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ERISA Does Not Preempt State-Law Claims that do not require
Interpretation of the Plan
ISN, the plan sponsor of an ERISA-governed plan, hired Great-West to perform certain non-discretionary administrative services under the plan. Great-West was to provide payment to ISN employees for claims that were approved by ISN's plan administrator, ISN's CFO, and ISN was then responsible for reimbursing Great-West. In December of 2000, ISN notified Great-West that it intended to terminate its relationship. In response, Great-West demanded payment of the $93,999.73 that it had fronted ISN employees. ISN refused to reimburse Great-West; thus, Great-West brought claims against ISN for breach of contract and unjust enrichment. ISN answered alleging that Great-West's claims were preempted by ERISA. The district court rejected ISN's ERISA preemption argument and granted judgment in favor of Great-West in the amount of $93,999.73. ISN appealed.
The 4th Circuit provided that ERISA did not preempt claims against ERISA plans that were "run-of-the-mill state-law claims such as unpaid rent, failure to pay creditors, or even torts committed by an ERISA plan." The 4th Circuit found that an evaluation of Great-West's claims do not require interpretation of the Plan or even the existence of the plan. Additionally, evaluation of Great-West's claims do not implicate the categories of state law that Congress intended to preempt by ERISA. In summary, the Court found that where a company is hired to perform nondiscretionary administrative services under the self-funded portion of an ERISA plan, claims for reimbursement of nondiscretionary payments are not preempted when (1) discretion to make payment rested with the plan administrator; (2) there is evidence that the plan administrator agreed that the company should be reimbursed; and (3) the evaluation of the claims do not require interpretation of the plan. Therefore, Great-West was allowed to pursue its claims for breach of contract and unjust enrichment.
Parties should be aware that ERISA does not preempt run-of-the-mill state law claims even if they involve an ERISA plan where no interpretation of the plan is required and where the claimant only performed nondiscretionary duties under the plan. |
