LaRocque v. Life Insurance Company of North America

Background

Life Insurance Company of North America (LINA) denied Trevor LaRocque’s claim for long-term disability benefits. LaRocque asserted state-law claims for breach of contract and breach of the implied covenant of good faith and fair dealing. He also asserted, in the alternative, a claim for benefits under the Employee Retirement Income Security Act of 1974 (ERISA).

LaRocque is a partner and equity owner at PricewaterhouseCoopers LLP (PwC). He received long-term disability coverage under PwC’s Partner Long Term Disability Plan, an insurance policy issued by LINA. The policy provided coverage only to U.S. firm partners and principals. PwC also maintained a separate employee benefits plan that included disability benefits for employees.

LINA moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. LINA argued that ERISA preempted LaRocque’s state-law claims.

Analysis

The parties agreed that the state-law claims would be preempted if the partner disability policy was an employee benefit plan governed by ERISA. They also agreed that the policy was not governed by ERISA standing alone because it covered only PwC owners, and that PwC’s broader employee benefits plan was an ERISA plan.

The court therefore addressed whether the policy was a separate plan or a component of PwC’s broader ERISA plan. Two 2022 and 2023 amendment documents described the partner disability policy as a “component of” PwC’s employee welfare benefit plan. Although the parties disagreed about what the documents meant, the court concluded that they showed PwC intended, by at least 2022, to integrate the policy into the broader plan.

The court reasoned that ERISA covers plans “established or maintained” by an employer, so the circumstances under which a policy is maintained can matter in addition to the circumstances of its creation. The court also relied on Ninth Circuit precedent indicating that the relationship between benefit policies and the employer’s intent to treat them as one integrated plan are relevant. The court distinguished a prior Ninth Circuit case in which there was no evidence that separate policies were intertwined or intended to form one integrated plan.

The court held that an employer’s integration of a preexisting policy into a broader ERISA-governed plan can make the policy part of the ERISA plan. Because the policy was part of the plan when LaRocque’s claim arose, his state-law claims were preempted.

Disposition

The court granted LINA’s motion to dismiss. It dismissed LaRocque’s claims for breach of contract and breach of the covenant of good faith and fair dealing with prejudice and without leave to amend. The court also granted LaRocque leave to file a motion for reconsideration to the extent he could identify other precedent suggesting that an employer’s intentional integration of a non-ERISA policy into an ERISA plan does not bring the policy within ERISA’s coverage. The opinion does not state how the alternative ERISA benefits claim was resolved.