# Allen v. First UNUM Life Insurance Company

> District Court, M.D. Florida · February 17, 2022

URL: https://www.frixlaw.com/law-library/cases/10109493

## Case

- **Court:** District Court, M.D. Florida
- **Decided:** February 17, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## How later opinions describe it (automated extraction)

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## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10109493. Public record. Not legal advice.