# Nicholas v. Standard Insurance > Court of Appeals for the Sixth Circuit · October 9, 2002 · 48 F. App'x 557 URL: https://www.frixlaw.com/law-library/cases/7212510 ## Case - **Full name:** John P. NICHOLAS v. STANDARD INSURANCE CO. - **Court:** Court of Appeals for the Sixth Circuit - **Decided:** October 9, 2002 - **Citations:** 48 F. App'x 557 - **Precedential status:** Published - **Opinion:** Dissent by Haynes - **Judges:** Boggs, Haynes - **Cited by:** 9 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/7212510 ## How later opinions describe it (automated extraction) - discussing Thompson and stating that the applicable factors are the employer’s involvement in the creation and negotiation of terms of the policy, whether the employer was the plan administrator, and whether the summary plan description refers to ERISA - rejecting plaintiffs contention that plan was not an ERISA plan as applied to him because he did not receive a copy of the summary plan description ## Opinion text HAYNES, District Judge, Dissenting. HAYNES, District Judge. For several reasons, I dissent from the majority’s holding that the long-term disability policy offered to salaried employees of CTA satisfies the safe harbor provisions in ERISA regulations, 29 C.F.R. § 2510.3 (l)(j) as interpreted by this Court in Thompson v. American Home Assurance Co., 95 F.3d 429 (6th Cir.1996). In my view, the proof about this policy and its administration fails to establish the requisite substantial employer involvement to constitute the employer’s endorsement to remove the policy from ERISA’s safe harbor provisions. “[TJhe premise” of this regulation is “that the absence of employer involvement vitiates the necessity for the ERISA safe guards.” Johnson v. Watts Regulator Co., 63 F.3d 1129, 1133 (1st Cir. 1995). 1 In Thompson , we adopted the First Circuit’s analysis of ERISA’s safe harbor regulations in Johnson . Under Thompson and Johnson , the analysis begins with a review of the evidence from the employees’ perspective. “The court agrees, however, with the holding of the Johnson court that the relevant framework for determining the employer’s involvement in the creation or administration of the policy from employees’ point of view,” 95 F.3d at 436-37 , citing Johnson, 63 F.3d at 1134, 1137, n. 6 . The majority fails to reflect whether its analysis is from the employees’ perspective. As discussed below, when the policy is viewed from such a perspective, the material evidence is that CTA did not endorse this policy for ERISA coverage. The majority’s opinion reference to the vantage point of a reasonable person, Opinion at p. 564, applies on whether the policy is a plan under ERISA, but does not apply to whether the safe harbor provisions are satisfied. Our review here is de novo with all favorable inferences in plaintiffs favor as the opposing party. Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997). An employee would not perceive the policy to be endorsed by CTA for ERISA coverage. First, the policy at issue that is entitled “Voluntary Long-Term Disability for Salaried Employees” does not reflect CTA’s endorsement. To be sure, the “Group Long-Term Disability Insurance Policy” lists CTA as the “policy owner” and has a statement of ERISA rights. Yet, Michael V. Domulewicz, CTA’s chief financial officer, stated that: “[n]o employees of CTA Acoustics, Inc., were ever informed that the Standard Insurance Company long-term disability policy was an ERISA benefit ... The officers and executives of CTA Acoustics never considered the Standard Insurance Company long-term disability policy to be an ERISA benefit for its employees.” J.A. at 563, 564. J.A. at 995, 1000. The majority opinion notes that a summary plan discription of Standard’s policy was distributed to CTA employees. 2 The *567 distribution, however, was by Standard. Before the district court, Standard’s counsel explained that “we are reasonably expected to bring notices to the employees.” J.A. at 1126. Standard distributed another document entitled “ERISA Summary Plan Description Information” that refers to CTA as the “Plan Sponsor” and “Plan Administrator,” J.A. at 857, and provides a list of ERISA rights. J.A. at 871. Beverly Majors, an account service manager with Willis Corroon, conducted the initial enrollment of CTA employees at its Troy, Michigan facility. J.A. at 1373-74, 1626. Plaintiffs proof reflects that CTA did not distribute a Summary Plan Description (“SPD”), as required by 29 U.S.C. §§ 1024 and 1025, for covered ERISA plans. CTA’s salaried employee handbook and employee benefit program for salaried employees do not contain any reference to ERISA. According to James Tomaw, CTA’s director of human services, these booklets were the only information CTA provided to salaried employees about this policy. J.A. at 1327. While the majority correctly notes that Plaintiff is not suing for denial of information rights, when this fact of non-distribution is viewed from the employees’ perspective, an employer’s failure to issue a SPD may be reasonably construed by the employee to mean that the policy is not an ERISA plan. Moreover, consistent with the statement of CTA’s chief financial officer, the proof of CTA’s failure to issue a SPD also reflects its view that this policy is not an ERISA plan. For the claim process under this policy, the employee must submit “a written authorization for us [Standard] to obtain information and any other items we may reasonably require in support of your claim.” J.A. at 865. Standard actually collected the information on Plaintiffs claim.” J.A. at 893, 896, 950. Standard’s publication clearly provides that claims are to be filed on “our [Standard’s] forms.” J.A. at 865. For Plaintiffs benefit claims, Olive Bailey, CTA’s personnel administrator, informed Plaintiff: “After Standard Insurance reviews you claim, they will notify you of approval....” J.A. at 367. Mark Hesse, Standard’s “disability benefits analyst” wrote all of the letters to Plaintiff, informing him initially that: “it does not appear that you meet the group policies definition of disability” and requesting more information. J.A. at 952. See also J.A. at 978. On Standard’s stationary, Hesse also issued the final decision that: ‘We have completed a thorough review of the information in your claim file. Based upon this review and the terms and provisions of the CTA ... group policy, your claim must be denied.” J.A. at 989. To obtain a review of that decision, Hesse directed Plaintiff to file his request with “Standard Insurance Company, Group LTD Department.” J.A. at 994. Standard’s quality assurance unit denied relief on Plaintiffs request for a review. J.A. at 1003-04. As found by the majority, Plaintiff has satisfied all of the elements that this policy does not qualify for the ERISA safe harbor regulation, except for the issue of substantial involvement of the employer. As to CTA’s actual involvement with this policy, the majority writes that James Tomaw made four decisions: he selected the Standard policy; he lowered the benefit under the Standard policy; he restricted the long-term disability to salaried employees; and he negotiated the reduced rate without any participation by CTA. J.A. at 1495. *568 Tomaw testified that Eddie Riddlebarger, a Willis Coroon insurance agent, presented him with a proposal of several policies and then Tomaw made a decision as to which company would provide coverage. J.A. at 1334. In a word, Riddlebarger would obtain long-term disability policies from different companies. According to Tomaw, this list “was part of the package that Eddie Riddlebarger presented to me upon which he was making recommendations to me and I would make my decision on who to go with and who not to go with ... I don’t want you to think that I went to Eddie and said, Eddie, I want you to do this, this year and this way; that’s not what happened. He presented to me and I made my decisions from that.” J.A. at 1340-41 (emphasis added). Tomaw also stated that from his research of CTA business records, CTA does not have any notes or documents evidencing its discussions of various plans. J.A. at 75. As to the selection of the Standard policy for CTA employees, Tomaw never had direct negotiations with Standard: “Q: Did you ever negotiate with Standard Insurance Company on any term of coverage relating to the long-term disability plan. A: Never have.” J.A. at 1335. Tomaw described the typical manner of changes in the plan as follows: Q: Well, if you wanted to modify— each of the benefits that the company’s offering, you know, pays benefits under certain conditions. Your medical plan has certain things that are covered and certain things that are not covered. A: Yeah, to give you an example, this year we changed our short-term disability for our hourly workforce; we changed the term of coverage from 26 weeks to 52 weeks. Is that what you’re talking about? MR. ALAIMO: Yes. A: Yes. Yes. We did that this year. Q: And then you would direct Eddie to find an insurance company that’s going to provide a policy that handles that kind of term? A: Actually, Eddie suggested that to me, and I said, yeah, that sounds good, so then he came back to quote us for the price. Q: And the same would be true for the LTD policy, as well? A: If we wanted to change that term, yes, that’s the way we would handle it. J.A. at 1306-07. Tomaw stated in his affidavit as follows: “I was not involved in and have no personal knowledge regarding the decisions and/or negotiations between CTA and Standard Insurance Company, if any, concerning the Group LTD policy that may have preceded its issuance to CTA by Standard Insurance in 1993.” J.A. at 752. As another example of CTA’s lack of substantial involvement in the selection of policy terms, when there was a change in insurance companies in 1996, Riddlebarger testified “there was a reason to revise the Life of Georgia application for long-term disability and I had made some changes, ..., and sent it to Jim Tomaw and CTA Acoustics and asked him to sign the revised application and send it back to me.” J.A. at 1532 (emphasis added). As to whether CTA made disability determinations and authorized Plaintiffs receipt of short-term disability benefits pending a decision on long-term benefit, “Standard, not CTA, would make all of the decisions to either grant or deny long-term disability benefits ... [and] short-term disability benefits.” J.A. at 753. CTA never objected to any benefits decision by Standard. Id. Further, Tomaw stated that “[s]ince January 1, 1994, CTA has not made any of the decisions about whether *569 to grant or deny claim for disability benefits that were submitted by employees pursuant to the group LTD policy issued by Standard Insurance to CTA in 1993.” J.A. at 754. As to the lowering of the benefits, To-maw testified that Eddie Riddlebarger, Willis Coroonr’s insurance agent, actually undertook the effort to secure the reduced benefits: A: I actually don’t recall that they were specifically discussed with Eddie. I looked at this, read it, understood it. But that was it.” Q: But you didn’t direct Mr. Riddlebarger to try to find a policy with different terms in it. A: That’s correct.” J.A. at 1258. For the selection of the long-term disability terms, Tomaw testified that he did not personally review those terms. Q: By signing this, you were agreeing that the options that had been selected there were the ones that you wanted for your plan for LTD? A: It’s an item on this form that was given to me by Eddie Riddlebarger, mailed to me by Eddie Riddlebarger; I signed it, returned it to him. I can tell you that nothing on this form was discussed other than the two-year rate guarantee and the amount of insurance— the only things I recall discussing with him. When I referred to this as a boilerplate policy— this is an example of what I call boilerplate; these are options that you could, take or not take. I’ve never seen them; I’ve never discussed them, don’t know anything about them. Q: But you understood they were options that if you wanted to find out about, you could have? A: As I look at this form now, I understand that. I did not even look at that and consider it, cause it was never discussed. J.A. at 1267 (emphasis added). As to the lowering of rates under the policy, the evidence is that Riddlebarger, the Willis Corroon agent, negotiated those terms. Q: So you were able to negotiate a lower rate than they originally proposed. A: Yes. Q: Did you do that after any discussion with CTA. A: No. J.A. at 1495. In my opinion, this testimony establishes that Standard was really making the decisions for the terms of the policy that CTA simply ratified in reliance upon Riddlebarger’s judgment. Riddlebarger was an agent of Willis Corroon. Standard paid Riddlebarger’s commission and CTA did not have any written agreement with Riddlebarger. J.A. at 1539, 1542. The evidence illustrates that CTA’s role in the administration of the plan was primarily ministerial. CTA collected employee premiums for this policy, but remitted those premiums to Standard. CTA also maintained a list of the insured employees and assisted Standard in securing any necessary documentation. Yet, CTA employees paid all of the premiums and employee participation in this policy was voluntary. In none of these publications about the availability of this policy did CTA recommend that its employees subscribed to this policy. Any employee would realistically look only to Standard for answers and decisions about this policy. Viewing this evidence from the employees’ perspective and in a light most favorable to the Plaintiff, CTA did not have *570 substantial involvement with this long-term benefits policy. CTA’s role in selecting Standard from several insurers who were identified by Riddlebarger is merely a “simple connection” that does not serve to compromise CTA’s “employer neutrality” toward Standard’s policy. Riddlebarger actually negotiated the policy terms and rates with Standard and CTA simply signed off on Riddlebarger’s recommendation, trusting his judgment. CTA decided that only salaried employees will be eligibility, but thereafter, Standard administered the policy and made all coverage decisions initially and upon a request for further review. CTA does not have an active role in administering this policy. In Johnson , the employer selected the group policy that was offered to its employees and the insurer drafted its terms, but was nonetheless held to have insufficient involvement thereby qualifying under the ERISA safe harbor. 63 F.3d at 1131, 1135 . To satisfy the substantial involvement element of ERISA’s safe harbor regulation, more is required than an employer’s simply choosing one of several insurance policy plans to offer to its employers. In my view, these facts are strikingly similar to Johnson where the employer selected the insurer, recommended involvement in the plan, distributed enrollment cards, completed portions of claim forms, and maintained a list of eligible employees. 63 F.3d at 1136 . In Johnson , as here: “[a]s long as the employer merely advises employees of the availability of group insurance, accepts payroll deductions, passes them on to the insurer, and performs other ministerial tasks that assist the insurer in publicizing the program, it will not be deemed to have endorsed the program under 28 C.F.R. § 2510.3-1 (j).... It is only when an employer purposes to do more, and takes substantial steps in that direction, that it offends the ideal of employer neutrality and brings ERISA into the picture.” Johnson, 63 F.3d at 1133 . In Thompson , we found the First Circuit’s approach in Johnson is directly in keeping with Congress’ intention in enacting ERISA.” 95 F.3d at 436 . “In some cases, the evidence will point unerringly in one direction so that a rational factfinder can reach but one conclusion. In those cases, endorsement is a question of law....” Johnson, 63 F.3d at 1135, n. 3 . In my view, the facts here are strikingly similar to the facts in Johnson and warrant the conclusion that Standard’s policy does not qualify as an ERISA plan. I would reverse the district court’s judgment and direct the district court to remand the action to state court. . Whether ERISA applies, “can make a pronounced difference” because "preemption may cause potential state-law remedies to vanish ... or may change the standard of review ... or may effect the admissibility of evidence ... or may determine whether a jury trial is available.” Johnson, 63 F.3d at 1131 (citations omitted). . In footnote 2, the majority states that the full summary plan description which is reprinted at JA 344-65 was distributed to CTA employees. The summary description plan *567 cited by the majority was written on Standard Insurance letterhead, was created, published and distributed solely by Standard. The ERISA references in this document are Standard’s, not CTA's. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/7212510. Public record. Not legal advice.