The opinion of the court was delivered by: Richard Mills, District Judge.
Does a minority shareholder have standing to maintain a suit
based on the denial of medical benefits under ERISA?
Motion to remand to state court is DENIED.
The eight count complaint in this case was originally filed in
the Circuit Court for the Seventh Judicial Circuit of Sangamon
County, Illinois. In the complaint, Plaintiffs brought several
claims against Defendants, including breach of contract and
several tort claims, based on the alleged denial of insurance
Defendants filed a notice of removal on September 1, 1999. In
the notice of removal, Defendants state that this Court has
jurisdiction over the case because it is based on the denial of
insurance benefits under the terms of a group health plan that
constitutes an employee welfare benefits plan under ERISA,
29 U.S.C. § 1001 et. seq.
Plaintiffs contest this Court's subject matter jurisdiction
over the case and seek remand. Plaintiffs argue that this case
is not governed by ERISA because Plaintiff Thomas Myerscough is
a part-owner of Myerscough, Inc., and as such he is not a
"participant" or a "beneficiary" in any welfare plan governed by
ERISA. Rather, Plaintiffs argue, as a part owner of Myerscough,
Inc., Mr. Myerscough is an "employer" and hence not covered by
The parties were ordered to submit supplemental briefing as to
the legal and factual issues raised by this motion to remand.
The briefing has now been submitted and the motion is ready for
The burden to show the existence of federal subject matter
jurisdiction is generally on the party seeking to remove a case
to federal court. See, e.g., Chase v. Shop 'N Save Warehouse
Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).
In order to come within the coverage of ERISA, a plaintiff
must be either a "participant" or a "beneficiary" of a plan.
29 U.S.C. § 1132(a). A participant is defined as an "employee or
former employee of an employer . . . who is or may become
eligible to receive a benefit. . . ." 29 U.S.C. § 1002(7). A
beneficiary is defined as "a person designated by a participant,
or by the terms of an employee benefit plan, who is or may
become entitled to a benefit thereunder." 29 U.S.C. § 1002(8).
Beneficiaries who are also deemed to be "employers," however,
may not come within the scope of ERISA due to the antiinurement
provisions at 29 U.S.C. § 1002(5), which provides that "the
assets of a plan shall never inure to the benefit of any
employer. . . ." 29 U.S.C. § 1103(c)(1). An employer is defined
as "any person acting directly as an employer, or indirectly in
the interest of an employer, in relation to an employee benefit
plan." 29 U.S.C. § 1002(5). This definition is mostly circular
and rather uninformative, but it is rather broad and thus likely
includes most of those persons usually thought of as employers.