Christoff v. Paul Revere Life Insurance Company, The
- John Tunheim
- 0:17-cv-03515
- U.S. District Court · District of Minnesota
- 19
In Christoff v. Paul Revere, Judge Tunheim ruled the disability policy was not ERISA-covered, denying Paul Revere’s motion and partly granting Christoff’s.
Matthew J. Christoff and The Paul Revere Life Insurance Company; the ruling determined that ERISA did not preempt Christoff’s contract claims challenging the termination of disability benefits.
What happened
Matthew J. Christoff sued The Paul Revere Life Insurance Company, arguing that ending his disability benefits breached his insurance contract. Paul Revere argued that federal employee-benefits law covered the policy and prevented Christoff from pursuing that contract claim.
The court found that Spencer Stuart’s role—deducting premiums and sending them to Paul Revere—did not establish the ongoing benefits-administration system required for the policy to be covered by that federal law. The court also found factual disputes about whether Spencer Stuart contributed to the plan, so neither side was entitled to a ruling on that issue.
In Christoff v. Paul Revere, Judge John R. Tunheim overruled Paul Revere’s objections, adopted the magistrate judge’s recommendation, denied Paul Revere’s summary-judgment motion, and granted Christoff’s partial summary-judgment motion in part and denied it in part.
The detailed version
- Christoff v. Paul Revere Life Insurance Company, The · No. 0:17-cv-03515
- John Tunheim
- Sept. 14, 2018
Background
Matthew J. Christoff purchased an individual disability-insurance policy from The Paul Revere Life Insurance Company in 1998 while working for Spencer Stuart. Spencer Stuart also offered its employees a separate long-term disability group policy insured by Cigna and covered by the Employee Retirement Income Security Act of 1974 (ERISA). Christoff voluntarily purchased the Paul Revere policy.
Spencer Stuart deducted the premiums for the individual policies from employees’ earnings and sent the payments to Paul Revere. Employees paid the premiums with after-tax dollars. Spencer Stuart did not receive compensation for allowing Paul Revere to offer the policies, did not administer claims, and did not process employees’ claims. Christoff began receiving disability benefits in 2001. Paul Revere stopped paying benefits in 2016 after deciding that Christoff was no longer disabled.
Christoff sued Paul Revere for breach of contract. Paul Revere moved for summary judgment, which is a decision without a trial when no genuine dispute of important facts exists and one side is entitled to judgment under the law. Paul Revere argued that ERISA covered the policy and preempted, or displaced, Christoff’s contract claim. Christoff sought partial summary judgment on the same issue.
A magistrate judge recommended denying Paul Revere’s motion and granting Christoff’s motion in part. Paul Revere objected to the recommendation, including the exclusion of documents attached to an affidavit and the magistrate judge’s treatment of the evidence.
Evidentiary Ruling
The court rejected Paul Revere’s objection to excluding the documents attached to the Mugford affidavit. The affidavit established that the documents were maintained in the regular course of business, but it did not establish other requirements for admission under the business-records exception to the hearsay rule, including that the records were made at or near the relevant time, by someone with knowledge, and as a regular business practice. The court therefore adopted the recommendation and denied Paul Revere’s motion for summary judgment.
Disputed Facts
The court rejected Paul Revere’s objections concerning the magistrate judge’s factual analysis. The evidence did not establish that Spencer Stuart specifically negotiated the 35-percent premium discount, that the discount resulted from Spencer Stuart’s payment arrangement, or that Spencer Stuart promoted the policies.
The evidence also did not establish that Spencer Stuart set eligibility requirements, played an active role in the application process, or processed the related paperwork. The Paul Revere application stated that Paul Revere would use the information to determine eligibility. At most, a genuine dispute of important fact remained about Spencer Stuart’s role in the application process.
ERISA and the Safe Harbor
The court held that Paul Revere failed to show that Spencer Stuart established or maintained an ongoing administrative system for administering the policy’s benefits. Spencer Stuart’s deduction and transfer of premium payments were mechanical tasks, not the type of discretionary benefits administration that would make the policy an ERISA employee-welfare-benefit plan.
The court separately addressed ERISA’s safe-harbor provision. It found that Spencer Stuart did not endorse the plan, but a genuine dispute remained about whether Spencer Stuart contributed to it. The evidence did not show that Spencer Stuart obtained the 35-percent discount for its employees, and the record supported another possible explanation for the discount. Because of that factual dispute, neither party was entitled to summary judgment on the safe-harbor issue.
Disposition
The court overruled Paul Revere’s objections and adopted the magistrate judge’s report and recommendation. It found that Christoff’s claims challenging the termination of benefits were not preempted by ERISA because Paul Revere had not shown that Spencer Stuart established or maintained the required administrative system.
The order states that Christoff’s motion for partial summary judgment was GRANTED in part and DENIED in part, as described in the opinion. Paul Revere’s motion for summary judgment was DENIED. The court also denied both parties’ motions as to the safe-harbor issue because a genuine dispute of material fact remained.
Read the full 19-page opinion on CourtListener, the free public archive maintained by the Free Law Project.