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March 14, 2002


The opinion of the court was delivered by: Moran, Senior District Judge.


Plaintiff Dolores J. Russo filed this action alleging that her employer, defendant B & B Catering, Inc. (B & B), violated ERISA, 29 U.S.C. § 1022, 1024(b)(1), by failing to timely notify her that her health insurance had been terminated. Plaintiff also alleges that defendant Jeffrey Dziedzic, a B & B employee, is individually liable as a plan fiduciary. The parties have filed cross motions for summary judgment. Plaintiff agrees to the dismissal of Dziedzic, leaving B & B as the only remaining defendant. Subsequent to defendant's motion, plaintiff filed an amended complaint adding a conversion claim. The instant motions, however, only address the ERISA claims. For the following reasons, we grant summary judgment for plaintiff with respect to liability.


In 1996, B & B offered its employees medical insurance through a group policy. It used a broker to select a carrier and contracted with United Health Care. Eligible employees were invited to enroll and to have their premiums deducted from their regular paychecks. Initially the company contributed 50% of the premiums and employees paid the remainder. B & B filed for Chapter 11 bankruptcy protection in December 1996, leading United Health Care to cancel the policy in February or March 1997. Employees were informed of this cancellation sometime in March. Later in 1997, B & B contracted with another medical insurer, Protective Life. Once again, the company contributed 50% of the premium, and withheld the remaining 50% from participating employees' paychecks That policy ended in June or July 1998

In September 1998, B & B contracted with Rush Presbyterian (Rush) as its new group insurer. For a brief period it paid 100% of the premiums. In January 1999, approximately four months after the initiation of the policy, B & B informed its employees that it would cease contributing to the insurance premiums entirely — employees themselves would now be responsible for 100% of the premiums. However, the company would continue to deduct the relevant premiums from weekly paychecks and pay the insurer directly. Employees were given the option to decline coverage. This they could do by notifying Rush directly, rather than by going through B & B. Rush sent its materials, including descriptions of the coverage, identification cards, and termination forms, to covered employees at their homes, not through B & B.

B & B's financial difficulties continued, and although it continued to deduct insurance premiums from employees' paychecks, several of its checks in payment for the premiums were returned unpaid by the bank. As a result, Rush cancelled the policy in June 1999. B & B claims it had no knowledge of the cancellation until it was informed by its broker in September 1999, shortly after which time it informed its employees, including plaintiff.

B & B reimbursed plaintiff for any medical expenses incurred by her during gaps between insurance policies. However, because of the time lapse following Rush's termination, plaintiffs preexisting condition has prevented her from acquiring new insurance.


The court may only grant summary judgment when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). We must also draw all inferences and view all admissible evidence in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). This does not mean there must be absolutely no evidence supporting the non-moving party, but rather there is not enough to support a reasonable jury verdict. Id. at 248, 106 S.Ct. 2505.

I. Does ERISA apply?

An ERISA employee welfare benefit plan must be "(1) a plan, fund or program; (2) established or maintained; (3) by an employer or employee organization or by both; (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits . . .; (5) to participants or their beneficiaries." Postma v. Paul Revere Life Ins. Co., 223 F.3d 533, 537 (7th Cir. 2000). The second element, whether plaintiffs health insurance plan was established or maintained by B & B, is at issue here.

The critical factor is the employer's level of administrative involvement in the plan. Defining which employees are eligible to participate, contributing to premiums and performing some administrative functions can all implicate ERISA. On the other hand, allowing insurance carriers access to employees on a neutral basis, or withholding the employees' premiums from paychecks is generally not enough to bring a plan within ERISA's coverage. See Brundage-Peterson v. Compcare Health Services Ins. Corp., 877 F.2d 509, 510 (7th Cir. 1989). We also consider a Department of Labor regulation that excludes certain group insurance plans from ERISA, if

(1) No contributions are made by an employer or employee organization;
(2) Participation the program is completely voluntary for ...

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