Slamen v. Paul Revere Life Ins.

Citation: Not availableDocket: 98-6147

Court: Court of Appeals for the Eleventh Circuit; January 31, 1999; Federal Appellate Court

Original Court Document: View Document

Combined Opinion SummaryCombined Opinion Original

EnglishEspañolSimplified EnglishEspañol Fácil

Herbert A. Slamen appeals a post-trial order from the United States District Court for the Northern District of Alabama, which dismissed his claim for disability insurance benefits against Paul Revere Life Insurance Company. Slamen argues that his disability insurance policy is not governed by the Employee Retirement Income Security Act of 1974 (ERISA) and that the federal court lacked subject matter jurisdiction, asserting that his state law breach of contract and tort claims should have been remanded to Alabama state courts.

Slamen established a health plan for his dental practice in 1981, which did not include disability benefits. In 1985, he purchased a disability insurance policy solely for himself, with premiums paid by his professional corporation. After Paul Revere denied benefits in December 1996, Slamen filed suit in state court, claiming breach of contract and tort. Paul Revere removed the case to federal court, where Slamen's motion to remand was denied, leading to the dismissal of his state law claims as preempted by ERISA. The district court allowed Slamen to amend his claims to state an ERISA claim, but after a bench trial, ruled in favor of Paul Revere.

The appeal centers on whether Slamen's disability insurance policy qualifies as an ERISA employee welfare benefit plan. If it does, the district court's actions were appropriate; if not, federal jurisdiction would be lacking, necessitating a remand to state court. ERISA defines an employee welfare benefit plan as any program established by an employer to provide benefits, including those for disability.

In Donovan v. Dillingham, the Eleventh Circuit established five criteria for an employee welfare benefit plan to be governed by ERISA: (1) it must be a "plan, fund, or program," (2) established or maintained by an employer or employee organization, (3) intended to provide specified benefits (medical, surgical, etc.), (4) for participants or their beneficiaries. A "plan, fund, or program" is deemed established if a reasonable person can identify intended benefits, beneficiaries, financing sources, and benefit procedures. Notably, not all plans meeting these criteria fall under ERISA; they must involve participants linked to an employment relationship. Plans exclusively covering business owners or their spouses do not qualify as employee welfare benefit plans under ERISA. A plan must provide benefits to at least one employee, excluding owners for this determination.

In Slamen's case, his disability insurance policy, which only covered him as the sole owner of his dental practice, was not an ERISA plan. Since no employees benefited from this policy, it did not meet ERISA's requirements. The court rejected the argument that ERISA applied due to other insurance policies for employees, citing that non-ERISA benefits cannot be classified under ERISA merely because they are part of a multi-benefit plan.

An employer's retirement education assistance benefits are not protected by ERISA, and their inclusion in a multibenefit plan does not convert them into an employee welfare benefit plan. Similarly, Slamen's disability insurance policy, which is not an ERISA plan by its terms, remains non-ERISA despite Slamen providing ERISA benefits to employees. Previous cases, such as Robertson v. Alexander Grant Co., illustrate that separate plans covering different groups (e.g., partners vs. principals) are not governed by ERISA, as each plan serves distinct beneficiaries. The court emphasized that a benefit plan covering only business owners, like Slamen, is excluded from ERISA's scope, which is designed to regulate employee benefit plans rather than employer-only plans. The district court incorrectly ruled on Slamen's case, as the disability insurance policy exclusively benefits Dr. Slamen, and thus the claim does not fall under ERISA, resulting in a lack of federal jurisdiction. The judgment is reversed, instructing the case to be remanded to Alabama state courts. Additionally, the payment of premiums by Slamen's professional corporation does not alter the ERISA status, as no employee other than Dr. Slamen received benefits, and he cannot be regarded as an employee of the corporation he owns.