Allen v. First UNUM Life Insurance Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

MARCUS ALLEN, M.D.,

Plaintiff,

v. Case No.: 2:18-cv-00069-JES-MRM

FIRST UNUM LIFE INSURANCE

COMPANY, PROVIDENT LIFE AND

CASUALTY INSURANCE COMPANY

and THE UNUM GROUP,

Defendants.

OPINION AND ORDER

This matter comes before the Court on review of the parties’

cross Motions for Summary Judgment on Counts 1 and 2 of the Second

Amended Complaint (Docs. ##145, 148). Responses in Opposition

(Docs. ##154, 155) were filed, as were Replies (Docs. ##159, 160).

In addition, Plaintiff filed a Motion for Summary Judgment on

Defendants’ First, Fourth, and Fifth Affirmative Defenses (Doc.

#149), to which Defendants filed a Response in Opposition (Doc.

#153) and Plaintiff filed a Reply (Doc. #161).

For the reasons set forth below, Defendants’ motion for

summary judgment is granted in part and denied in part. Plaintiff’s

cross-motion for summary judgment is denied, but his motion for

summary judgment on Defendants’ affirmative defenses is granted in

part and denied in part.

I.

This case involves a dispute concerning five disability

income insurance policies covering Dr. Marcus Allen (Plaintiff or

Dr. Allen) issued by Provident Life and Casualty Insurance Company

(Provident) or First Unum Life Insurance Company (First Unum) and

The Unum Group (Unum Group). Four of the policies are individual

disability insurance policies (the Individual Policies), while the

fifth policy is a group disability insurance policy (the Group

Policy), (collectively the Policies). (Doc. #87, ¶¶ 17-45.)

The operative pleading is the Second Amended Complaint (SAC)

(Doc. #87), and the only remaining claims are two counts of breach

of contract (Counts 1, 2). In Count 1 of the SAC, Plaintiff

asserts a state law claim of breach of contract against defendants

Provident and Unum Group, alleging he has been and remains totally

disabled and is owed unpaid benefits under the four Individual

Policies. (Id., p. 29.) Count 2 of the SAC alleges a state law

breach of contract claim against defendants First Unum and The

Unum Group, claiming that Plaintiff’s benefits under the Group

Policy were wrongfully terminated. (Id., p. 32.)

Defendants argue they are entitled to summary judgment as to

Counts 1 and 2 because the undisputed material facts show

Plaintiff’s claims are preempted by the Employee Retirement Income

Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA), and First

Unum’s decision to terminate Plaintiff’s disability benefits under

the Group Policy was not arbitrary or capricious. (Doc. #145, p.

2.) Plaintiff, on the other hand, argues that none of the Policies

are governed by ERISA, and he is entitled to summary judgment on

both his state-law claims because Defendants have provided no

evidence to suggest he is no longer disabled or was no longer

disabled when his disability benefits were terminated. (Doc. #148,

pp. 1-2.) Additionally, Plaintiff asserts that he is entitled to

summary judgment with respect to Defendants’ First, Fourth, and

Fifth Affirmative Defenses because as a matter of law the Policies

are not governed by ERISA. (Doc. #149, p. 3.)

II.

Motions for summary judgment should only be granted when the

pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, show “there is no genuine

issue as to any material fact and that the moving party is entitled

to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986). “An issue of fact is

‘genuine’ if the record taken as a whole could lead a rational

trier of fact to find for the nonmoving party.” Baby Buddies,

Inc. v. Toys “R” Us, Inc., 611 F.3d 1308, 1314 (11th Cir. 2010).

A fact is “material” if it may affect the outcome of the suit under

governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). “A court must decide ‘whether the evidence presents a

sufficient disagreement to require submission to a jury or whether

it is so one-sided that one party must prevail as a matter of

law.’” Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256,

1260 (11th Cir. 2004) (quoting Anderson, 477 U.S. at 251).

In ruling on a motion for summary judgment, the Court views

all evidence and draws all reasonable inferences in favor of the

non-moving party. Scott v. Harris, 550 U.S. 372, 380 (2007); Tana

v. Dantanna’s, 611 F.3d 767, 772 (11th Cir. 2010). However, “if

reasonable minds might differ on the inferences arising from

undisputed facts, then the court should deny summary judgment.”

St. Charles Foods, Inc. v. America’s Favorite Chicken Co., 198

F.3d 815, 819 (11th Cir. 1999)(quoting Warrior Tombigbee Transp.

Co. v. M/V Nan Fung, 695 F.2d 1294, 1296-97 (11th Cir.

1983)(finding summary judgment “may be inappropriate even where

the parties agree on the basic facts, but disagree about the

factual inferences that should be drawn from these facts.”)). “If

a reasonable fact finder evaluating the evidence could draw more

than one inference from the facts, and if that inference introduces

a genuine issue of material fact, then the court should not grant

summary judgment.” Allen v. Bd. of Pub. Educ., 495 F.3d 1306,

1315 (11th Cir. 2007).

Cross motions for summary judgment do not change the standard.

See Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1331

(11th Cir. 2005). Cross motions for summary judgment are to be

treated separately; the denial of one does not require the grant

of another. See id. Even where the parties file cross motions

pursuant to Rule 56, summary judgment is inappropriate if disputes

remain as to material facts. United States v. Oakley, 744 F.2d

1553, 1555 (11th Cir. 1984).

III.

As relevant to the current motions, the undisputed material

facts are as follows:

Dr. Allen became a board-certified radiologist in 1984. In

March 1986, Dr. Allen began working as a diagnostic radiologist at

Prospect Hill Radiology Group, P.C. (Prospect Hill) in Syracuse,

New York. While working at Prospect Hill, Dr. Allen purchased

four individual, long-term disability income insurance policies

from Provident through its agent David Schultz in Syracuse, New

York.1 (Doc. #87, ¶¶ 7, 17, 21-24; Docs. ##87-1; 87-2; 87-3; 87-

4.) Dr. Allen personally paid all premiums due on the Individual

Policies. (Doc. 43-1, ¶ 35-38.)

Effective June 1, 2005, defendant First Unum issued a Group

Policy to Prospect Hill which provided long term disability

insurance coverage to the “Partners” of Prospect Hill. (Doc. #87,

1 The Individual Polices are identified as: (1) Policy 1 –

Policy #36-334-60188, issued March 13, 1986; (2) Policy 2 — Policy

#36-334-60526, issued March 13, 1986; (3) Policy 3, Policy #36-

335-66237, issued May 5, 1987; and (4) Policy 4 – Policy #36-335-

6002485, issued February 17, 1989. (Docs. ##87-1; 87-2; 87-3; 87-

4.)

¶ 38; Doc. #87-5, p. 3.) Prospect Hill paid all premiums on the

Group Policy. (Doc. #43-1, ¶¶ 41-43.)

In May 2010, Dr. Allen experienced a “sudden change” in his

vision that affected his ability to conduct the acute visual

analysis required of a diagnostic radiologist. (Doc. #87, ¶¶ 47-

49.) After he was examined by three physicians, Dr. Allen was

diagnosed with “ocular degeneration, posterior vitreous detachment

with retinal tear, bleed in his left eye, as well as significant

floaters and visual disturbances in both eyes detrimentally

impacting his visual field.” (Id. at ¶¶ 50-51; Doc. #147-1, p.

350.) Dr. Allen resigned from his radiology practice on June 23,

2010, and filed a claim for disability benefits with Defendants,

asserting that he became totally disabled as of May 1, 2010. (Doc.

#87, ¶¶ 51-55.) At the time, Dr. Allen was fifty-six years old.

After reviewing Dr. Allen’s documentation in support of

disability, Defendants determined he was totally disabled under

the Policies. (Id. at ¶¶ 56-57.) On or about January 15, 2011,

Defendants began paying Dr. Allen 60% of his monthly earnings up

to the “Maximum Monthly Amount” of $15,000. (Id. at ¶¶ 42, 59;

Doc. #147-1, pp. 478-83.)

While paying disability benefits, Defendants requested Dr.

Allen’s medical records as part of periodic medical reviews. These

medical records revealed that Dr. Allen suffered from floaters and

glare that impacted his vision and ability to read x-rays. (Doc.

#87, ¶¶ 70-71.)

Dr. Allen was also required by Unum to apply for Social

Security disability benefits, and did so on June 13, 2011. (Doc.

#87, ¶ 72; Doc. #147-9, p. 296.) In 2013, the Social Security

Administration (SSA) required Plaintiff to undergo a physical

examination, and his medical records and file were reviewed by

several physicians and a vocational expert. (Doc. #87, ¶ 76.) On

June 28, 2013, the SSA determined that Dr. Allen had a “severe

impairment” and was incapable of performing the occupation of

diagnostic radiologist since June 2010, but that he could “engage

in any other kind of substantial gainful work . . . .” (Doc. #87,

¶¶ 77, 101; Doc. #147-9, pp. 299-303.) In November 2013, Dr. Allen

moved to Naples, Florida. (Doc. #148-1. P. 7.)

Defendants also required Dr. Allen to undergo additional

Independent Medical Examinations (IMEs) with two physicians of

their choosing. (Doc. #87, ¶¶ 105-06.) The IMEs found evidence of

floaters and visual disturbances in Dr. Allen’s eyes that impacted

his field of vision. Defendants determined, however, that there

was no objective medical evidence to support the continued

existence of disability. (Id. at ¶¶ 107-08, 110, 114.)

On August 31 and September 1, 2015, after paying disability

benefits for approximately five years, Defendants terminated Dr.

Allen’s disability benefits under his Individual and Group

Policies. (Id. at ¶¶ 113, 134.) Dr. Allen appealed the benefit

termination decision through Defendants’ internal appeal process.

On February 24, 2016, Defendants upheld the decision to terminate

Plaintiff’s benefits under all the Policies. (Id. at ¶¶ 120-21.)

Additional facts will be discussed as necessary to resolve

specific issues.

IV.

The crux of Defendants’ summary judgment motion is that the

state-law breach of contract claims in both Counts 1 and 2 are

defensively preempted by ERISA. (Doc. #145, pp. 15-22; Doc. #69,

pp. 14-16.) Dr. Allen responds that ERISA does not govern either

the Individual Policies or the Group Policy. (Doc. #155, pp. 17-

23.) The Court concludes that each side is half right.

A. ERISA Defensive Preemption Principles

In an earlier Opinion and Order in this case, the Court noted

that

under ERISA, two types of preemption may

arise—conflict preemption or complete

preemption. Here, defendants rely on conflict

preemption. "Conflict preemption, also known

as defensive preemption, is a substantive

defense to preempted state law claims." Conn.

State Dental. Ass'n v. Anthem Health Plans,

Inc., 591 F.3d 1337, 1344 (11th Cir. 2009).

"This type of preemption arises from ERISA's

express preemption provision, § 514(a), which

preempts any state law claim that 'relates to'

an ERISA plan." Id. (citing 29 U.S.C. §

1144(a) (ERISA "supersede[s] any and all State

laws insofar as they may now or hereafter

relate to any employee benefit plan described

in section 1003(a) of this title and are not

exempt under section 1003(b) of this

title.")).

(Doc. #86, pp. 6-7.) A state law claim is defensively preempted

pursuant to 29 U.S.C. § 1144(a) if plaintiff's state law claim (1)

“relate[s] to” (2) an employee benefit plan governed by ERISA.

Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th

Cir. 1997).

(1) “Relates to”

Several phrases have been used to describe the “relates to”

requirement. "[A] party's state law claim 'relates to' an ERISA

benefit plan for purposes of ERISA preemption whenever the alleged

conduct is intertwined with the refusal to pay benefits." Garren

114 F.3d at 187. “State law claims that ‘have a connection with

[an] ERISA plan’ are thus preempted.” Engelhardt v. Paul Revere

Life Ins. Co., 139 F.3d 1346, 1351 (11th Cir. 1998), quoting

Morstein v. Nat’l Ins. Serv. Inc., 93 F.3d 715, 722 (11th Cir.

1996) (en banc). “A state law ‘relates to’ a covered employee

benefit plan ‘if it has a connection with or reference to such a

plan.’” Variety Children's Hosp., Inc. v. Century Med. Health

Plan, Inc., 57 F.3d 1040, 1042 (11th Cir. 1995), quoting District

of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 129

(1992). See also Hall v. Blue Cross/Blue Shield of Ala., 134 F.3d

1063, 1065 (11th Cir. 1998). There does not appear to be any

substantive differences in the different formulations.

(2) Employee Benefit Plan Governed by ERISA

The second requirement for defensive preemption is the

existence of an ERISA-governed plan. The rule is deceptively

simple to state: “ERISA governs employee welfare benefit programs

provided by an employer. See 29 U.S.C. § 1001 et seq.” Moorman v.

UnumProvident Corp., 464 F.3d 1260, 1265 (11th Cir. 2006). The

parties dispute whether the facts in this case establish such an

ERISA-governed employer program.

Generally, a “plan” under ERISA is "an employee welfare

benefit plan or an employee pension benefit plan or a plan which

is both an employee welfare benefit plan and an employee pension

benefit plan." 29 U.S.C. § 1002(3). An "employee welfare benefit

plan" is in turn defined in relevant part as

[]any plan, fund, or program which was . . .

established or maintained by an employer . .

. to the extent that such plan, fund, or

program was established or is maintained for

the purpose of providing for its participants

or their beneficiaries, through the purchase

of insurance or otherwise, (A) . . . benefits

in the event of . . . disability, . . ..

29 U.S.C. § 1002(1). Thus, as relevant to this case, a welfare

benefit plan requires (1) a “plan, fund, or program” (2)

established or maintained (3) by an employer, (4) for the purpose

of providing disability benefits, (5) to participants or their

beneficiaries. Donovan v. Dillingham, 688 F.2d 1367, 1370 (11th

Cir. 1982) (en banc); Anderson v. Unum Provident Corp., 369 F.3d

1257, 1263 (11th Cir. 2004); Garcon v. United Mut. of Omaha Ins.

Co., 779 F. App'x 595, 597 (11th Cir. 2019).2 Determining whether

an insurance policy is an "employee welfare benefit plan" governed

by ERISA is a question of law for the court after considering all

surrounding circumstances and facts from the point of view of a

reasonable person. Stern v. IBM, 326 F.3d 1367, 1373 (11th Cir.

2003) (citing Donovan, 688 F.2d at 1373).

"A plan is 'established' when there has been some degree of

implementation by the employer going beyond a mere intent to confer

a benefit." Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207,

1214 (11th Cir. 1999) (citing Donovan, 688 F.2d at 1373). "[N]o

single act in itself necessarily constitutes the establishment of

the plan, fund, or program . . .." Donovan, 688 F.2d at 1373. The

Eleventh Circuit has identified seven factors which may be relevant

in determining whether an employee welfare benefits plan has been

established: "(1) the employer's representations in internally

distributed documents; (2) the employer's oral representations;

(3) the employer's establishment of a fund to pay benefits; (4)

actual payment of benefits; (5) the employer's deliberate failure

2The parties dispute whether ERISA should be interpreted in

this case under Second Circuit or Eleventh Circuit precedent. The

dispute is illusory as to this portion of the case since the Second

Circuit follows the Eleventh Circuit’s Donovan v. Dillingham

decision, having found that its “logic is persuasive.” Guilbert

v. Gardner, 480 F.3d 140, 146 (2d Cir. 2007).

to correct known perceptions of a plan's existence; (6) the

reasonable understanding of employees; and (7) the employer's

intent." Butero, 174 F.3d at 1215; Anderson, 369 F.3d at 1265-66.

To "maintain" a plan simply means to "continue" a plan.

Anderson, 369 F.3d at 1265. The seven Butero factors are also

important in determining whether a plan has been maintained.

Moorman, 464 F.3d at 1269.

The focus of the inquiry is the conduct of the employer or

employee organization. It is “an employer or employee

organization, or both, and not individual employees or

entrepreneurial businesses, [which] must establish or maintain the

plan, fund, or program.” Donovan, 688 F.2d at 1373. “Our inquiry

thus necessarily focuses on ‘the employer ... and [its] involvement

with the administration of the plan,’” Moorman, 464 F.3d at 1269,

quoting Anderson, 369 F.3d at 1263, not the conduct of others.

“[W[hether a plan is ‘established’ is determined by the employer's

conduct, not that of any other ERISA entity.” Butero, 174 F.3d at

1214 (emphasis in original).

B. Application of Defensive Preemption Principles to Plaintiff’s

Individual Policies

(1) “Relates to” Requirement

There is no question that Plaintiff’s state-law breach of

contract claim in Count 1 "relates to" Dr. Allen’s Individual

Policies. The alleged conduct is not only intertwined with the

failure to pay benefits, but the failure to pay disability benefits

is the crux of the breach of contract claim. See Swerhun v.

Guardian Life Ins. Co. of Am., 979 F.2d 195, 198 (11th Cir.

1992)(“We have consistently held that ERISA preempts state law

breach of contract claims.”); Butero, 174 F.3d at 1215 (finding it

well-settled that breach of contract claims are the types of claims

preempted under ERISA).

(2) ERISA-Governed Employee Benefit Plan

The dispositive defensive preemption issue as to Count 1 is

whether the Individual Policies constituted an employer’s ERISA

plan. Defendants assert that Dr. Allen’s Individual Policies

qualify as part of an “employee benefit plan” because they were

established or maintained by Prospect Hill, Dr. Allen’s employer.

(Doc. #145, pp. 18-20.) Dr. Allen responds that Prospect Hill

neither established nor maintained the Individual Policies and had

no involvement with the Individual Policies. (Doc. #155, pp. 17-

18.) Dr. Allen also asserts that the Individual Policies fall

within the “safe harbor” exception of ERISA (Doc. #149, p. 14) and

that the Individual Policies were exempt from ERISA coverage

because he was a “shareholder/partner/owner” of Prospect Hill and

not an employee. (Id. at 15.)

The Court rejects Dr. Allen’s argument that the Individual

Policies are exempt from ERISA because he was a

“shareholder/partner/owner” of Prospect Hill. Under the

undisputed facts set forth in the record, Dr. Allen’s status as a

shareholder or partner of Prospect Hill does not preclude a plan

from being governed by ERISA or Dr. Allen from being a beneficiary

of an ERISA plan. See Raymond B. Yates, M.D., P.C. Profit Sharing

Plan v. Hendon, 541 U.S. 1, 1 (2004); Gilbert v. Alta Health &

Life Ins. Co., 276 F.3d 1292, 1302 (11th Cir. 2001); Engelhardt v.

Paul Revere Life Ins. Co., 139 F.3d 1346, 1351 (11th Cir. 1998).

The Court also rejects Dr. Allen’s argument that his

Individual Policies cannot be defensively preempted because they

fall within the “safe harbor” exception of ERISA. “The United

States Department of Labor explicitly exempts from ERISA

governance certain ‘group or group-type insurance programs offered

by an insurer to employees.’ 29 C.F.R. § 2510.3–1(j).” Moorman,

464 F.3d at 1265. The Individual Policies are not a “group or

group-type” insurance program, so the safe harbor exemption cannot

apply. This does not end the inquiry, however, because even “a

plan that falls outside of the safe harbor exception does not

necessarily fall within the jurisdiction of ERISA.”. Moorman, 464

F.3d at 1269 (citation omitted.)

In is undisputed that: (1) Dr. Allen personally purchased all

four Individual Policies through Provident agent David Schultz;3

3 Dr. Allen first met with Provident agent David Schultz in

1982 when he was employed as a medical resident at Upstate Medical

Center. (Doc. #149-1, ¶ 8.) Dr. Allen agreed to purchase Policies

1 and 2 from Agent Schultz while he was still employed by Upstate

(2) Dr. Allen or his wife personally paid all the premiums for all

the policies for all the years the Individual Policies were in

force;4 (3) No premiums for the Individual Policies were deducted

from Dr. Allen’s income by Prospect Hill;5 (4) Prospect Hill never

itself paid any premiums for the Individual Policies;6 and (5)

Prospect Hill had no involvement in the selection, purchase, or

continuation of the Individual Policies.7

Medical Center, but these policies were not issued until after Dr.

Allen began employment at Prospect Hill. (Id. at ¶¶ 4-6.) The

Court rejects Dr. Allen’s argument that Policy 1 and Policy 2

cannot be part of Prospect Hill’s ERISA plan because his

application was made while he was still employed at Upstate Medical

Center. (Doc. #149, p. 15.) The Application Progress Sheet

created by Defendants, Exhibit K to Defendants’ submissions (Doc.

#147-24), states that Dr. Allen’s policy was in connection with

the Upstate Medical Center plan. But what matters is when the

policy became a contract, not when an application was filed.

4 Dr. Allen has stated without contradiction that he and/or

his wife personally paid the premiums to either Agent Schultz or

Provident. (Doc. #149-1, ¶¶ 2-17, 23, 25, 35-37, pp. 126-35.)

5 See infra note 6.

6 Prospect Hill’s bookkeeper stated that the company never

paid for plaintiff’s Individual Polices, and that despite

overseeing the companies’ finances, she knew nothing about the

Policies. In particular, a February 9, 2011 letter from the

bookkepper to Unum confirmed that with respect to Dr. Allen’s

Individual Policies, “RE: Policy numbers 60188, 606526, 66237 &

6002485 Provident Life and Casualty Insurance Company, the company

[Prospect Hill] does not pay for these policies and I would assume

that the individual paid for them on his own, as I have no knowledge

of them.” (Doc. #149-1, p. 136.)

7 In addition to the bookkeeper’s testimony, Dr. Allen stated

that in 1986, when he first began working for Prospect Hill,

disability insurance was not part of his compensation package, and

Prospect Hill never publicized or offered him individual

Nonetheless, Defendants assert that the following facts

establish that the Individual Policies purchased by Dr. Allen

constitute a ERISA plan by Prospect Hill: (1) Prospect Hill entered

into a 1976 “Salary Allotment Agreement” with Provident; (2) each

of the Individual Policies has a Salary Allotment rider which

references a Salary Allotment Agreement; (3) the premiums for Dr.

Allen and other Prospect Hill employees were group-billed by

Provident under a common “risk number”; and (4) Dr. Allen and other

Prospect Hill employees paid discounted premiums pursuant to their

group membership. (Doc. #145, p. 18.) The Court discusses each in

turn.

(a) Salary Allotment Agreement

The New York Department of State website states that Prospect

Hill Radiology Group, P.C. is an active domestic professional

corporation. (Doc. #147-17.) Under “name history,” the website

document shows that on August 9, 1971 the entity name was “Carsky,

Brownell, Berrigan & Shaheen, M.D., P.C.;” on July 15, 1976, the

entity name was “St. Joseph’s Radiology Group, P.C.”; and finally

on November 17, 1978, the entity name became “Prospect Hill

disability income coverages or communicated the existence of any

agreement that would provide a discount insurance premium rate.

Dr. Allen states that he elected on his own (and with no

participation from Prospect Hill) to purchase his Individual

Policies. (Doc. #149-1, ¶¶ 2-17, 23, 25, 35-37, pp. 126-35.)

Radiology Group, P.C.” (Doc. #147-17, pp. 2-3.) For summary

judgment purposes, the Court accepts the accuracy of the factual

assertions that Prospect Hill is an active domestic professional

corporation and that a prior name of the entity which is now

Prospect Hill was “Carsky, Brownell, Berrigan & Shaheen, M.D.,

P.C.” 8

Defendants claim that on May 5, 1976, Prospect Hill’s

predecessor-entity-twice-removed, “Carsky, Brownell, Berrigan &

Shaheen, M.D., P.C.,” entered into a Salary Allotment Agreement

(the Agreement) with the Provident Life and Casualty Insurance

Company of Chattanooga, Tennessee. (Doc. #147-16, p. 2.) The one—

8“This Court has discretion to take judicial notice of

material derived from official government web sites such as those

generated by the New York State Department of State.” LaSonde v.

Seabrook, 89 A.D.3d 132, 137, 933 N.Y.S.2d 195, 199 (2011)(citation

omitted); see also Swindol v. Aurora Flight Scis. Corp., 805 F.3d

516, 519 (5th Cir. 2015) (“We conclude that the accuracy of these

public records contained on the Mississippi Secretary of State's

and the Virginia State Corporation Commission's websites cannot

reasonably be questioned.”). The Court grants the part of

Defendants’ request to take judicial notice of the New York

Department of State website as to Prospect Hill being an active

entity and its name history. (Doc. #145, p. 4 n.1.) The Court

declines to take judicial notice that “Carsky, Brownell, Berrigan

& Shaheen, M.D., P.C.” is “the name under which Prospect Hill

entered into the Salary Allotment Agreement” as requested at Doc.

#145, p. 4 n.1. This statement is one which can reasonably be

questioned, and therefore does not fall within the scope of Fed.

R. Evid. 201(b)(2). The website carries the following disclaimer:

“As the Department relies upon information provided to it, the

information's completeness or accuracy cannot be guaranteed.” See

New York Department of State, http://

www.dos.ny.gov/corps/bus_entity_search.html(last visited February

14, 2022).

page Agreement9 provided Carsky, Brownell, Berrigan & Shaheen,

M.D., P.C. (the Employer) with three options “as respects policies

issued by the Insurance Company to certain individuals.” The

Employer’s options were: [1] “to make salary deductions for

required premiums for such policies and to remit such premiums to

the Insurance Company when due,” or [2] “to pay a portion of the

required premiums and to make salary deductions of the remainder

. . . and remit such premiums to the Insurance Company when due”,

or [3] “to pay in full the required premiums . . . and remit such

premiums to the Insurance Company.” (Id.) There is a handwritten

“X” placed next to the first option. (Id.) In consideration for

the Employer’s salary deductions and remitting, the Insurance

Company agreed to accept reduced premiums for such policies. (Id.)

The Agreement could be terminated by either party with thirty days

written notice. (Id.)

The record does not establish: (1) Whether Carsky, Brownell,

Berrigan & Shaheen, M.D., P.C. ever actually made a salary

deduction and remitted it to Provident; (2) the identities of the

“certain individuals” whose policies had issued and were eligible

for such a premium reduction; (3) any factual or legal basis to

find the Agreement would be binding on Prospect Hill; (4) whether

9 For summary judgment purposes, the Court will accept that

Defendants could establish the authenticity of the Salary

Allotment Agreement.

Prospect Hill adopted or ratified this Salary Allotment Agreement;

or (5) whether Prospect Hill ever made such deductions for anyone

either prior to or after Dr. Allen’s 1986 employment. Indeed, the

uncontradicted evidence is that Prospect Hill did not do anything

in connection with this Agreement. As to Dr. Allen, he arrived at

Prospect Hill ten years and two name-changes later. Dr. Allen

stated, without contradiction, that each partner at Prospect Hill

was involved in managing all aspects of the practice, including

any type of discounted benefits packages. There was never any

discussion of a salary allotment agreement or premium reduction

plan concerning disability benefits. (Doc. #149-1, ¶ 27.) Under

the circumstances set forth in the record, an Agreement signed by

a Prospect Hill predecessor entity fails to provide any support

for the existence of an ERISA plan by Prospect Hill. Even the

existence of a Salary Allotment Agreement would itself be

insufficient to establish an ERISA plan.10 The Court finds that the

10 Defendants’ management recognized in an internal memo from

1995 that "[s]alary allotment or payroll deduction arrangements,

by themselves, do not necessarily mean that a policy is subject to

ERISA." (Doc. #149-3, McCall Memo.) The memo further suggests that

the company began modifying its salary allotment agreements in

1995 to include endorsement language in an effort to ensure ERISA

applicability for new agreements going forward. (Id.) Compare

Saunders v. Provident Life & Accident Ins. Co., No. 16-cv-1474-

JLK, 2018 U.S. Dist. LEXIS 162340, at *19 (D. Colo. Mar. 1, 2018)

(existence of a salary allotment agreement not evidence of the

intent to provide benefits where plaintiff paid his own premiums);

Crooms v. Provident Life & Accident Ins. Co., 484 F. Supp. 2d 1286,

1298 (N.D. Ga. 2007)(employer established a plan under ERISA where

a salary allotment agreement named and identified the present

Salary Allotment Agreement signed by a Prospect Hill predecessor

entity, even if binding on Prospect Hill, fails to provide any

support to the argument that Prospect Hill established an ERISA

plan to benefit Plaintiff (or anyone else).

(b) Salary Allotment Rider

Defendants also point out that each of Dr. Allen’s Individual

Policies has a Salary Allotment rider referencing a Salary

Allotment Agreement. (Doc. #145, p. 18.) The “Salary Allotment

Premium Payment” provision (the rider) found in each of Dr. Allen’s

Individual Polices states in part that “[i]n consideration of the

Salary Allotment Agreement between your employer and us, we agree

to accept Policy Premiums as billed to your employer.” (Doc. #87-

1, p. 21.) The rider also provides that “3. This rider will be

void if: a. your employment with your employer ends; b. the Salary

Allotment Agreement is terminated; or c. for any reason, your

employer fails to pay premiums.” (Id.) Even assuming that the

Salary Allotment Agreement referred to in the riders was the 1976

Agreement signed by Prospect Hill’s predecessor, the record is

clear that Prospect Hill did not ever pay or deduct Dr. Allen’s

employer, the employer received semi-annual invoices for all the

disability policies, the bookkeeper corresponded with the

insurance company regarding the addition/subtraction of employees

from the employer’s insurance coverage, and the employer provided

the premium payments to the insurer).

premiums for his Individual Polices. Therefore, by its very

language the rider is “void” and does not support an assertion

that Prospect Hill has established an ERISA plan.

(c) Billing Under Common Risk Number

At various times other medical partners at Prospect Hill

purchased individual disability insurance policies from Defendants

through Agent Schultz. It appears that Defendants assigned all

such individual policies a common risk number (R-12429) for their

internal paperwork. Defendants assert that the common risk number

is evidence of group billing, which in turn establishes the

existence of an ERISA plan created by Prospect Hill. (Doc. #145,

p. 18.)

At least internally, Defendants referred to these various

individual policies for Prospect Hill partners as a “group,” using

the name Prospect Hill Radiology as their designation of the group.

At least two of the premium bills (Docs. ##147-19, 147-21) for the

individual policies of these partners were addressed to “Prospect

Hill Radiology” in care of Defendants’ agent (David Schultz) at

the agent’s business address. Agent Schultz then billed the

individuals for payment of their respective premiums, including

Dr. Allen, who was sent invoices and billed for his Individual

Policies by Agent Schultz. Dr. Allen provided copies of invoices

for the Individual Policies which have his and/or his wife’s

handwriting noting “paid” and the date paid. See (Doc. #149-1, ¶¶

35-38, pp. 126-135.) According to Dr. Allen, he sent payment to

Agent Schultz for the first two invoices, and for the remaining

invoices he made the payment to Provident. None of the payments

involved Prospect Hill. (Id.; Doc. #149, pp. 27-28.)

The internal administrative use of a common internal risk

number by an insurer does not establish that an ERISA plan has

been created by an employer for its employees. As discussed

earlier, the focus of the inquiry is the conduct of the employer,

not the conduct of the insurer. Donovan, 688 F.2d at 1373; Moorman

v. UnumProvident Corp., 464 F.3d at 1269; Anderson, 369 F.3d at

1263; Butero, 174 F.3d at 1214. Prospect Hill had no involvement

in either the purchase of the Individual Policies by Dr. Allen or

the internal administrative procedures and paperwork utilized by

Defendants with respect to these Individual Policies. Prospect

Hill’s bookkeeper confirmed that Prospect Hill knew nothing about

Plaintiff’s Individual policies, that Prospect Hill did not pay or

deduct the premiums, and that Prospect Hill was not participating

in group billing. (Doc. #149-1, p. 136.)

The Court finds that the existence of a common “risk number”

assigned by Defendants, and their single billing format to their

agent for multiple individual policies, are insufficient to

establish that Prospect Hill established an ERISA plan. See Rosen

v. Provident Life & Accident Ins. Co., No. 2:14-cv-0922-WMA, 2015

WL 260839, 2015 U.S. Dist. LEXIS 6586, at *24 (N.D. Ala. Jan. 21,

2015) (holding that a common risk group number and salary allotment

agreement were insufficient to warrant ERISA preemption).

(d) Discounted Premiums

Finally, Defendants argue that Prospect Hill established an

ERISA plan by enabling Dr. Allen to receive a 10% discounted

premium based on the Salary Allotment Agreement. (Doc. #145, p.

19.) According to Defendants, “[p]ursuant to the express terms of

the Salary Allotment Agreement, Provident accepted premiums on a

‘reduced basis’ in consideration for Prospect Hill’s assistance in

facilitating the collection and remittance of premiums from

employees to whom policies were issued.” (Id.) Defendants contend

that the discounted purchase of long-term disability insurance is

sufficient to demonstrate that Prospect Hill intended to confer a

benefit to its employees and created an ERISA plan. (Id.)

The parties dispute whether Dr. Allen actually received a

discount on his premiums for the Individual Policies. For summary

judgment purposes only, the Court resolves this conflict in favor

of Defendants, and assumes that Dr. Allen’s premiums were the

subject of a ten-percent discount. This alone, however, is

insufficient to establish an ERISA plan. There is no evidence

Salary Allotment Agreement is binding on Prospect Hill, and the

evidence clearly establishes that Prospect Hill was not billed for

or remit premiums on Dr. Allen’s Individual Policies. The

existence of a discount for premiums does not establish an ERISA

plan under the record evidence in this case. Defendants’ reliance

on Harding v. Provident Life & Accident Ins. Co., 809 F. Supp. 2d

403, 408 (W.D. Pa. 2011) and Alexander v. Provident Life and Acc.

Ins. Co., 663 F. Supp.2d 627 (E.D. Tenn. 2009) is misplaced, since

both of those cases materially different facts in which the

discount was in exchange for the employer deducting and remitting

the employee’s premiums.

In sum, the Court finds that the undisputed material facts

establish that the Individual Policies were not established and

maintained by Prospect Hill. As such, Dr. Allen’s Individual

Policies do not qualify as ERISA plans, and the state law breach

of contract claim in Count 1 is not preempted by ERISA.

C. Application of Defensive Preemption Principles to Group Policy

Defendants argue that Dr. Allen’s Group Policy is part of an

ERISA-governed benefit plan and therefore the state law claim in

Count 2 is preempted by ERISA. (Doc. #145, p. 22.) Plaintiff

responds that the Group Policy falls within the safe harbor

provision of ERSIA, and in any event is not within the scope of

ERISA and is therefore not preempted. (Doc. #149, pp. 6-14.)

As noted in the Court’s discussion of Count 1, the parties

dispute whether the Court should apply the federal common law as

interpreted by the Second Circuit or the federal common law as

interpreted by the Eleventh Circuit. The Group Policy states that

the “governing jurisdiction” is New York, and that the Group Policy

“is governed by the laws of the governing jurisdiction and to the

extent applicable by the Employee Retirement Income Security Act

of 1974 (ERISA) and any amendments.” (Doc. #87-5, p. 3).

It is clear that “claims involving the interpretation and

enforcement of employee benefit plans are brought under federal

common law.” Hauser v. Life Gen. Sec. Ins. Co., 56 F.3d 1330,

1333 (11th Cir. 1995). There does not appear to be an actual

conflict between the Second Circuit and the Eleventh Circuit as to

defensive preemption and the safe harbor ERISA law. See Grimo v.

Blue Cross/Blue Shield of Vermont, 34 F.3d 148, 152 (2d Cir. 1994),

citing Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982).

(1) Safe Harbor Exemption

Courts have suggested that the safe harbor analysis proceed

first since even an employee welfare benefit plan under ERISA may

fall outside ERISA’s reach if it comes under the “safe harbor”

exemption. See Moorman, 464 F.3d at 1267.

The Code of Federal Regulations establishes a regulatory safe

harbor which excepts from the definition of "employee welfare

benefit plan" certain "group or group-type insurance program[s]"

"offered by an insurer to employees." 29 C.F.R. § 2510.3-1(j). To

qualify for the exemption, the following four requirements must

all be satisfied:

(1) No contributions are made by an employer or

employee organization;

(2) Participation [in] the program is

completely voluntary for employees or

members;

(3) The sole functions of the employer or

employee organization with respect to the

program are, without endorsing the program,

to permit the insurer to publicize the

program to employees or members, to collect

premiums through payroll deductions or dues

checkoffs and to remit them to the insurer;

and

(4) The employer or employee organization

receives no consideration in the form of

cash or otherwise in connection with the

program, other than reasonable

compensation, excluding any profit, for

administrative services actually rendered

in connection with payroll deductions or

dues checkoffs."

29 C.F.R. § 2510.3-1(j). All four regulatory requirements must be

satisfied in order for an insurance plan to qualify for the safe

harbor exemption. Butero, 174 F.3d at 1207; Grimo, 34 F.3d at 152;

Stern v. Provident Life & Accident Ins. Co., 295 F. Supp. 2d 1321,

1325 (M.D. Fla. 2003). If “an insurance plan meets all four

criteria of the safe harbor provision, the Court's inquiry

concludes, and ERISA is conclusively deemed not to preempt a

plaintiff's state law claims.” Riggs v. Smith, 953 F. Supp. 389,

394 (S.D. Fla. 1997).

Only the third element is at issue in this case, since the

record establishes that the other requirements have been

satisfied. Defendants argue that the safe harbor exemption is

unavailable because Prospect Hill “endorsed” Dr. Allen’s Group

Policy by purchasing it and serving as the named Plan

Administrator. (Doc. #145, pp. 23-24.) Plaintiff responds that

Prospect Hill did not endorse the Policy because “the partners did

not perform any functions concerning the Group Policy except to

make premium payments.” (Doc. #155, p. 23.) The Court finds that

the undisputed facts establish that Prospect Hill endorsed the

Group Policy, and therefore the Group Policy does not fall within

the safe harbor provision.

An employer endorses a program if it "urges or encourages

member participation in the program or engages in activities that

would lead a member reasonably to conclude that the program is

part of a benefit arrangement established or maintained by the

employee organization." Moorman, 464 F.3d at 1268 (citing ERISA

Op. Letter No. 94-26A, 1994 ERISA LEXIS 28, 1994 WL 369282 (July

11, 1994)); see also Johnson v. Watts Regulator Co., 63 F.3d 1129,

1135 (1st Cir. 1995) (holding that standard is whether "an

objectively reasonable employee would conclude on the basis of the

employer's actions that the employer had not merely facilitated

the program's availability but had exercised control over it or

made it appear to be part and parcel of the company's own benefit

package"). Thus, "the relevant framework for determining if

endorsement exists is to examine the employer's involvement in the

creation or administration of the policy from the employees' point

of view." Hamilton v. Provident Life & Accident Ins. Co., No. 1:07-

cv-302, 2008 U.S. Dist. LEXIS 44687, at *10 (E.D. Tenn. June 3,

2008). To remain neutral for purposes of the safe harbor

regulation, an employer like Prospect Hill must "refrain from any

function other than permitting the insurer to publicize the program

and collect[] premiums." Butero, 174 F.3d at 1213.

Dr. Allen’s Group Policy is a contract between the

Policyholder “Prospect Hill Radiology Group, P.C.” and First Unum

Life Insurance Company which restricted eligibility to the

“Partners of Prospect Hill Radiology in active employment in the

United States with the Employer.” (Doc. #87-5, pp. 2, 5.) The Group

Policy gave Prospect Hill the right, in its sole and absolute

discretion, to amend, modify, or terminate the plan, in whole or

in part, and for any reason, which could only be approved by Unum.

The Group Policy also instructed the insured to contact the Plan

Administrator (i.e., Prospect Hill) if they had questions about

the plan. (Doc. #87-5, pp. 3, 11, 36, 40.) The Group Policy has

an “Additional Summary Plan Description Information” that states

“if” the Policy provides benefits under a Plan that is subject to

ERISA, Prospect Hill is the plan administrator and agent for

service of legal process. (Doc. #87-5, p. 35.)

The Court finds that an objectively reasonable partner would

conclude that Prospect Hill had endorsed the Group Policy by

exercising control over it that went beyond simply permitting the

insurer the publicize the program and collect premiums. The safe

harbor exemption therefore does not apply to Count 2.

(2) Employee Benefit Plan Governed By ERISA

Failure to establish a safe harbor is not the end of the

inquiry for Dr. Allen. “Even if the safe harbor is barred, ‘that

does not necessarily mean that the insurance policy is part of an

ERISA plan.’ Butero, 174 F.3d at 1214; see also Anderson, 369 F.3d

at 1263 n. 2 (“[A] plan that falls outside of the safe harbor

exception does not necessarily fall within the jurisdiction of

ERISA.”). Moorman, 464 F.3d at 1269. Thus, Defendants must still

establish that the Group Policy satisfies the ERISA11 requirements.

(a) State Law Claim “Relates To” an ERISA Plan

The Court must determine whether Dr. Allen’s state law claim

in Count 2 “relates to” his Group Policy in order for the claim to

be defensively preempted by ERISA. 29 U.S.C. § 1144(a). See supra

pp. 9-10. For the same reasons as discussed in connection with

Count 1, the Court finds that Plaintiff’s breach of contract claim

in Count 2 “relates to” a ERISA plan. See supra pp. 12-13.

11 For the Group Policy to be an ERISA plan, it must be “(1)

part of a plan, fund or program, (2) [that has been] established

or maintained (3) by an employer . . . (4) for the purpose of

providing . . . disability benefits (5) to participants or their

beneficiaries.” Garcon, 779 F. App'x at 597.

(b) Part of a Plan, Fund or Program

Dr. Allen concedes that Prospect Hill entered into a contract

with defendant First Unum Life Insurance Company for group long

term disability benefits (Doc. 149-1, p. 16) and that the Group

Policy details the intended benefits. (Doc. #87-5, pp. 5-6, 17-

25.) A reasonable person can ascertain that: (1) the intended

benefits are the monetary disability payments that Dr. Allen was

to receive pursuant to the Group Policy in the event he could no

longer perform his job as a diagnostic radiologist (Doc. #87-5,

pp. 5-6); (2) the intended beneficiaries are “partners of Prospect

Hill Radiology,” which in this case would include Dr. Allen (Id.,

p. 5); (3) the financing was to come from the employee, since the

Group Policy stated that “You pay the cost of your coverage,”12

while it was responsibility of the policyholder (Prospect Hill) to

deduct and remit premium payments to the insurer (Id., pp. 5, 10);

and (4) receiving benefits was to be accomplished by following the

procedures set forth in the Group Policy. (Id., p. 8.)

(c) Establishment or Maintenance of the Plan By

Prospect Hill

Prospect Hill established a fund to pay benefits by applying

for and selecting the Unum plan as its long-term disability plan.

The Group Policy was limited to the “partners” in active

12 The group Policy defines “you” as “an employee who is

eligible for Unum coverage.” (Doc. #87-5, p. 34.)

employment, working at least 30 hours per week (Doc. #87-5, pp. 3,

5), thus making the Unum plan a benefit closely tied to the

employer-employee relationship. See, e.g., Moorman, 464 F.3d at

1270 (employer established a fund to pay benefits by selecting a

sole long-term benefits plan and limiting eligibility to certain

employees); Anderson, 369 F.3d at 1265 (employer established a

fund to pay benefits by selecting the plan and limiting eligibility

to certain employees); Searles v. First Fortis Life Ins. Co., 98

F. Supp. 2d 456, 460 (S.D.N.Y. 2000) (ERISA plan established by

the employer where, among other actions, purchased a group policy

and chose the eligibility requirements for participation).

Prospect Hill is directly involved in the benefit payment

process. The Group Policy states that Prospect Hill would provide

claim forms to employees who wanted to make a claim, and that

Prospect Hill had to complete its portion of the claim form for an

employee to initiate a claim for benefits. Prospect Hill would

thus assist its employees to actually receive the disability

benefits. (Doc. #87-5, p. 8.) See Moorman, 464 F.3d at 1270 (where

employer did not actually pay benefits, its direct involvement in

the payment process (i.e., maintaining a supply of claim forms and

facilitating the payment of benefits) satisfied the fourth Butero

factor); Anderson, 369 F.3d at 1266 (employer was directly involved

in the payment of benefits by filling out a section of the claim

form, verifying eligible employees, and sending the form to the

insurer which demonstrated, in part, that the employer established

a plan).

The Court finds that an objectively reasonable partner would

conclude that Prospect Hill had established a plan since Prospect

Hill entered into a contract with First Unum for the sole purpose

of providing long term disability benefits, was named as the Plan

administrator, and had the sole power to change, amend or terminate

the plan. Prospect Hill clearly intended to provide a benefits

plan. “[T]he policy itself expresses [the employer’s] intent to

provide benefits on a regular and long-term basis,” Anderson, 369,

F.3d at 1266 (quotations omitted). Prospect Hill had continuing

obligations under the plan, and for the plan to remain viable,

Prospect Hill had to remit all premiums to First Unum, inform the

insurer as to each employee’s eligibility or lack thereof, and

complete portions of the claim forms. (Doc. #87-5, pp. 10, 36.)

The Group Policy between Prospect Hill and First Unum, as

well as the certificate of coverage that was in place at the time

of Dr. Allen’s disability, provide that the Policy “is governed by

the laws of the governing jurisdiction and to the extent applicable

by the Employee Retirement Income Security of 1974 (ERISA) and any

amendments.” (Doc. #87-5, pp. 3, 13.) Plaintiff argues that this

qualifying language squarely draws into question ERISA

applicability (Doc. #155, p. 21), while Defendants argue it is

indicative of ERISA preemption. (Doc. #145, p. 23.) The policy

in Anderson contained the exact same language, from which the

Eleventh Circuit concluded “clearly state that ERISA governed the

policy.” Anderson, 369 F.3d at 1261, 1266. Accordingly, the Court

finds that Defendants have established that Prospect Hill

“established” and “maintained” a plan.

(d) Purpose of Providing Specific Types of Benefits

A plan is an ERISA plan only to the extent that it is

maintained for the purpose of providing the types of benefits that

Congress decided to protect when enacting ERISA. See Kemp v. IBM,

109 F.3d 708, 713 (11th Cir. 1997). The evidence shows, and the

parties agree, that Dr. Allen’s Group Policy concerned disability

benefits in the event he could no longer perform his job as a

diagnostic radiologist. (Doc. #87-5; Doc. #145, ¶ 16; Doc. #149-

1, ¶ 58.) Consequently, the Court finds the undisputed facts

demonstrate that disability benefits provided by Dr. Allen’s Group

Policy are the type of benefits protected by ERISA.

(e) To Participants or Their Beneficiaries

To qualify as an ERISA plan, the plan "must provide benefits

to at least one employee." 29 C.F.R. § 2510.3-3(b). ERISA defines

"participant" as “any employee or former employee of an employer

. . . who is or may become eligible to receive a benefit of any

type from an employee benefit plan which covers employees of such

employer . . . or whose beneficiaries may become eligible to

receive any such benefit.” 29 U.S.C. § 1002(7). Dr. Allen asserts

that the Group Policy does not fall under ERISA’s domain because

the Group Policy states it applies to the “Partners of Prospect

Hill Radiology.” This demonstrates, Dr. Allen argues, that he is

in fact a partner of Prospect Hill, not an employee. (Doc. #87-5,

p. 5; Doc. #145, p. 8.)

Defendants argue that Plaintiff is an “employee” for ERISA

purposes because Prospect Hill Radiology Group, P.C. is a

professional corporation, meaning it has shareholders, not

partners. (Doc. #145, pp. 17-18.) Defendants contend that while

partners who wholly own a business are not normally “employees” of

that business for ERISA purposes, the same is not true of multiple

shareholders who wholly own a corporation. (Id., citing Provident

Life and Acc. Ins. Co. v. Sharpless, 364 F.3d 634, 639 (5th Cir.

2004)(holding that shareholders in a multiple-shareholder

corporation are employees under ERISA)).

As discussed in connection with the Individual Policies, the

Court is not persuaded by Plaintiff’s argument. The Group Policy

refers to those covered “partners” as “employees,” who arguably

would be within the reach of ERISA (Doc. #87-5, p. 5), and

Plaintiff presents no evidence to show Prospect Hill is a legal

partnership. Dr. Allen avers in his declaration that on January

1, 1989, he became a “shareholder of Prospect Hill” and “received

25 shares in the corporation.” (Doc. #149-1, ¶ 13.) Dr. Allen’s

declaration also comports with New York State records which

demonstrate that Prospect Hill is designated as a professional

corporation (Doc. #147-17, pp. 2-3), not a partnership, and as

such, has shareholders, not literally partners. See Sharpless, 364

F.3d at 639. The undisputed evidence thus shows that Plaintiff is

a shareholder of Prospect Hill.

Plaintiff also argues that he is not a “participant” or

“employee” under ERISA because he is a “working owner” of Prospect

Hill. (Doc. #149, p. 8; Doc. #155, p. 19.) In Raymond B. Yates,

M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 21 (2004),

the Court explained that “ERISA’s text contains multiple

indications that Congress intended working owners to qualify as

plan participants.” Id. The Yates Court further explained that

“a working owner may have dual status, i.e., he can be an employee

entitled to participate in a plan and, at the same time, the

employer . . . who established the plan.” Yates, 541 U.S. at 15.

It is undisputed that Prospect Hill is a professional

corporation in which Dr. Allen is a shareholder, along with five

other physicians identified by Dr. Allen as shareholders. (Docs.

##69-2; 69-3; 69-4; 69-6; 149-1, ¶ 44.) While these physicians are

shareholders of Prospect Hill, 29 C.F.R. § 2510.3-3(c)(1) does not

exclude shareholders from the ERISA definition of “employee.”

Under ERISA, a plan covering only corporate shareholders, as the

Group Policy, is exempt from ERISA only if the sole shareholder

wholly owns the company and coverage is limited to the sole

shareholder and a spouse, while plans that cover working owners

and their non-owner employees are within ERISA’s reach. See Yates,

541 U.S. at 21. Indeed, in Advisory Opinion 76-67, the U.S.

Department of Labor explained that a plan covering only corporate

shareholders was exempt from ERISA only if the company was wholly

owned by one shareholder or by the shareholder and his or her

spouse. See DOL Advisory Opinion 76-67, 1976 ERISA Lexis 58 (May

21, 1976)(emphasis added).

Although Dr. Allen argues the DOL advisory opinion is not

applicable, the Court disagrees. See, e.g., Sharpless, 364 F.3d at

639;13 Silverman, 2015 U.S. Dist. LEXIS 99714, at *8; Sullivan v.

Paul Revere Life Ins. Co., No. 5:09-cv-1015-JEO, 2010 U.S. Dist.

13 Plaintiff argues that the Fifth Circuit in Sharpless totally

misconstrued the holding by the Supreme Court in Yates, 541 U.S.

at 6, by blanketly ruling that “shareholders in a multiple-

shareholder corporation . . . are employees under ERISA.”

Sharpless, 364 F. 3d 369. (Doc. #149, p. 11 n.7.) Plaintiff asserts

the Fifth Circuit omitted the critical factor that in order for

shareholders to be deemed employees under a group plan, the plan

must also cover a non-shareholder employee. (Id.) Defendants’

respond that Plaintiff has misapprehended Yates in that unlike

Sharpless and the present case, Yates considered whether a “sole

shareholder” of a professional corporation was an employee for

ERISA purposes. (Doc. #153, p. 5.) The Court agrees. The Yates

court held that while Congress “intended working owners to qualify

as plan participants,” plans covering “sole owners or partners and

their spouses . . . fall outside [ERISA’s] domain.” Yates, 541

U.S. 16, 21. Sharpless not only properly considered Yates, but it

also followed the DOL’s advisory opinion which clearly stated that

a plan covering corporate shareholders is “exempt from ERISA only

if the company [is] wholly owned by one shareholder.” Id. at 638-

39 (citing DOL Advisory Opinion 76-67, 1976 ERISA LEXIS 58 (May

21, 1976)).

LEXIS 144444, at *28 (N.D. Ala. May 28, 2010); Pope v. Wash. Nat'l

Ins. Co., No. 4:05-cv-01412-HGD, 2005 U.S. Dist. LEXIS 58090, at

*11-12 (N.D. Ala. Dec. 15, 2005).

Drawing all reasonable inferences in favor of Plaintiff, the

Court concludes that “shareholders in a multiple-shareholder

corporation, such as [Dr. Allen], are employees under ERISA.”

Sharpless, 364 F.3d at 639. Accordingly, Plaintiff’s Group Policy

is part of an ERISA plan that was established and maintained by

Prospect Hill for the purpose of providing disability benefits to

its employee Dr. Allen. See Garcon, 779 F. App'x at 597.

In sum, the Court finds that Defendants have established that

the breach of contract claim for violation of the Group Policy is

defensively preempted by ERISA.

V.

Both sides seek summary judgment on the merits of both Counts

1 and 2. Dr. Allen argues that he is entitled to judgment on the

breach of contract claim in Count 1, while Defendants argue they

are entitled to judgment on the ERISA-preempted claim in Count 2.

The Court finds that neither party is correct.

A. Breach of Contract – Count 1

Dr. Allen asserts that because there is an absence of evidence

that he is not disabled, he therefore is entitled to summary

judgment that Defendants breached the Policies’ terms when they

terminated his disability benefits. (Doc. #148, p. 2.) But the

record contains a host of disputed issues of material facts which

preclude granting summary judgment as to the Individual Policies.

(1) Choice Of Law

As a threshold matter, Dr. Allen asserts that (mostly) New

York law governs his breach of contract claim as to the Individual

Policies since they were executed in New York. For purposes of

this Motion, Defendants do not disagree. (Doc. #154, p. 2.)

This case was filed in federal court on the basis of diversity

jurisdiction. (Doc. #87, pp. 1-2.) “[A] federal court sitting in

diversity appl[ies] the substantive law of the forum State, absent

a federal statutory or constitutional directive to the contrary.”

Salve Regina College v. Russell, 499 U.S. 225, 226 (1991). There

is no federal statutory or constitution directive to the contrary

applicable to this case, so the Court determines the applicable

substantive state law using the choice-of-law rules of the forum

state. Travelers Prop. Cas. Co. of Am. v. Moore, 763 F.3d 1265,

1270 (11th Cir. 2014). Therefore, the Court looks to Florida’s

choice-of-law rules to determine which state’s substantive law

will apply. Frank Briscoe Co. v. Ga. Sprinkler Co., 713 F.2d 1500,

1503 (11th Cir. 1983).

In the absence of a contractual provision specifying the

governing law or a public policy exception, “Florida follows the

‘lex loci contractus’ choice-of-law rule, which provides that the

law of the jurisdiction where the contract was executed governs

the rights and liabilities of the parties in determining an issue

of insurance coverage." Rando v. Gov't Emps. Ins. Co., 556 F.3d

1173, 1176 (11th Cir. 2009) (quoting State Farm Mut. Auto. Ins.

Co. v. Roach, 945 So. 2d 1160, 1163 (Fla. 2006)(internal quotations

omitted)). See also Am. United Life Ins. Co. v. Martinez, 480

F.3d 1043, 1059 (11th Cir. 2007)(“Absent a specific contractual

provision to the contrary, Florida conflict of law rules dictate

that courts should apply lex loci contractus, or the law of the

state where the contract was made, to questions of contracts (other

than those that deal with contracts for the performance of

services).”); Shaps v. Provident Life & Accident Ins. Co., 244

F.3d 876, 881 (11th Cir. 2001) (same). "Lex loci contractus is, in

general, an 'inflexible,' bright-line rule that exists 'to ensure

stability in contract arrangements.'" Rando, 556 F.3d at 1176

(quoting Roach, 945 So. 2d at 1164). There is one general

exception to the lex loci contractus doctrine: a Florida court

will depart from the doctrine "for the purpose of necessary

protection of [Florida] citizens [and to enforce] some paramount

rule of public policy.". U.S. Fid. & Guar. Co. v. Liberty Surplus

Ins. Corp., 550 F.3d 1031, 1033 (11th Cir. 2008)(quoting Roach,

945 So. 2d at 1164.)

The Individual Policies do not contain a choice of law

provision, the contracts are not for the performance of services,

and there is not a paramount public policy that warrants departure

from the lex loci contractus doctrine in this case. The undisputed

evidence demonstrates that Dr. Allen applied for and executed the

Individual Policies while residing in New York and they were

delivered to him in New York. (Doc. #43-1, ¶¶ 4, 10, 15.) Thus,

under the Florida lex loci contractus rule, the substantive law of

New York applies to the Individual Policies. See Shaps, 244 F.3d

at 881 (under lex loci contractus, New York substantive law applied

to interpretation and application of a disability insurance

contract executed in New York when a breach of contract claim was

filed in Florida.)

Under New York substantive law, a plaintiff must establish

four elements to sustain a breach of contract claim by a

preponderance of the evidence: "(1) an agreement, (2) adequate

performance by the plaintiff, (3) breach by the defendant, and (4)

damages." Leeber Realty LLC v. Trustco Bank, 316 F. Supp. 3d 594,

609 (S.D.N.Y. 2018). Dr. Allen correctly maintains that the

disputes in this action focus on the elements of “performance of

Plaintiff” and “breach of contract by Defendant” elements of the

cause of action. (Doc. #148, p. 15.)

Dr. Allen argues, however, that one aspect of Florida law

still governs the breach of contract claim. He states that under

Florida law where the insurer seeks to avoid the continued payment

of benefits to the insured, “the burden is on the insurer to

establish by the preponderance of the evidence that the condition

of the insured is such that he no longer comes within the purview

of the policy in this regard.” (Doc. #148, pp. 15-16, citing Mut.

Life Ins. Co. of N.Y. v. Ewing, 10 So. 2d 316, 318 (Fla. 1942)).

The Florida Supreme Court stated in Ewing:

If and when an insured makes his initial claim

for indemnity under a policy such as these,

the burden of proof is on the insured to show

that he comes within the purview of the terms

of the policy; that he is totally and

permanently disabled. If he has been entitled

to the benefits of the policy and receives

such and thereafter, while receiving such

benefits, so recovers as to no longer be

entitled to the benefits and thereafter, for

any reason, shall again become entitled to the

benefits, the burden is again on him to

establish that second or subsequent

disability, exists the same as it was to

establish the first. The rule as to such cases

is too well settled to require citation of

authorities.

Where, however, it is established, as in this

case, that a permanent and total disability

existed within the purview of the policy and

the insurer seeks relief from continuation of

payment of indemnities theretofore paid under

and within the purview of the policy the

burden is on the insurer to establish by the

preponderance of the evidence that the

condition of the insured is such that he no

longer comes within the purview of the policy

in this regard.

Ewing, 10 So. 2d at 317–18 (citations omitted).

Dr. Allen asserts that the burden-shifting is a procedural

issue to which Florida law applies. Shaps v. Provident Life &

Accident Ins. Co., 826 So. 2d 250, 254-55 (Fla. 2002)(“in Florida

the burden of proof is a procedural issue for conflict-of-laws

purposes,” not a matter of substantive law.) Dr. Allen therefore

argues that Defendants must demonstrate, by a greater weight of

the evidence14, that Dr. Allen no longer has floaters and that his

disability has ceased. (Doc. #148, p. 16.)

Dr. Allen is correct that under Florida law the burden of

proof is a procedural issue. Shaps, 826 So. 2d at 254-55. Thus,

“where the insurer begins to pay total disability benefits to an

insured but later ceases to pay benefits based on a belief that

the insured is not disabled, . . . the insurer [has] to establish

by the preponderance of the evidence that the condition of the

insured is such that he no longer comes within the purview of the

policy in this regard." Shaps v. Provident Life & Accident Ins.

Co., 317 F.3d 1326, 1330 (11th Cir. 2003)(citing Fruchter v. Aetna

Life Ins. Co., 266 So. 2d 61 (Fla. 3d Dist. Ct. App. 1972), cert.

discharged, 283 So. 2d 36 (Fla. 1973)(quotations omitted)).

Therefore, Defendants have the burden of establishing that Dr.

Allen’s visual condition is no longer disabling within the meaning

14 The Florida greater weight of the evidence standard is

equivalent to the preponderance standard. Hall v. State, 212 So.

3d 1001, 1037 n.12 (Fla. 2017) (stating that “our case law has

stated this burden in terms of the greater weight of the evidence

or in terms of a preponderance of the evidence which are

synonymous.”). There does not appear to be any conflict between

Florida, New York, or federal law regarding the burden of proof –

in the context of this case, all three use a preponderance of the

evidence.

of the Individual Policies. This does not appear to be disputed.

(Doc. #179, p. 19, §10B.)

Dr. Allen is incorrect in arguing that the presence of

floaters alone constitutes a disability. Defendants argue that the

central question is not whether Dr. Allen did or did not experience

floaters at the time benefits were terminated, but rather whether

the floaters then rendered him incapable of working as a

radiologist. Defendants assert such a determination is factual

issue that is very much in dispute, thus precluding summary

judgment. (Doc. #154, p. 4.) As discussed below, the Court agrees.

(2) Conflicting Evidence

The Court finds that there are numerous genuine issues of

material facts which preclude summary judgment as to the Individual

Policies. In particular, the medical opinion evidence of record

is in conflict as to the severity of Dr. Allen’s condition, whether

Plaintiff’s condition prevented him from performing the

substantial or material duties of a diagnostic radiologist, and

whether Dr. Allen failed to take reasonable steps to mitigate the

severity of his condition. (Doc. #148-2, p. 331; Doc. #148-4, pp.

203, 206, 220-23; Doc. #148-5, pp. 161-63, 461, 463-66, 491); see,

e.g., Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73,

79 (2d Cir. 2002) (quoting Hudson Riverkeeper Fund v. Atlantic

Richfield Co., 138 F. Supp. 2d 482, 488 (S.D.N.Y. 2001))(“Where,

as here, there are conflicting expert reports presented, courts

are wary of granting summary judgment."); Redd v. N.Y. State Div.

of Parole, 678 F.3d 166, 174 (2d Cir. 2012) (“Credibility

determinations, the weighing of the evidence, and the drawing of

legitimate inferences from the facts are jury functions, not those

of a judge.” The court's role in deciding a motion for summary

judgment ‘is to identify factual issues, not to resolve them.’")

(internal citations and quotations omitted). Accordingly, whether

Plaintiff is totally disabled according to the terms of his

Individual Policies can only be characterized as a question of

fact which is properly considered by a jury. See Hippe v. Life

Ins. Co. of N. Am., No. 02-CV-0086 (ILG), 2003 U.S. Dist. LEXIS

27374, at *19 (E.D.N.Y. July 31, 2003); see also Stewart v. Penn

Mut. Life Ins. Co., 97 Civ. 5779 (AKH), 1999 U.S. Dist. LEXIS

20025, at *4 (S.D.N.Y. Dec. 29, 1999)(“Under New York law, the law

governing this agreement, it is generally a question for the jury

to determine whether a policy holder is totally disabled within

the meaning of the policy provision . . . .") (internal quotations

omitted).

B. ERISA Claim – Count 2

Defendants argue that they are entitled to summary judgment

as to Count 2 because the administrative record provides reasonable

grounds for the termination of Dr. Allen’s disability benefits

under his Group Policy, and therefore was not arbitrary or

capricious. (Doc. #145, p. 2; Doc. #159, p. 7.) The Court finds

that it would be premature to consider a summary judgment on the

ERISA-governed count.

While Count 2 will be dismissed without prejudice as

defensively preempted by ERISA, Dr. Allen will be granted leave to

file an amended complaint in which he states his claim(s) as

violations of ERISA. Since such a claim is determined on a review

of the administrative record, the Court will bifurcate the ERISA

claim (Count 2) from the state-law breach of contract claim (Count

1). Defendants will be required to submit an administrative record,

subject to any challenges as may be appropriate.15 The Court will

enter a separate scheduling order as to the ERISA claim(s).

Accordingly, Defendants’ motion for summary judgment as to Count

2 is denied. Defendants’ Motion for Summary Judgment is also denied

to the extent it asserts that Count 1 is preempted by ERISA.

VI.

Lastly, Plaintiff moves for summary judgment on Defendants’

First, Fourth and Fifth Affirmative Defenses. (Doc. #105, pp. 25-

15 ERISA claims for benefits are to be decided after

consideration of a full administrative record. See Williamson v.

Travelport, LP, 953 F.3d 1278, 1289 (11th Cir. 2020); Glazer v.

Reliance Standard Life Ins. Co., 524 F.3d 1241, 1246 (11th Cir.

2008). A plan administrator "has the obligation to identify the

evidence in the administrative record" and a claimant must have "a

reasonable opportunity to contest whether that record is

complete." Williamson, 953 F.3d at 1289 (citation omitted); Melech

v. Life Ins. Co. of N. Am., 739 F.3d 663 (11th Cir. 2014).

28.) Plaintiff’s Motion for Summary Judgment on Defendants’ First,

Fourth and Fifth Affirmative Defenses (Doc. #149) is: (1) granted

as to the portion of the First Affirmative Defense which asserts

that Count 1 is preempted by ERISA; (2) granted as to the portion

of the Fourth Affirmative Defense which asserts that Dr. Allen

failed to exhaust available ERISA administrative remedies as to

Count 1; and (3) granted as to the portion of the Fifth Affirmative

Defense which asserts that Count 1 of the SAC fails to state a

claim upon which relief may be granted. The motion is otherwise

denied.

Accordingly, it is now

ORDERED:

1. Defendants’ Motion for Summary Judgment on Counts 1 and 2 of

the Second Amended Complaint (Doc. #145) is GRANTED in part

and DENIED in part.

a. Defendants’ Motion for Summary Judgment as to Count 1

is DENIED as it is not preempted by ERISA.

b. Defendants’ Motion for Summary Judgment as to Count 2

is GRANTED as it is preempted by ERISA.

c. Count 2 of the Second Amended Complaint is dismissed

without prejudice.

2. Plaintiff’s Motion for Summary Judgment as to Counts 1 and 2

of the Second Amended Complaint (Doc. #148) is DENIED.

3. Plaintiff’s Motion for Summary Judgment on Defendants’ First,

Fourth, and Fifth Affirmative Defenses (Doc. #149) is GRANTED

in part and DENIED in part.

a. Plaintiff’s Motion for Summary Judgment on

Defendants’ First Affirmative Defense as to Count 1

is GRANTED, but is otherwise DENIED as to this

defense.

b. Plaintiff’s Motion for Summary Judgment on

Defendants’ Fourth Affirmative Defense as to Count 1

is GRANTED, but is otherwise DENIED as to this

defense.

c. Plaintiff’s Motion for Summary Judgment on

Defendants’ Fifth Affirmative Defense as to Count 1

is GRANTED, but is otherwise DENIED as to this

defense.

4. Plaintiff may file a Third Amended Complaint within FOURTEEN

(14) DAYS of this Opinion and Order in which he states only

his Group Policy claim as violation(s) of ERISA.

5. The Court bifurcates the proceedings on Count 1 of the SAC

and any Third Amended Complaint filed. The Court will issue

a separate Case Management and Scheduling Order as to Third

Amended Complaint, if filed. The Court will also issue a

separate Order as to the forthcoming jury trial in regard to

Count 1 of the SAC.

DONE AND ORDERED at Fort Myers, Florida, this 17th day of

February, 2022,

Z tkicob

JQH E. STEELE

SHMIOR UNITED STATES DISTRICT JUDGE

Copies:

Counsel of record