Desrosiers v. Hartford Life and Accident Insur.Co.

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Desrosiers v. Hartford Life and Accident Insur.Co., 2005 U.S.Dist.LEXIS 1397 (D.R.I. 1/27/2005)( Issue: ERISA Preemption-Who's Covered) . The plaintiff, an employee of the United States Trustee Program of the United States Bankruptcy Court, purchased disability coverage from Hartford through an entity known as the Department of Justice Recreation Association which offered benefits under a program entitled the Federal Employee Group Long Term Disability plan. After suffering three head injuries resulting in persistent dizziness, headaches, and back pain, plaintiff made a claim for benefits under that policy. When the claim was denied, Desrosiers sued in state court; however, the insurer removed the case alleging ERISA preemption.

The court ruled that the Department of Justice Recreation Association was an "employee organization" based on several ERISA Opinion letters issued by the Department of Labor which the court found persuasive - ERISA Op.Letters 89-20A, 95-25A. Because the DJRA was considered an employee organization, the plan was deemed to constitute an employee welfare benefit plan, which can be offered either by an employer or employee association. The court also rejected plaintiff's claim that there was no ERISA preemption because it falls within the safe harbor provision of 29 C.F.R. §2510.3-1(j). Although participation was voluntary and no contributions to the plan were made by the DJRA, the court found that DJRA endorsed the plan (citing ERISA Op.Letter 94-26A). Accordingly, ERISA was found to have preempted the plaintiff's claims brought under state law, including a claim for unfair claim processing under Rhode Island Insurance law.

Discussion: The decision reached by the court is questionable. In Edwards v. Prudential, 2002 U.S.Dist.LEXIS 13152 (S.D.Fla. 7/16/2002)( August 2002 ), the court ruled that because insurance was provided through an association, it was not governed by ERISA. This policy is available only to federal employees; and while it was endorsed by DJRA, it was not endorsed by the federal government. If Desrosiers had been an employee of the DJRA, this result would be easier to accept; however, this case appears to stretch the limits of ERISA preemption.

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