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The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and investment management.

 

Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's premier ERISA and employee benefits law firms. The firm has seven offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 34 attorneys, senior benefits consultant and five paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Seven of the attorneys are AV-rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Seven of the firm's attorneys have been named to the prestigious Super Lawyers list for 2017, which highlights outstanding lawyers based on a rigorous selection process.

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Boston 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

 

Washington, D.C.

Tel: (202) 969-2800

 

Fax: (202) 969-2568

 800 Connecticut Avenue, N.W.

Suite 810

Washington, D.C. 20006

 

Chicago

Tel: (847) 990-9034

Fax: (847) 557-1312

190 South LaSalle Street

Suite 2100

Chicago, IL 60603

 

  

Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

Tampa

Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 

  

San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104

  

St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
25 W. Moody Avenue
St. Louis, MO  63119 

 

Lincoln, MA

Tel: (617) 532-8080

Fax: (617) 532-9090

55 Old Bedford Road

Lincoln, MA 01773

 

 

www.wagnerlawgroup.com

 

 

 

 Employer Created ERISA Covered Plan by Endorsing

LTD Policy

June 22, 2018

 

 

 

A federal district court, in Stolebarger v. Prudential Insurance Company of America, ruled that long-term disability ("LTD") benefits were covered by ERISA because the employer had "endorsed" the coverage.  


Law.  ERISA preempts most state laws that relate to ERISA-covered employee benefit plans except for state laws that regulate insurance, banking, or securities.

 
Notwithstanding the above, under ERISA's safe harbor provision, an insurance policy will not be considered ERISA-covered if the policy satisfies the following four criteria:

  1. No contributions are made by the employer or employee organization.
  2. Participation in the program is voluntary.
  3. The sole functions of the employer with respect to the program  are, without "endorsing" the program, to permit the insurer to publicize the program, to collect premiums through payroll deduction, and to remit them to the insurer.
  4. The employer receives no consideration in connection with the policy other than reasonable compensation for administrative costs it incurs. 

Background.  An employee was diagnosed with depression and began to experience serious anxiety attacks that prevented him from performing his work.  With medication and treatment, the employee resumed some administrative work, but after attempting to resume work in his regular occupation, it was clear that he could not continue.   

 

The employee was placed on disability leave and filed a claim with the insurer for LTD benefits.  The employee had obtained LTD coverage under a policy offered by the insurer through his employer. 


The insurer denied the employee's claim for LTD benefits because it determined he was able to perform his job functions.  The employee then sued under both ERISA and state law (which provided greater penalties than ERISA).  In response, the insurer asked the court to dismiss the employee's state law claims saying they were preempted by ERISA. 


District Court.  Upon reviewing the matter, the district court noted that an employee benefit plan is not exempt from ERISA coverage if it fails any part of ERISA's safe harbor provision.  Here, the court found that the employer had endorsed the LTD plan because the insurance contract and certificate of coverage identified the employer as the plan sponsor, plan administrator and agent for service of process.  Moreover, the court observed that the summary plan description defined the plan as the "[Employer's] Long Term Disability Plan" and stated that the LTD plan was governed by ERISA.  Accordingly, the court determined that ERISA applied to the LTD plan and, in turn, dismissed the employee's state law claims.  

 
Employer Takeaway.  In view of Stolebarger, employers seeking to avoid the application of ERISA to similar arrangements are advised to refrain from: (i) including statements as to ERISA's application in plan documentation, correspondence, or communications with employees; and (ii) saying that they sponsor or administer the plan, or indicating that the plan is part of the employer's benefit package.  

 

 

 

 

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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.