ERISA makes clear that it governs “any plan, fund, or program … established … by an employer … for the purpose of providing [health benefits] for its participants.” 29 U.S.C. § 1002(1). Although most employee benefit plans that provide benefits to employees are governed by ERISA, some arrangements are not. The Northern District of Illinois’ recent decision in Till v. National General Accident & Health Insurance Co., No. 21-1256 (N.D. Ill. Mar. 8, 2022), provides some guidance into what kinds of arrangements may not constitute an ERISA plan.

The plaintiff in Till visited a hospital for medical treatment, and the following day, purchased a health insurance policy issued by the defendant. The policy was purchased through an association and provided coverage only to the plaintiff. The day after purchasing the policy, the plaintiff returned to the hospital and was treated for a pulmonary embolism. The defendant denied coverage, citing the policy’s pre-existing condition exclusion. The plaintiff then filed suit, claiming the denial violated ERISA. According to the plaintiff, the policy qualified as an ERISA plan because he bought it through an association of employers.

The defendant moved to dismiss, arguing the policy was not governed by ERISA. The court agreed, finding that ERISA governs plans arising from employment relationships, and that one cannot have an employment relationship with oneself. In other words, ERISA’s definitions of employer and employee contemplate separate parties. Here, the plaintiff had not alleged that his business had any employees, and the policy provided coverage only to plaintiff as an individual.

In addition, the court found that the plaintiff had not plausibly alleged that the association through which he had purchased his policy satisfied ERISA’s definition of an “association of employers.” The court stated that, under the relevant regulation, for an association to fit within the definition, it must be established by a group of employers to provide benefits to employees, have at least one substantial business purpose unrelated to the provision of benefits, have employer members that control the plan, and meet the various documentation requirements for plans established by the Department of Labor. The court found that plaintiff did not plausibly allege that the association met these requirements because the plaintiff alleged no facts about the association. For this additional reason, the policy was not governed by ERISA and the case was dismissed.

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Photo of James C. Goodfellow, Jr. James C. Goodfellow, Jr.

James C. Goodfellow, Jr. is of counsel in the Chicago, Illinois, office of Jackson Lewis P.C., where he helps employers reduce risk by giving advice on difficult issues prior to any disputes with the goal of avoiding any disputes. When litigation is unavoidable…

James C. Goodfellow, Jr. is of counsel in the Chicago, Illinois, office of Jackson Lewis P.C., where he helps employers reduce risk by giving advice on difficult issues prior to any disputes with the goal of avoiding any disputes. When litigation is unavoidable, Jim helps employers protect their assets and reputations by vigorously and efficiently defending them and their interests.

Jim represents employers, employee benefit plans, and fiduciaries in a broad range of employment and employee benefits litigation. He successfully has handled litigation from pre-lawsuit negotiation and evaluation through dispositive motions, as well as appeals before eight U.S. Circuit Courts of Appeal. In addition to his litigation experience, Jim is a skilled negotiator who has shepherded difficult cases through all forms of alternative dispute resolution.

From Fortune 500 companies to start-ups, to small, closely held corporations, Jim has assisted employers in matters involving ERISA, contract disputes, insurance coverage, unfair trade practice and consumer protection act claims, bad faith insurance claims handling, federal and state law race and gender discrimination claims, federal and state law age discrimination claims, federal and state law wage and hour claims, the FMLA, vicarious liability, RICO, OSHA, and the Delaware Limited Partnership Act. Jim also counsels clients on day-to-day employment law matters and assists them with revisions to employee policies and employment applications. Jim also has litigated unfair labor practice charges and contract interpretation matters.

Prior to entering private practice, Jim served as a law clerk to Justices Barry R. Schaller and David M. Borden, both retired, of the State of Connecticut Supreme Court.