Avoiding ERISA under disability insurance contracts.

As its name implies, the Employee Retirement Income Security Act of 1974 (ERISA) (1) was enacted for the primary purpose of protecting employees' rights under pension plans established by their employers. Like many laws, ERISA contains "add-on" provisions that extend its reach beyond its stated purpose. The most important of these is ERISA's inclusion of "employee welfare benefit plans," which extends its coverage beyond pension plans to any employer-sponsored plan that provides life, health, disability, or other insurance coverage to employees. Such benefits are usually provided through group insurance policies paid in whole or part by the employer.

In order to subject the provision of covered benefits to a single uniform regulatory scheme, ERISA preempts or supersedes any state laws that "relate to any employee benefit plan" covered by the act. (2) The courts have consistently ruled that ERISA preemption applies not only to state laws governing the formation and operation of such plans but also to state laws regulating the conduct of insurance companies in handling claims for benefits under policies provided through such plans, as well as state common law remedies applicable to improper claim handling, to the extent they apply to policies provided under ERISA plans. Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987). Preemption of state claim handling law applies notwithstanding ERISA's saving clause, (3) which exempts from preemption any state laws "regulat[ing] insurance." (4) Consequently, ERISA has had a major unintended impact on state laws regulating insurance claim practices, and on the remedies available to an employee whose insurer has denied a claim under a policy provided by his or her employer.

Insurance companies were quick to note that the remedies available to an employee for wrongful denial of ERISA plan benefits are far more restrictive and limited than are the remedies available under state law to insureds whose insurers have wrongfully denied their claims for policy benefits. There is no right to a jury trial under ERISA, because the ERISA action to recover plan benefits is equitable rather than legal. (5) In addition, there is no right to recover punitive or other extracontractual damages. (6) A successful plaintiff does not even have a right to recover attorneys' fees, although fees may be awarded in the court's discretion. (7) A court considering an award of fees under ERISA must consider a complex formula that includes 1) the bad faith or culpability of the defendant, 2) the defendant's ability to pay, 3) the deterrent effect of a fee award, 4) the benefit conferred on members of the plan other than plaintiff, and 5) the relative merits of the parties' positions. (8) In sharp contrast, in a state law action by an insured against the insurer for bad faith or other improper claim handling, the right to jury trial is inviolate, punitive and consequential damages are recoverable in appropriate cases, and in many states a successful plaintiff has an absolute right to recover attorneys' fees.

The potential savings for insurance companies by converting state law claims into ERISA claims are enormous. One company has estimated that for every state law claim handling case it can convert into an ERISA benefits case, it saves $600,000 in settlement costs. (9) Insurance companies have therefore adopted a practice of removing state law claim handling cases from state to federal court and arguing that the state law claims are preempted by ERISA. As a result, there has evolved a two-tier remedial scheme for improper claims handling. An insured who purchases an individual policy has the benefit of state statutory and common law claims for relief that generally include the right to recover consequential and/or punitive damages, a right to jury trial on those claims, and a right to recover attorneys' fees if successful. On the other hand, an insured whose otherwise identical policy was obtained through an employee benefit plan covered by ERISA is limited to an action to recover contract benefits, is denied a jury trial, and must rely on the court's discretion for recovery of attorneys' fees. Needless to say, this has the effect of affording insurance companies the opportunity to obtain bargain-basement settlements in ERISA cases. One court has commented on this anomalous situation as follows: "Enacted to safeguard the interests of employees and their beneficiaries, ERISA has evolved into a shield of immunity that protects ... insurers ... from potential liability for the consequences of their wrongful denial of ... benefits." (10)

The interpretation of the preemption clause in Pilot Life and its progeny is by no means a necessary reading of the statutory language. It is difficult to understand why state laws regulating insurance claim handling, and state common law remedies for breach of the duty of good faith and fair dealing available to insureds against their insurers, should be regarded as laws relating to employee benefit plans under ERISA. Such laws do not actually relate to the plans as such, in their formation, administration, financing, or any other aspect; they relate to the rights of insureds against their insurance companies. If an employee benefit plan promises insurance coverage to employees, and that promise is fulfilled by the purchase of an insurance policy, the duties of the employer have been satisfied; the duties of the insurance company to the insured employees are governed not by the plan but by state common and statutory law. State laws governing insurers' performance of their contracts should not be construed as relating to ERISA plans. For a forceful criticism of the preemption cases from this standpoint, see Korobkin, "The Failed Jurisprudence of Managed Care, and How to Fix It: Reinterpreting ERISA Preemption." (11)

The arguments on which insurance companies have relied to convert state law claims into ERISA cases are too many and various to be covered within the scope of this article. There are, of course, a great many cases that are legitimately within ERISA's scope. For the claimants in such cases, the only hope of obtaining an adequate system of remedies is statutory amendment that would give insureds whose policies are purchased by their employers the same remedies that are available to the holders of individual policies. There are, however, a great many cases in which insurance companies have attempted improperly to bring truly individual policies under the ERISA umbrella. This article will examine some of the situations in which policies with which an employer is connected in some way remain outside the scope of ERISA.

Employee-Paid and Owner-Benefit Policies

The fact that an insurance policy is obtained through an employer does not, in itself, mean that it is a part of an employee benefit plan. To be covered by ERISA, the policy must be provided by the employer to employees, and its provision must be pursuant to an actual employee benefit plan. To the extent that an employer simply makes arrangements with an insurance company to offer insurance to its employees (even at favorable group rates) which the employees are free to accept or reject, and for which they pay their own premiums, such coverage is not subject to ERISA. The Department of Labor has issued a "safe harbor" regulation clarifying the point. Group insurance offered to employees is not part of an employee welfare benefit plan if it satisfies all of the following conditions: 1) no contributions are made by the employer (or by an employee organization); 2) participation is completely voluntary; 3) the employer's sole function is to permit the insurer to publicize the program and to make payroll deductions for premium payments; and 4) the employer receives no consideration for allowing the program, although it can be compensated for administrative expenses actually incurred in connection with payroll deductions. (12)

The premiums for such policies are usually paid under a "salary allotment agreement," an agreement among the employer, the employee, and the insurance company pursuant to which the employer makes payroll deductions from the employees' pay in an amount equal to the employees' policy premiums and retains these sums until the insurance company sends the employer a "list bill" for the combined premiums for the covered employees. Although insurance companies have sometimes argued that a salary allotment agreement indicates the existence of an ERISA plan, they have never been successful, since payroll deductions for non-ERISA plans are expressly addressed in the Labor Department's safe harbor regulation.

The owners of small businesses often want to cover themselves under health, disability, or other insurance policies paid by their companies. In general, they can do so without running afoul of ERISA, provided that they keep their own coverage entirely separate from any benefit plan covering nonowner employees. A plan that covers even a single nonowner employee is subject to ERISA with respect to all participants or beneficiaries, including owners. (13) Consequently, owners who want to have company-paid insurance without being subjected to ERISA's restrictive remedial scheme in the event of insurer misconduct must provide for their own coverage under plans or policies that are completely separate from any plan providing for nonowner employee coverage. Sole proprietors, partners, and probably shareholders of small companies who also work in their businesses can avail themselves of company-paid insurance coverage without subjecting their policies to ERISA, as long as they are careful to keep their personal coverage separate from any plan for nonowner employee benefits. (14)

Benefits Without a Plan

It is important to keep in mind that ERISA covers employee benefit plans, not employee benefits. The fact that an employer provides an employee benefit does not, of itself, mean that an employee benefit plan exists. The leading case on the definition of a plan is Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982), which held that a plan is established "if, from the surrounding circumstances, a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits." (15)

Although Donovan is now routinely cited as the touchstone case for determining whether an ERISA plan exists, its definition was given a crucially important gloss by the Supreme Court in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). Fort Halifax involved a Maine statute requiring payment of severance benefits to displaced employees in the event of a plant closing. The company asserted that the law was preempted by ERISA because it related to an "employee benefit plan." The Supreme Court rejected the argument, holding that although the statute created an obligation to pay a benefit, it did not create a benefit plan, because it imposed no continuing financial obligation on the company and did not entail the creation of any continuing administrative scheme by the company to meet its obligations.

[S]tatements [by congressional sponsors of ERISA] reflect recognition of the administrative realities of employee benefit plans. An employer that makes a commitment systematically to pay certain benefits undertakes a host of obligations, such as determining the eligibility of claimants, calculating benefit levels, making disbursements, monitoring the availability of funds for benefit payments, and keeping appropriate records in order to comply with applicable reporting requirements. The most efficient way to meet these responsibilities is to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits. (16)

Congress intended preemption to afford employers the advantages of a uniform set of administrative procedures governed by a uniform set of regulations. This concern only arises, however, with respect to benefits whose provision by nature requires an ongoing administrative program to meet the employer's obligations. It is for this reason that Congress preempted state laws relating to plans, rather than simply to benefits. (17)

[In the case at hand, t]he employer assumes no responsibility to pay benefits on a regular basis, and thus faces no periodic demands on its assets that create a need for financial coordination and control.... To the extent that the obligation to [pay benefits] arises, satisfaction of that duty involves only making a single set of payments to employees at the time the plant closes. To do little more than write a check hardly constitutes the operation of a benefit plan. Once this single event is over, the employer has no further responsibility. (18)

Neither the possibility of a one-time payment in the future, nor the act of making such a payment, in any way creates the potential for the type of conflicting regulation of benefit plans that ERISA preemption was intended to prevent. (19)

Although Fort Halifax dealt with a statute requiring the payment of a benefit, it held that the ERISA preemption issue is treated identically, whether the obligation to pay benefits is established by state law or by the employer's unilateral action, rejecting the state court's rationale that ERISA did not apply because the obligation was created by statute rather than by the employer's decision. (20)

Fort Halifax has been applied in many subsequent cases, including cases involving the payment by employers of disability insurance premiums, to reject ERISA preemption claims when providing the benefit in question created no continuing financial obligation on the employer and did not entail creation of any ongoing administrative scheme. (21) These cases make clear that the proponent of preemption has the burden of showing the existence of an ERISA plan by producing documents or other evidence from which it can be determined what future obligations the company had to the employee as of the relevant date and the existence of an ongoing administrative scheme designed to meet future obligations. If the court cannot make a firm determination on the point based on the evidence of record, it must conclude that there is no "plan" and determine that the claim is not preempted. (22)

The ongoing administrative scheme requirement of Fort Halifax and its progeny is of special importance to professional corporations who wish to provide insurance coverage to their highly compensated professional employees, whose value will escape the ravages of ERISA. Given the current state of the law, it is impossible to provide group insurance benefits to regular employees that will not be subject to ERISA preemption. Furthermore, it is probably not feasible to attempt to provide life and health coverage even to professional employees on an individual rather than a plan basis. However, disability insurance is of special importance to professional employees, and the relative ease of providing disability coverage in a manner that avoids creation of an ERISA plan, and hence preemption of claims of bad-faith claim denial, makes it worthwhile to structure the provision of such coverage in a way that avoids ERISA.

The key to providing ERISA-exempt disability coverage is to avoid creating a "plan." This can be accomplished, at least for professional employees, by employing them under individually negotiated contracts for limited terms (one-year contracts are ideal, since this period coincides with the typical policy period for disability insurance), pursuant to which the employer agrees to pay the individual employee's premium for an agreed amount of coverage during the term of the employment contract. The employee should procure his or her own coverage, although the employer can refer the employee to an agent to assist the employee in obtaining coverage, and the employer can negotiate with the insurance company to obtain a premium discount under a list bill.

What is important is that the employer does not incur any long-term obligation for coverage and does not need to institute any ongoing administrative scheme to fulfill any such obligation; its only obligation is, pursuant to any individual employment agreement, to pay the current year's premiums for that employee's disability insurance. When the firm writes a check to the insurer for the premium due on a particular employee's disability insurance, its obligation to the employee is fully satisfied. Therefore, no need exists for the firm to create any kind of ongoing administrative plan or scheme; it has only to write a check for the current premium on its current assets, and it has no further obligation to anyone. The insurance company has no administrative role, and no obligation except to maintain the existing insurance in force for so long as the premiums are paid; if the employer ceases to pay premiums, the employee can keep coverage in force by paying his or her own premiums. This obligation exists pursuant to the contract of insurance between the insurer and the employee, not pursuant to any agreement between the insurer and the employer.

Under such an arrangement, the individual employment contracts are the only documents from which any sense of the firm's obligations to individual employees can be determined. The firm's obligations are limited, during the term of any individual contract, to writing a check from current funds for the annual premium on that employee's disability insurance. At any time the firm could decide not to pay disability insurance premiums for future years, and the professional employee would have no option but to pay future premiums personally or to allow the coverage to lapse. All the firm need do to fulfill its obligations under such an employment agreement is to write a check for the premiums due for the current year's coverage. As the Supreme Court stated in Fort Halifax, this "hardly constitutes the operation of a benefit plan." (23)

It is noteworthy that this rule has been applied also to group policies. (24) Even in such a case, the policy by itself does not provide sufficient evidence of the creation of an ongoing administrative scheme to support ERISA preemption. The company never undertakes any long-term obligation to provide disability insurance to anyone, and it never creates or needs to create any ongoing administrative scheme regarding such insurance. The courts have concluded in such cases that the employers' payment of disability insurance premiums did not constitute an employee benefit plan within the meaning of ERISA, and therefore that ERISA did not preempt the state law claims asserted in the action.

Where an insurance company faces the possibility of state statutory and common law remedies for bad faith claim handling, it has a far greater incentive to act in good faith than where it is subject only to the ERISA contract remedy. Indeed, under ERISA the insurance company has no incentive to act in good faith, because the worst fate it faces is a judgment for the amount it should have paid in the beginning, with the possibility of attorneys' fees added. Under ERISA, therefore, insurance companies are positively encouraged to act out of self-interest and against the interests of their insureds. It is unlikely that Congress intended such a perverse result in enacting ERISA. Employers who require the critical skills of their professional employees can protect themselves and their employees against disincentives to insurer good faith by negotiating individually with those professional employees for individual disability coverage on a basis that does not create long-term obligations or ongoing administrative schemes.

Former Employees--Conversion of Group Policy to Individual Policy

Whatever the disadvantages to covered employees, it must be acknowledged that most insurance policies provided by employers to employees are governed by ERISA, and actions against insurers for failure to pay policy benefits are limited to the scant ERISA remedies. This is true for so long as the employment relationship exists. However, there are many cases in which coverage continues after termination of the employment relationship, whether by dissolution of the firm or by the resignation or firing of an employee. In most if not all such situations, where the former employee maintains coverage after the employment relationship ceases, ERISA does not apply, and the former employee can maintain an action under state law for the insurance company's wrongful denial of policy benefits.

There are few cases addressing the question of whether ERISA coverage continues to exist after the sponsoring company goes out of business. However, and not surprisingly, the few cases in point all hold that, when a company goes out of business and a former employee continues formerly company-sponsored insurance coverage by individual payments, the subsequent insurance coverage is not governed by ERISA, and any claims under such coverage are not preempted by ERISA.

In both Waks v. Empire Blue Cross/Blue Shield, 263 F.3d 872 (9th Cir. 2001), and Christie v. Standard Insurance Co., 2002 WL 31505648 (N.D. Cal. 2002), former employees filed state law claims against their insurers for refusal to pay claims under policies that had been originally issued under employer group plans and had been converted to individual policies after the employer went out of business. In both cases the courts held that the state law claims arising under the converted policies were not governed by ERISA and were not preempted. As the court said in Waks:

[I]n this case ERISA preemption would be an absurd result because there is no ERISA plan and no administrator. SCS [the former employer] ceased operations years ago, and the ERISA plan was terminated at that time. State law therefore cannot impose any conflicting requirements on any employer or ERISA plan administrator. (25)

This result would seem obvious; yet insurance companies frequently invoke a "once ERISA, always ERISA" mantra in support of the proposition that any person whose insurance coverage was ever governed by ERISA can never thereafter escape ERISA coverage and preemption, notwithstanding changes in employment or in any other circumstances. This formula is traceable to a single district court decision, Stern v. Provident Life & Accident Insurance Co., 2003 WL 22967253 (M.D. Fla. 2003), whose actual holding does not support the proposition, although the court did use the "once ERISA, always ERISA" phrase in its opinion.

Stern involved a claim made by a current employee under a policy that was originally purchased through the employer. At first the employer paid the premiums; later, it was changed to a voluntary employee-paid program. The district judge held that it was not a program "maintained" by the employer after employees began to pay the premiums, but because it was initially "created" by the employer, it continued to be covered by ERISA after its status changed to employee-paid. It was on this basis that the Stern court coined the "once ERISA, always ERISA" phrase, which insurance companies have since attempted to universalize.

On the facts as stated in the opinion, Stern is simply wrong, and no other decision by any court is in accord with it. In treating the "created or maintained" language of ERISA with a dead-handed literalism, the Stern court ignored the Labor Department's safe harbor regulation, which clearly exempts from ERISA coverage a plan under which even current employees pay for their own insurance coverage which they voluntarily maintain. Properly speaking, the employee-paid program was a different and separate "plan" from the earlier employer-paid program, and the court should have recognized this.

Perhaps more importantly, in terms of its precedential value, Stern did not involve a termination of the employment relationship; Dr. Stern was still an employee of Radiology Associates when he made his claim. Far more common than a change in the terms of a plan under which insurance coverage formerly paid by the employer becomes employee-paid is the situation where an employee resigns or is discharged, and following the termination of the employment relationship converts his or her former group policy into an individual personally paid policy. Every case that has considered this situation has held that, upon conversion, the former employee's individually paid coverage is exempt from ERISA preemption. (26)

Glass v. United of Omaha Life Insurance Co., 33 F.3d 1341 (11th Cir. 1994), on which Stern relied, does not support "once ERISA, always ERISA." Glass involved a life insurance claim made by former employee Hostetter's personal representative against a policy issued pursuant to an admitted ERISA plan under an agreement entered into between Silk Greenhouse, Inc., and United of Omaha. When Hostetter was discharged in June 1990 (because of inability to work as a result of AIDS), he converted his group life policy (paid for by the employer) to a different group life policy (specifically provided for under the Silk Greenhouse/United of Omaha agreement and for which only members of the basic ERISA plan were eligible) covering former Silk Greenhouse employees. The court of appeals held that the conversion to another group life policy did not preclude ERISA's application, since both policies were sponsored by the employer. It specifically avoided expressing an opinion on what result would have followed if Hostetter had converted to an individual policy.

In reaching its holding, the court of appeals found it necessary to address Mimbs v. Commercial Life Insurance Co., 818 F. Supp. 1556 (S.D. Ga. 1993), which had held squarely that a claim arising under an individual policy, which had been converted from a group policy after termination of employment and on which the former employee paid the premiums, was not covered by ERISA. The court went to great lengths to avoid criticizing Mimbs, pointing out especially that the conversion in the case at hand "did not actually create an individual policy" (27) but merely changed Hostetter's coverage from one ERISA-governed group policy to another. It therefore expressly avoided ruling on whether an individual policy that is converted from an ERISA group policy after termination of employment is covered by ERISA. The 11th Circuit has still not expressly ruled on the point, but the district courts within the 11th Circuit are unanimous in reading Glass as not extending ERISA coverage to conversion policies, and in holding that such policies are not covered by ERISA. (28)

The fact that the original ERISA plan may have governed the insured's right to convert from a group to an individual policy on termination of employment does not implicate ERISA. Most if not all of the conversion policies in the cases cited above were converted pursuant to the terms of an ERISA plan. What is significant is that, after the conversion, the former employee was paying for his or her own coverage, and the former employer had no participation in it.

It is clear, therefore, that the overwhelming weight of authority is that the conversion of an ERISA group policy to an individual policy after the termination of employment does not result in continuing ERISA application, and that a claim arising under the "converted" individual policy is not governed or preempted by ERISA. There is no justification in fact, in logic, or in law for the "once ERISA, always ERISA" position now typically asserted by insurance companies, i.e., if insurance coverage was ever subjected to ERISA coverage, it remains forever subject to ERISA, no matter what factual changes may occur in the insurance or employment relationship.

Conclusion

ERISA is an outstanding example of the operation of the law of unintended consequences. The impetus for its enactment was the fact that many employee pension plans were under funded, leaving employees without security under employer-provided pensions. The core of the original proposal consisted of reporting, disclosure, and funding requirements to protect employees' pension rights. The preemption clause was included to make it easier for multistate employers to comply with those requirements and to avoid being subjected to a multiplicity of regulatory schemes governing their pension programs. Coverage of employee welfare benefit plans, i.e., employer-sponsored programs providing life, health, and disability insurance policies to employees, was added to the basic law as an afterthought, with little or no consideration of the long-term effect of ERISA on the rights of insured employees to have their claims handled fairly and in good faith by their insurance companies; it seemed like a good idea at the time.

Contrary to the intent of ERISA's sponsors, the extension of the act to employees' insurance policies, combined with an unnecessary judicial interpretation of the preemption clause, has resulted in a severe erosion of the rights and remedies of insured employees against their insurance companies in connection with the handling of their claims. In the case of insurance policies deemed to be covered by ERISA, it has allowed insurance companies to engage in unfair and bad faith claims denial with virtual impunity. For most employees, only an amendment to ERISA can restore their rights. Fortunately, however, the present scope of ERISA preemption is not as broad as insurance companies argue. It remains possible for small employers and professional corporations to provide some insurance coverage (especially disability) to their employees without causing them to lose the remedies they would have under state law if they bought the policies themselves.

(1) 29 U.S.C. 1001 et seq.

(2) 29 U.S.C. 1144(a).

(3) 29 U.S.C. 1144(b)(2)(A).

(4) The saving clause is subject to the "deemer" clause, 29 U.S.C. [section] 1144(b)(2)(B), which provides that no employee benefit plan subject to ERISA "shall be deemed to be an insurance company or other insurer ... or to be engaged in the business of insurance ... for purposes of any law of any State purporting to regulate insurance companies [or] insurance contracts."

(5) See Thomas v. Oregon Fruit Products Co., 228 F.3d 991 (9th Cir. 2000), and cases cited therein.

(6) Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985).

(7) 29 U.S.C. [section] 1132(g)(1).

(8) Johannssen v. District No. 1--Pacific Coast District, MEBA Pension Plan, 292 F.3d 159 (4th Cir. 2002); Hoover v. Provident Life & Accident Insurance Co., 290 F.3d 801 (6th Cir. 2002); Fritcher v. Health Care Service Corp., 301 F.3d 811 (7th Cir. 2002); Bogue v. Ampex Corp., 976 F.2d 1319 (9th Cir. 1992); Eddy v. Colonial Life Insurance Co., 59 F.3d 201 (D.C. Cir. 1995).

(9) Provident Life & Accident Insurance Co. internal memorandum, October 2, 1995.

(10) Andrews-Clarke v. Travelers Insurance Co., 984 F. Supp. 49, 53 (D. Mass. 1997). Andrews-Clarke involved a health insurance policy, and the quoted comment was in that context, but the observation is applicable to all types of employer-provided insurance.

(11) 51 UCLA L. REV. 457, esp. 470-474 (2003).

(12) 29 C.F.R. [section] 2510.3-1(j).

(13) Williams v. Wright, 927 F.2d 1540 (11th Cir. 1991); Biggers v. Wittek Industries, Inc., 4 F.3d 291 (4th Cir. 1993).

(14) Matinchek v. John Alden Life Insurance Co., 93 F.3d 96 (3d Cir. 1996); Agrawal v. Paul Revere Life Insurance Co., 205 F.3d 297 (6th Cir. 2000); Kennedy v. Allied Mutual Insurance Co., 952 F.2d 252 (9th Cir. 1991).

(15) Donovan, 688 F.2d at 1373.

(16) Fort Halifax, 482 U.S. at 9.

(17) Id. at 11 (emphasis in original).

(18) Id. at 12.

(19) Id. at 14.

(20) Id. at 6-7.

(21) See O'Connor v. Commonwealth Gas Co., 251 F.3d 262 (1st Cir. 2001) (early retirement severance bonus); Rodowicz v. Massachusetts Mutual Life Insurance Co., 192 F.3d 162 (1st Cir. 1990) (early retirement incentive program); New England Mutual Life Insurance Co. v. Baig, 166 F.3d 1 (1st Cir. 1999) (reimbursement of premiums for disability insurance); Whitt v. Sherman International Corp., 147 F.3d 1325 (11th Cir. 1998) (executive incentive plan whose terms had not been finally established when plaintiff was fired, although it was made retroactive to cover him after it was finalized); Siemon v. AT&T Corp., 117 F.3d 1173 (10th Cir. 1997) ("other benefits" program providing for payment of benefits for miscellaneous reasons on individual application to company); Dierlam v. Wesley Jessen Co., 222 F. Supp.2d 1052 (N.D. Ill. 2002) ("employee transition agreement" providing for one-time bonus for employees electing to remain actively employed); Mercado Collazo v. Life Insurance Co. of North America, 217 F. Supp.2d 189 (D.P.R. 2002) (disability insurance policy on which employer paid premiums).

(22) New England Mutual Life Insurance Co. v. Baig, 166 F.3d 1 (1st Cir. 1999); Mercado Collazo, 217 F. Supp.2d 189. These cases involved claims that ERISA governed claims under disability insurance policies whose premiums were either paid directly by the employer (Mercado Collazo) or reimbursed to the employee by the employer (Baig). In each case the claim of ERISA preemption was rejected because the evidence showed no long-term or continuing financial obligation by the employer and no ongoing administrative scheme. The two points are clearly related because, without a long-term financial obligation that requires the employer to provide a reserve of some kind, there is no occasion for the employer to devise any ongoing administrative scheme to meet its obligation.

(23) Fort Halifax, 482 U.S. at 12.

(24) Mercado Collazo, 217 F. Supp.2d 189.

(25) Waks, 263 F.3d at 876.

(26) Demars v. CIGNA Corp., 173 F.2d 443 (1st Cir. 1999); Waks, 263 F.3d 872; Mimbs v. Commercial Life Insurance Co., 818 F. Supp. 1556 (S.D. Ga. 1993); Gatewood v. Life Insurance Co. of North America, 75 F. Supp.2d 1347 (M.D. Fla. 1999); Mizrahi v. Provident Life & Accident Insurance Co., 994 F. Supp. 1452 (S.D. Fla. 1998); Loudermilch v. New England Mutual Life Insurance Co., 942 F. Supp. 1434 (S.D. Ala. 1996).

(27) Glass, 33 F.3d at 1346.

(28) Mimbs, 818 F. Supp. 1556; Gatewood v. Life Insurance Co. of North America, 75 F. Supp.2d 1347 (M.D. Fla. 1999); Mizrahi, 994 F. Supp. 1452; Loudermilch, 942 F. Supp. 1434.

D. Frank Winkles practices medical malpractice, negligence, products liability, white collar criminal defense, and disability insurance law in Tampa. He received his J.D. in 1972 from the University of Florida. He has served on the Criminal Procedure Rules Committee, Federal Practice Committee, and is admitted before the U.S. district courts, Middle and Northern districts and U.S. Court of Appeals, Fifth Circuit and 11th Circuit.

Claude H. Tison, Jr., practices insurance, commercial litigation, appellate practice, disability insurance, state and federal constitutional litigation, contracts, and criminal defense in Tampa with the Winkles Law Group. He graduated, cum laude, from Stetson University College of Law, J.D., and from the University of Virginia, LL.M. He is admitted to the U.S. Court of Appeals, Fourth and 11th circuits as well as the US. district courts, Middle and Southern districts.