 1059 (La. 1983)). The doctrine, in proper circumstances, will prevent a party “from
taking a position contrary to his prior acts, admissions, representations, or silence.” John Bailey, 439 So.2d at 1059–
60. Equitable estoppel thus has three elements: “(1) A representation by conduct or work; (2) Justifiable reliance
thereon; and (3) A change of position to one’s detriment because of the reliance.” Id. Here, Plaintiffs do not allege
that they detrimentally relied upon a material misrepresentation by Defendant regarding whether the policy is subject
to ERISA.
167

Rec. Doc. 7-1 at 10–11.

168

Rec. Doc. 13 at 8.

169

29 U.S.C. § 1003(a).

170

29 U.S.C. § 1002(3).

28

policy is an “employee welfare benefit plan.”171
ERISA defines an “employee welfare benefit plan” as
any plan, fund, or program which was . . . established or maintained by an employer
. . . 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 . . . medical, surgical, or hospital care or
benefits, or benefits in the event of sickness, accident, disability, death or
unemployment. . . .172
The issue of “[w]hether a particular set of insurance arrangements constitute an ‘employee
welfare benefit plan’ is a question of fact.”173 “This factual determination is governed by a set of
well established legal standards.”174 Furthermore, the question is treated as one of law “where the
factual circumstances are established as a matter of law or undisputed.”175
To determine whether a particular plan qualifies as an ERISA employee welfare benefit
plan, the Fifth Circuit instructs that district courts must “ask whether a plan: (1) exists; (2) falls
within the safe-harbor provision established by the Department of Labor; and (3) satisfies the
primary elements of an ERISA ‘employee benefit plan’—establishment or maintenance by an
employer intending to benefit employees.” 176 “If any part of the inquiry is answered in the

171

Rec. Doc. 13 at 8.

172

29 U.S.C. § 1002(1).

173

Hansen v. Cont’l Ins. Co., 940 F.2d 971, 976 (5th Cir. 1991), abrogated on other grounds by CIGNA
Corp. v. Amara, 563 U.S. 421 (2011). (internal citations omitted).
174

Id.

175

House v. American United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007) (internal citations omitted).

176

Martin v. Trend Personnel Services, 656 F. App’x 34, 36 (5th Cir. 2016) (quoting Meredith v. Time Ins.
Co., 980 F.2d 352, 355 (5th Cir. 1993)).

29

negative, the submission is not an ERISA plan.”177 The parties dispute whether the policy
satisfies each of these requirements. Therefore, the Court will address each of these issues in turn.
a.

Whether a Plan Exists

Plaintiffs contend that Defendant is unable to prove the existence of a plan because “the
claims at issue in this case arise out of defendant’s unilateral imposition of an individualized, noncontractual reimbursement process on plaintiffs, through a third party intermediary,” which
Plaintiffs argue is not part of the normal claims handling process.178 In response, Defendant argues
that a ‘“plan exists’ because a reasonable person could readily determine the intended benefits” as
those benefits are laid out within the policy’s language.179 Specifically, Defendant notes that the
beneficiaries under the policy included Plaintiffs and other members of the law firm, the
application states that the employer would contribute 100% of the policy’s premiums, and the
policy specifically lists the benefits available, the eligible beneficiaries, sources of funding, and
procedures for making a claim.180
“Before a court can ask whether a plan is an ERISA plan [] it must first satisfy itself that
there is in fact a ‘plan’ at all.”181 To determine whether there is a plan, the Court “must determine
from the surrounding circumstances whether a reasonable person could ascertain the intended

177

Id.

178

Rec. Doc. 7-1 at 11.

179

Rec. Doc. 13 at 9 (citing Lain, 27 F.Supp.2d at 931).

180

Id. at 10.

181

Hansen, 940 F.2d at 976.

30

benefits, beneficiaries, source of financing, and procedures for receiving benefits.”182
In this case, the policy is for health insurance, “which fits comfortably within the customary
meaning of employee welfare benefit plan.”183 The intended benefits are clearly laid out within
the policy’s language.184 The application filed by the law firm, Soileau & Associates, LLC, lists
Plaintiffs and other members of the firm as beneficiaries. 185 A reasonable person could also
ascertain the sources of financing and procedures for receiving benefits under the policy. The
Group Application for Coverage explicitly states that the employer, Soileau & Associates, LLC,
will contribute 100% of the policy’s premiums.186 Furthermore, Articles IV–XVII of the policy
list the benefits available, Article III lists the eligible beneficiaries, and Article XXV lists the
procedures for making a claim.187 The “Schedule of Benefits” also lists the benefits available to
the Group’s covered employees.188
Plaintiffs have offered no evidence to show that a reasonable person could not have
ascertained these details about the policy. Instead, Plaintiffs contend that Defendant is unable to
prove the existence of a plan because “the claims at issue in this case arise out of defendant’s
unilateral imposition of an individualized, non-contractual reimbursement process on plaintiffs,

182

Id.

183

Meredith, 980 F.2d at 355.

184

Rec. Doc. 7-3.

185

Rec. Doc. 13-1.

186

Rec. Doc. 13-1 at 2.

187

Rec. Doc. 7-3.

188

Rec. Doc. 13-2 at 128–55.

31

through a third party intermediary,” which Plaintiffs argue is not part of the normal claims handling
process. 189 However, Plaintiffs do not cite any authority to support their assertion that these
alleged actions on the part of Defendant preclude a finding that the policy is a “plan.”
Furthermore, as noted by Defendant, Plaintiffs’ argument that the use of a third-party
intermediary for the processing of the claims implies that the policy is not covered by ERISA is
unavailing because an ERISA plan fiduciary may delegate its fiduciary responsibilities.190 Article
XXII(S) of the policy also sets forth procedures for the use of out-of-state and/or out-of-network
providers.191 To the extent Plaintiffs argue that Defendant breached its fiduciary obligations or
failed to comply with the procedures set forth in the policy, these arguments go to the merits of
the case not to whether the policy is a “plan.” Accordingly, the Court finds that Defendant has met
its burden of establishing the existence of a plan.
b.

The Department of Labor “Safe Harbor” Provision

Plaintiffs assert that the policy falls within the Department of Labor’s “safe harbor”
provision because: (1) Soileau & Associates LLC has not endorsed the policy and receives no
profit from it; (2) participation in the insurance contact is voluntary; and (3) Soileau & Associates
makes no contributions to a plan with the exception of premiums collected through payroll
deductions. 192 Defendant argues that the policy does not fall under the safe-harbor provision

189

Rec. Doc. 7-1 at 11.

190

Id. (citing 29 U.S.C. § 1105(c)(1)).

191

Rec. Doc. 7-3 at 91–92.

192

Rec. Doc. 7-1 at 14–15.

32

because the application states that the employer would contribute 100% of the policy premiums.193
In support of this assertion, Defendant cites a Declaration of Danielle Conway, the Director of
Membership & Billing for Defendant, which states that “[t]he application for Group Insurance
Coverage indicates that Soileau & Associates, LLC would be paying 100% of the premium for
coverage under the Plan for Isaac H. Soileau, Jr. and [another covered employee] S.B.”194
The Department of Labor has promulgated regulations providing that certain insurance and
other benefit plans are excluded from ERISA’s coverage.195 The “safe harbor” provision provides
that the term “employee welfare benefit plan”:
[S]hall not include a group or group-type insurance program offered by an insurer
to employees or members of an employee organization, under which
(1) No contributions are made by an employer or employee
organization;
(2) Participation [in] the program is completely voluntary for
employees or members;
(3) The sole functions of the employer or employee organization
with respect to the program are, without endorsing the program,
to permit the insurer to publicize the program to employees or
members, to collect premiums through payroll deductions or
dues checkoffs and to remit them to the insurer; and
(4) The employer or employee organization receives no
consideration in the form of cash or otherwise in connection
with the program, other than reasonable compensation,
excluding any profit, for administrative services actually
rendered in connection with payroll deductions or dues

193

Rec. Doc. 13 at 11 (citing Rec. Doc. 13-1).

194

Rec. Doc. 13-1 at 2.

195

Hansen, 940 F.2d at 976.

33

checkoffs.196
“Group insurance plans which meet each of these criteria are excluded from ERISA’s
coverage.”197
Plaintiffs assert that Soileau & Associates make no contributions to the policy, with the
exception of payroll deductions. However, Plaintiffs do not present any evidence showing that the
contributions made by Soileau & Associates, LLC were in fact premiums. The only evidence in
the record on this issue is the Declaration of Danielle Conway, the Application for Group Insurance
Coverage, and the Amended Application for Group Insurance Coverage, all of which indicate that
the “employer contribution” for medical insurance would be 100%.198 Defendant also presents
copies of group premium invoices that were sent to Soileau & Associates, LLC.199 Therefore,
Defendant has met its burden of establishing that the policy does not fall within the safe harbor
provision.
c.

Whether the Plan Satisfies the Primary Elements of an ERISA Employee
Benefit Plan

Plaintiffs contend that there is no evidence that plaintiffs have “established or maintained”
a “plan, fund, or program” in this matter.200 In response, Defendant asserts that the policy was
established or maintained by an employer with the intent to benefit employees because the

196

29 C.F.R. 2510.3–1(j).

197

Hansen, 940 F.2d at 977 (internal citations omitted).

198

Id.; Rec. Doc. 13-2 at 125; Rec. Doc. 13-3 at 2.

199

Rec. Doc. 13-7.

200

Rec. Doc. 7-1 at 17.

34

employer: (1) purchased the insurance; (2) selected the benefits; (3) identified the employee
participants; and (4) distributed enrollment and claim forms.201
If there is a plan, the Court must next determine whether the plan is covered by ERISA.
“By its terms, ERISA applies only to those employee welfare benefit plans that are established or
maintained by an employer for the purpose of providing certain benefits to its employees.”202
Pursuant to Fifth Circuit precedent, two elements must be met for a policy to be an ERISA plan:
“first, it must be established or maintained by an employer, and second, the employer must have a
certain intent—a purpose to provide benefits to its employees.” 203 In McDonald v. Provident
Indemnity Life Insurance Co., the Fifth Circuit found that the employer “established or
maintained” an insurance plan for the purpose of providing benefits to its employees where the
employer “purchas[ed] the insurance, select[ed] the benefits, identif[ied] the employeeparticipants, and distribut[ed] enrollment and claim forms.”204
Here, Defendant presents evidence showing that Soileau & Associates, LLC submitted the
Group Application on or around April 21, 2010, establishing the plan.205 Soileau & Associates
selected the benefits and identified the employee participants.206 Defendant also presents copies

201

Rec. Doc. 14 at 12 (citing McDonald v. Provident Indemnity Life Ins. Co., 60 F.3d 234, 236 (5th Cir.

202

Hansen, 940 F.2d at 977 (citing 29 U.S.C. § 1002(1)).

203

Id.

204

McDonald, 60 F.3d at 236.

205

Rec. Doc. 13-1 at 1.

206

Rec. Doc. 13-2 at 125.

1995)).

35

of group premium invoices that were sent to Soileau & Associates, LLC. 207 Therefore, the
evidence presented by Defendant shows that Soileau & Associates, LLC contracted with
Defendant to provide health care benefits to employees. Plaintiffs offer no evidence or argument
that the law firm did not establish the health insurance with the intent to benefit its employees.
Thus, Defendant has established the policy is an employee welfare benefit plan under the Fifth
Circuit’s three-part test.
D.

Whether Plaintiffs are Employees Subject to ERISA
Finally, Plaintiffs also contend that as the owners of Soileau & Associates, LLC, they are

not employees subject to ERISA.208 In opposition, Defendant argues that Plaintiffs are participants
and beneficiaries subject to ERISA.209
In Meredith v. Time Insurance Company, the Fifth Circuit held that an insurance plan
covering only a sole proprietor and her spouse was not an ERISA employee welfare benefit plan.210
This is so because “an employee benefit plan does not include one in which no employees are
participants, and for purposes of this regulation, ‘[a]n individual and his or her spouse shall not be
deemed to be employees with respect to a trade or business, whether incorporated or
unincorporated, which is wholly owned by the individual or by the individual and his or her
spouse.’”211 In Vega v. National Life Insurance Services, Inc. the Fifth Circuit held that “where a

207

Rec. Doc. 13-7.

208

Rec. Doc. 7-1 at 17.

209

Id. at 15.

210

980 F.2d at 358.

211

Id. (quoting 29 C.F.R. § 2510.3–3 (1992)).

36

husband and wife are sole owners of a corporation that has created an employee benefits plan
covered by ERISA, and the husband and wife are also enrolled under the plan as employees of the
corporation, they are employees for ERISA purposes and so our courts have jurisdiction under
ERISA to review a denial of their claims.”212
Louisiana law recognizes a limited liability company, like Soileau & Associates, LLC, as
a legal entity separate and distinct from its shareholders.213 Furthermore, the policy covers at least
one employee other than the owner, Isaac Soileau, and has wife. 214 Therefore, Plaintiffs are
employees subject to ERISA.
V. Conclusion
Based on the foregoing, the Court finds that Defendant has established the policy is an
employee welfare benefit plan under the Fifth Circuit’s three-part test. Defendant has also shown
that Plaintiffs’ case relates to the denial of health benefits as Plaintiffs clearly bring suit
complaining of a denial of coverage for medical care, which they believe they were entitled to
because of the terms of the insurance policy. Therefore, because the policy is an employee welfare
benefit plan under ERISA, Plaintiffs’ claim for benefits fall within the scope of Section
502(a)(1)(B) of ERISA and federal-question jurisdiction exists. Furthermore, Plaintiffs are
employees subject to ERISA.

212

Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287, 288–89 (5th Cir. 1999) (en banc), overruled on other
grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)).
213

See La. Rev. Stat. § 12:1301 (“‘Limited liability company’ or ‘domestic limited liability company’ means
an entity that is an unincorporated associated having one or more members that is organized and existing under this
Chapter.”).
214

Rec. Doc. 13-2.

37

Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ “Motion to Remand”215 is DENIED.

15th
NEW ORLEANS, LOUISIANA, this ______ day of August, 2018.

________________________________
NANNETTE JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT

215

Rec. Doc. 7.

38