43 F. Supp.2d 70 (1999) | Cited 0 times | D. Maine | March 11, 1999


Daniel Beegan, Plaintiff, brought this suit against AssociatedPress and Connecticut General Life Insurance Company ("ConnecticutGeneral"), Defendants, alleging violations of the EmployeeRetirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.("ERISA"), and breach of contract. Now before the Court isDefendant Associated Press's motion brought pursuant toFed.R.Civ.P. 12(b)(6), in which Associated Press seeks dismissalof this action against it on the ground that it is not a properdefendant to claims under ERISA and that Mr. Beegan's state lawbreach of contract claim is preempted by ERISA (Docket No. 3).


Because the Court is considering a motion to dismiss, it willset forth the facts as stated in Mr. Beegan's Amended Complaint.Mr. Beegan was an employee of the Associated Press until July 1,1994, when he applied for long-term disability benefits ("LTDbenefits"). Amended Complaint (Docket No. 2) ¶ 1 at 2. At allrelevant times, Mr. Beegan was covered by a group long-termdisability insurance policy ("LTD Policy"), which was availableto employees of Associated Press and was issued, administered,and underwritten by Connecticut General. Id. ¶ 1. ConnecticutGeneral was the designated administrator and fiduciary of the LTDPolicy. Id. ¶ 4.

Under the LTD Policy, eligible employees disabled due tosickness or accidental bodily injury may receive LTD benefits fortwenty-four months. Id. ¶ 10. In addition, eligible employees whoare disabled because of a physical disability may continue toreceive LTD benefits beyond the twenty-four-month period if thedisability completely prevents him or her from engaging in anyoccupation for which he or she is qualified by training,education, or experience. Id. ¶ 11. Finally, the LTD Policylimits the period for which a person disabled because of a mentalillness or functional nervous disorder may receive LTD benefitsto twenty-four months. Id. ¶ 12.

Mr. Beegan suffers from major recurrent and severe depression,irritable bowel syndrome, and degenerative arthritis in hisleft hip, shoulder, hands, and knees, id. ¶ 1 at 2, and hisapplication for LTD benefits was granted by letter datedJanuary 31, 1995. Id. In April of 1996, Mr. Beegan submitted asupplemental application for benefits wherein he stated that hesuffered from somatic dysfunction, cervical and lumbar spineproblems, panic disorder, chronic depression, fatigue, sadness,poor concentration, back/neck pain, and cranial strain pattern.Id. On April 30, 1996, Connecticut General notified Mr. Beeganthat he was not eligible for benefits beyond the twenty-fourmonths due to the mental illness limitation under the LTD Policy.Id. ¶ 13. Mr. Beegan furnished the insurance company with medicalreports and records which allegedly demonstrate that he isphysically disabled and unable to engage in any occupation forwhich he is qualified by training, education, or experience. Id.¶ 14. Connecticut General continues to deny his claim andprovided Mr. Beegan with a final written denial of his claim forLTD benefits on June 27, 1997. Id. Upon the termination of hisLTD benefits, Associated Press terminated his employment anddiscontinued his group health and life insurance and his pensionbenefits. Id. ¶¶ 25-26


The principle argument set forth by Mr. Beegan in this case isthat Connecticut General mistakenly and wrongfully determinedthat he suffers from a mental disability and accordingly limitedhis receipt of LTD benefits to two years. In Count I, Mr. Beegancontends that he is entitled to receive benefits beyond thetwo-year limitatidn under the terms of the LTD policy because hisdisability is physical in nature and he meets the LTD Policy'sdefinition of permanent disability. Amended Complaint ¶ 17. InCount II, he alleges that the handling of his claim for LTDbenefits breached requirements imposed by the LTD Policy andresponsibilities imposed upon fiduciaries under ERISA. Finally,Mr. Beegan argues in Count III that Associated Press breached acontract which required it to continue to pay his employee fringebenefits, such as group health and life insurance and pensionbenefits, while he was receiving or eligible to receive LTDbenefits. Associated Press's motion to dismiss requires the Courtto ascertain whether: 1) Associated Press is a proper defendantto the foregoing claims under ERISA and 2) Mr. Beegan's statecommon law breach of contract claim against Associated Press ispreempted by ERISA.

A motion to dismiss tests the legal sufficiency of thecomplaint and thus does not require the court to examine theevidence at issue. See Carey v. Mt. Desert Island Hospital,910 F. Supp. 7, 9 (D.Me. 1995). The plaintiff must set forth factualallegations, either direct or inferential, respecting eachmaterial element necessary to sustain recovery under someactionable legal theory. See Gooley v. Mobil Oil Corp.,851 F.2d 513, 515 (1st Cir. 1988). Thus, a Rule 12(b)(6) motion requiresthe court to take all of the plaintiff's factual averments astrue and indulge every reasonable inference in the plaintiff'sfavor. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51(1st Cir. 1990). However, the court need not accept "baldassertions" or "unsubstantiated conclusions." Id. at 52. A motionwill be granted only if, when viewed in this manner, the pleadingshows no set of facts which could entitle plaintiff to relief.Gooley, 851 F.2d at 514.

A. Employer As A Proper Defendant To Claims Brought Under ERISA.

The Court first examines Associated Press's argument that it isan improper party to Mr. Beegan's ERISA claims contained inCounts I and II of his Amended Complaint. Associated Press wasMr. Beegan's employer until July 1, 1994. Amended Complaint ¶ 1.ERISA permits suits to recover benefits only against the Plan asan entity, see 29 U.S.C. § 1132(a)(1)(B), (d) and suits forbreach of fiduciary duty only against the fiduciary. See29 U.S.C. § 1109(a). In addition, ERISA requires that an employeebenefit plan designate a plan administrator and to identify thosepersons or entities who are responsible for the administrationof the plan and have a fiduciary duty thereunder. See 29 U.S.C. § 1102(a).Where such designation is lacking, ERISA defines anadministrator as the employee benefit plan's sponsor. See29 U.S.C. § 1002(16)(B). The sponsor of an employee benefitplan is defined as the participant's employer. See29 U.S.C. § 1002(16)(B). An employer is, thus, a proper party to an ERISAsuit brought pursuant to 29 U.S.C. § 1132 if it is the designatedplan administrator or fiduciary. In addition, an employer is aproper party to an ERISA suit if it is the employee benefitplan's sponsor and no other administrator or fiduciary has beendesignated. See Rossi v. Boston Gas Co., 833 F. Supp. 62, 67(D.Mass. 1993).

In the case at bar, Mr. Beegan alleges that, upon information andbelief, Connecticut General is the "Designated Plan Administratorand/or named fiduciary of the employee welfare benefit plan, . . . withinthe meaning of ERISA, 29 U.S.C. § 1002(16)(A)(i) and(B)(i)." Amended Complaint ¶ 4. Nowhere in his Amended Complaintdoes Mr. Beegan allege that Associated Press is a designated planadministrator or fiduciary under the Plan. According to theallegations of Mr. Beegan's Amended Complaint, the LTD Policyproperly designates Connecticut General as the plan administratorand named fiduciary of the LTD Policy. Accordingly, AssociatedPress is not the plan administrator or fiduciary by designation.Nor is Associated Press the plan administrator or fiduciarybecause the LTD Policy fails to designate one. Thus, it appearsunder ERISA's plain requirements and the allegations in theAmended Complaint that Associated Press is not a proper partydefendant to Mr. Beegan's ERISA claims.

In cases where a plan administrator and fiduciary, other thanthe employer, is designated, an employer may still be a properdefendant to an ERISA claim. Those courts which have consideredwhether an employer is a proper party in a suit such as this one,brought pursuant to 29 U.S.C. § 1132, carved out the exceptionthat an employer may be named a defendant in an ERISA action ifthe plaintiff shows that the employer controlled or influencedthe administration of the plan. See Daniel v. Eaton Corp.,839 F.2d 263, 266 (6th Cir.), cert. denied, 488 U.S. 826, 109 S.Ct.76, 102 L.Ed.2d 52, (1988); McLaughlin v. Reynolds, 886 F. Supp. 902,906 (D.Me. 1995); Marcum v. Zimmer, 887 F. Supp. 891, 894(S.D.W.Va. 1995); Rossi, 833 F. Supp. at 67; Green v. EasternAirlines, 138 F.R.D. 146, 147 (M.D.Fla. 1991); Adamo v. AnchorHocking Corp., 720 F. Supp. 491, 498 (W.D.Pa. 1989); Reynolds v.Bethlehem, 619 F. Supp. 919, 928 (D.Md. 1984); Foulke v.Bethlehem 1980 Salaried Pension Plan, 565 F. Supp. 882, 883(E.D.Pa. 1983); Boyer v. J.A. Majors Co. Employees' ProfitSharing Plan, 481 F. Supp. 454, 457-58 (N.D.Ga. 1979); Barrett v.Thorofare Markets, Inc., 452 F. Supp. 880, 884 (W.D.Pa. 1978);see also Law v. Ernst & Young, 956 F.2d 364, 372-73 (1st Cir.1992) (reasoning that employer "controlled the provision ofinformation concerning . . . [the] ERISA plan" and is, thus, aproper defendant to a claim under section 1132(c) of ERISA).Where an administrator has been appointed by the plan, it is theresponsibility of the plaintiff to show that the employerinfluenced or controlled the administrator's or fiduciary'sdecision. See Rossi, 833 F. Supp. at 67 (citing Reynolds, 619 F.Supp. at 928-29). Accordingly, in order to determine whether hemay sustain recovery under ERISA against Associated Press, theCourt will examine Mr. Beegan's Amended Complaint to determinewhether he has set forth any factual allegations, either director inferential, tending to show that Associated Press exercisedcontrol or influence over the LTD Policy or the decision to limitMr. Beegan's LTD benefits to twenty-four months.

Mr. Beegan concedes that a benefit plan participant's employeris not a proper defendant unless it is shown that it was involvedwith the administration of the plan. However, he contends that hesets forth facts in his Amended Complaint from which it can beinferred that Associated Press exercised control or influenceover the LTD Policy. Specifically, he points to his allegationthat the LTD Policy was administered by Connecticut General "fordefendant Associated Press." See Amended Complaint ¶ 1 at 1(emphasis added). Additionally, Mr. Beegan alleges in hisstatements of liability and prayers for relief in Count I andCount II that both the Associated Press and Connecticut Generalwrongfully terminated his disability payments and breached therequirements imposed on fiduciaries to the LTD Policy underERISA. Id. ¶¶ 19, 21, 23. Mr. Beegan contends that theseallegations are sufficient to show that he may be able to show attrial that Associated Press controlled or influenced the LTDPolicy.

These bald allegations are conclusory statements and areinsufficient to survive a motion to dismiss. Mr. Beegan'scontention that Connecticut General administered the benefitplan for Associated Press directly and inferentially supportsthe allegation that Associated Press was the LTD Policysponsor and that Connecticut General was responsible for itsadministration. It does not support the inference that AssociatedPress exercised control over or influenced the administration ofthe LTD Policy or the decision to apply the two-year term limitto Mr. Beegan's LTD benefits in this case. In fact, it morelikely supports the inference that Associated Press did notcontrol the administration of the plan and was not involved indecisions relating to employment benefits under the plan and thatsuch responsibility was left to Connecticut General. In addition,the allegations contained in paragraphs 19, 21, and 23 of theAmended Complaint are conclusory assertions of liability and donot support or contradict an inference as to Associated Press'scontrol or influence over the plan. The Court has carefullyconsidered the remaining allegations in Mr. Beegan's AmendedComplaint and finds that Mr. Beegan has not alleged any facts orset of facts which could support the allegation that AssociatedPress controlled or influenced decisions made under the LTDPolicy.1 Accordingly, the Courtwill grant Associated Press's motion to dismiss CountsI and II against it.

B. ERISA Preemption and Mr. Beegan's Breach of Contract Claim (Count III).

In Count III, Mr. Beegan contends that his employment contractwith Associated Press was breached when Associated Pressterminated his employment which resulted in the loss of hisfringe benefits including group health and life insurance andpension benefits. Amended. Complaint ¶¶ 25-26. ERISA providesthat "the provisions of [ERISA] shall supersede any and all Statelaws insofar as they may now or hereafter relate to any employeebenefit plan. . . ." 29 U.S.C. § 1144(a). The statute defines theterm "State law" as "all laws, decisions, rules, regulations, orother State action having the effect of law, of any State."29 U.S.C. § 1144(c)(1). The purpose of ERISA's preemption provisionis to "ensure uniformity in [employee welfare] plans bypreventing states from imposing divergent obligations upon them."See Boston Children's Heart Found., Inc. v. Nadal-Ginard,73 F.3d 429, 439 (1st Cir. 1996) (citing Simas v. Quaker Fabric Corp. ofFall River, 6 F.3d 849, 852 (1st Cir. 1993)).

The Supreme Court has interpreted ERISA's preemption provisionbroadly to cover any state law that "has a connection with orreference to such a plan." Shaw v. Delta Air Lines, Inc.,463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983);Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138-39, 111 S.Ct.478, 482-83, 112 L.Ed.2d 474 (1990). "Such a preemption is worked`regardless of whether there is a comfortable fit between a statestatute and ERISA's overall aims.'" Boston Children's HeartFound., Inc., 73 F.3d at 439 (quoting Simas, 6 F.3d at 852(internal citations omitted)). Normally, however, laws of generalapplicability, such as state common law of contracts at issue inthis case, have merely a "tenuous, remote, or peripheralconnection with a covered benefit plan" and may not be preemptedby ERISA. District of Columbia v. Greater Washington Bd. ofTrade, 506 U.S. 125, 130 n. 1, 113 S.Ct. 580, 583 n. 1, 121L.Ed.2d 513 (1992); Boston Children's Heart Found., Inc., 73 F.3dat 439. However, the Court of Appeals for the First Circuit hasexplained that "a court cannot conclude that a state law is oneof general applicability, and as such is not preempted by ERISA,based on the form or label of the law . . . and absent precedenton a closely related problem, the inquiry into whether a statelaw `relates to' an ERISA plan or is merely `tenuous, remote, orperipheral' requires the court to look at the facts of particularcase [sic]." Boston Children's Heart Found., Inc., 73 F.3d at439-40. Hence, the Court must examine the particular facts of Mr.Beegan's claim in Count III.

Cases examining whether state common law causes of action arepreempted provide helpful guidance. In Ingersoll-Rand Co. v.McClendon, the Supreme Court held that a state law claim forwrongful discharge was preempted by ERISA. The state courthad held that the employer violated state public policy bydischarging an employee in order to deny him pension benefitsunder an ERISA plan. See Ingersoll-Rand Co., 498 U.S. at 136, 111S.Ct. at 481. The Supreme Court held that because "theexistence of a pension plan is a critical factor inestablishing liability under the State's wrongful dischargelaw," the state law "relates to" ERISA, and the cause ofaction was preempted. Ingersoll-Rand, 498 U.S. at139-40, 111 S.Ct. at 483. Likewise, in McMahon v. DigitalEquipment Corp., 998 F. Supp. 62, 64 (D.Mass. 1998)(Collings, M.J.), an ERISA plan participant sued her employer forbreach of contract, negligence, and interference with anadvantageous business relationship for allegedly improperlyterminating her short-term disability benefits, ordering her backto work, and subsequently terminating her employment because of areduction-in-workplace plan which would not have applied to herhad she continued to receive short-term disability benefits. Thecourt reasoned that establishing plaintiff's claims for breach ofcontract, negligence, and intentional interference withadvantageous relationship would require plaintiff to demonstratethat under the terms of the plan, she continued to qualify forshort-term disability benefits after the date upon which she wasordered back to work. See id. at 68-69. Because her state lawclaims required the fact finder to examine the terms of the ERISAplan, they were preempted by ERISA. See id.; see also Vartanianv. Monsanto Co., 14 F.3d 697 (1st Cir. 1994) (similarly holdingthat the plaintiff's state law claims for breach of fiduciaryduty, discrimination, and misrepresentation were preempted byERISA because in order to determine whether the plaintiff couldprevail, the court would need to inquire into the terms of theplan); Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790 (1stCir. 1995) (holding that a state law claim for negligentmisrepresentation was preempted because in order to calculate theplaintiff's damages, the court would need to examine the terms ofthe plan).

Therefore, if in order to establish that a plaintiff has aclaim under state law, a fact finder must refer to the terms ofan ERISA plan, the state law claim is preempted by ERISA.Application of the foregoing principle to the facts of theinstant case indicates that preemption of Mr. Beegan's state lawclaim for breach of contract is warranted. Mr. Beegan allegesthat Associated Press was required to continue his fringebenefits as an employee while he was receiving or was eligible toreceive LTD benefits. The essence of Mr. Beegan's claim is thatAssociated Press's termination of his employment and itsdiscontinuation of his employment benefits constitute a breach ofcontract because they were based on the wrongful termination ofhis LTD benefits. The locus of Mr. Beegan's breach of contractclaim is that his LTD benefits were wrongfully terminated.Resolution of Mr. Beegan's claim clearly requires the fact finderto determine whether his LTD benefits were wrongfully terminated.The only way to answer this question is to examine the terms ofthe LTD Policy. Thus, Mr. Beegan's state law claims againstAssociated Press are preempted by ERISA.2


To conclude, the Court finds that CountsI and II pursuant to 29 U.S.C. § 1132(a),of Mr. Beegan's Amended Complaint against his employer,Associated Press, are DISMISSED because AssociatedPress is not a proper defendant as it did not exercise anycontrol or influence over the LTD Policy. The Court furtherconcludes that Count III of Mr. Beegan's Amended Complaint ispreempted by ERISA. Accordingly, it is ORDERED that DefendantAssociated Press's Motion to Dismiss By the Associated Press WithIncorporated Memorandum of Law (Docket No. 3) be, and it ishereby, GRANTED.


1. The Court's reasoning in this regard is in accord withERISA's statutory framework. As set forth above, where the plandoes not designate a plan administrator, ERISA defines the planadministrator as the employee benefit plan's sponsor. See29 U.S.C. § 1002(16)(B). The sponsor of an employee benefitplan is defined as the participant's employer. See29 U.S.C. § 1002(16)(B). Accordingly, an employer is a proper party to anERISA suit if it is the employee benefit plan's sponsor and noother administrator or fiduciary has been designated. Thus, underERISA, an employer can fully delegate responsibility foradministering the plan to a designated plan administrator. Tohold that where a plaintiff merely alleges that an insurancecompany administers the plan for the employer, the employerstill controls the administration of the plan, would vitiatethe principle that an employer sponsor can delegate thisresponsibility.

2. Mr. Beegan argues that the McMahon-Vartanian-Carloprinciples do not apply in this case and urges the Court to applythe six-step test articulated in Stetson v. PFL Insurance Co.,16 F. Supp.2d 28 (D.Maine 1998), wherein this Court applied the testto determine whether ERISA preempted the plaintiff's state lawclaim of negligent misrepresentation against the defendantinsurer. However, that case did not involve claims against anemployer acting in its ERISA fiduciary capacity and the allegedmisrepresentations transpired prior to the existence of the ERISAplan under which the plaintiffs were later covered. See id. at32-33. Accordingly, the Court in Stetson rejected the lineof reasoning in the McMahon, Vartanian, and Carlo cases.The multi-factor test was applied in that case because theplaintiff's claims arose from alleged misrepresentations thatoccurred prior to the existence of the ERISA policy. See Stetson,16 F. Supp.2d at 33. Although the Court does not limit theapplicability of the Stetson multifactor test, it is clear thathere, where the plaintiff's state law claim is against hisemployer, essentially is a claim seeking benefits under the ERISApolicy, and arises out of facts that transpired after the ERISAplan was established, the McMahon-Vartanian-Carlo principlesapply.

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