Gupta's own complaint titles Freixenet's benefit package a "program." Second, Gupta recognizes that Freixenet established and maintained the program. Third, Gupta states that Freixenet was his employer. Fourth, Gupta states that the program provided disability benefits, fifth, to Gupta, a covered participant.
In addition, Gupta provides other information which indicates that Freixenet established and maintained a welfare benefit plan. The Complaint states that Burns, Freixenet's administrator, personally advised Gupta as to the amount of benefits which he was entitled to receive. The disability claim form, attached to the Complaint as Exhibit 2, states that Freixenet paid 100% of Gupta's premium.
Furthermore, the booklet contains considerable other information indicating that Freixenet itself maintained the program. The booklet directs participants to contact the employer for information, assistance, and explanation of facts which form the basis for a request for review. Also, Freixenet had the power to terminate the plan, elect the effective date of a participant's coverage, and consult with participants ending employment about continuing coverage. Freixenet established the terms under which its employees had the right to purchase life insurance coverage.
The booklet itself contains a section entitled "Statement of Rights," which enumerates Gupta's rights under ERISA. That section specifically names ERISA. This indicates that, beyond behaving like an ERISA plan, Freixenet's program was actually designed as such.
Simply from the Complaint and its attached exhibits, a reasonable person could determine the intended benefits and beneficiaries, the source of funding, and the procedures for obtaining benefits. As such, Freixenet's program satisfies ERISA's statutory definition of a welfare benefit plan. Accordingly, it would is preempted by ERISA's provisions.
Nevertheless, Gupta states that Freixenet's plan falls under an exception to ERISA's preemption provisions. Gupta states that the plan eludes ERISA preemption because it acts through a group insurance trust, Upper Midwest. See Taggart Corp. v. Life & Health Benefits Admin., Inc., 617 F.2d 1208 ( 5th Cir. 1980) (group insurance trusts alone are not ERISA plans). A group insurance trust itself is not a plan because it merely conducts business like a mutual fund, collecting and forwarding payments from various small employers to larger insurers. Id.
However, the Taggart case, cited by Gupta, addressed only the issue of whether the insurance trust itself constituted a plan, rather than a subscribing employer's comprehensive scheme of benefits. See id. Taggart does not hold that employers who subscribe to group insurance trusts cannot establish and maintain welfare benefit plans. See Ed Miniat, 805 F.2d at 739.
Although group insurance trusts, standing alone, are not plans, employers who contract with group insurance trusts may establish welfare benefit plans in which he group insurance trusts provide the benefits. Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982). Department of Labor regulations provide that a group insurance program is not a plan where there are no employer contributions, where employees voluntarily participate, where the employer does not endorse the program but only permits the insurer to promote the program and collects premiums, and where the employer receives no consideration other than basic administration costs. 29 C.F.R. § 2510.3-1(j). As set forth above, even if Freixenet did subscribe to a group insurance trust, Freixenet paid the premiums, endorsed the program, and was actively involved in the program's administration. Thus, the Complaint itself pleads facts establishing that Freixenet itself established and maintained a welfare benefit plan. Accordingly, ERISA completely preempts Gupta's claims.
C. Application of ERISA
Gupta's state law claims need not be dismissed merely because they are preempted by ERISA, which is not addressed in the Complaint. Instead of questioning whether a complaint denotes the appropriate statute, the court should inquire as to whether a plaintiff can state a claim for relief upon any set of facts consistent with those set forth in the complaint. Bartholet, 953 F.2d at 1078. Gupta's state law claims may be re-characterized as ERISA claims. The Complaint in the instant case amounts to an attempt to claim benefits under § 502 of ERISA.
In Count I, Gupta contends that he should have received $ 4,400, as opposed to $ 3,000 per month in disability payments. In Count II, Gupta alleges that those payments were terminated without valid reason. In Count III, Gupta claims damages based on the benefits he was to receive under the alleged oral contract with Freixenet.
Plan administrators abuse their discretion where they make benefit determinations based on clearly erroneous findings of fact. See Bali v. Blue Cross & Blue Shield Ass'n, 683 F. Supp. 1220 (N.D. Ill.), aff'd 873 F.2d 1043 (7th Cir. 1988). Thus, Gupta can prevail in Counts I and II, where he disputes the plan administrators' findings, only if he can establish that those findings were clearly erroneous.
Count I claims benefits in excess of $ 3,000 per month. Gupta does not state that he submitted proof of good health to Principal when applying for benefits or at any other time. Apparently, Gupta has failed to thoroughly read the portion of the booklet which unambiguously requires submission of proof of good health for benefits in excess of $ 3,000 per month. That provision states as follows:
Proof of good health will be required to place your insurance in force. The type and form of required proof will be determined by Us [Principal]. You will also need to file proof of good health: