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Native American “Member Policy” Not Governed by ERISA – 6th Cir.

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  • Native American “Member Policy” Not Governed by ERISA – 6th Cir.

    Native American “Member Policy” Not Governed by ERISA – 6th Cir.

    Attached hereto is an unpublished case out of the Sixth Circuit, Saginaw Chippewa Indian Tribe of Michigan; Welfare Benefit Plan v. Blue Cross Blue Shield of Michigan. This case is on appeal from the district court. The plaintiff maintained two separate health insurance plans, one for its employees and one for its members. The key difference between the policies is that the member policy was only available to employees who were members of the Tribe, while the employee policy was available to any individual employed by the Tribe, whether they were a member of the Tribe or not. Plaintiff argued, unsuccessfully, that the two plans were one in the same. After the court determined that they were two separate plans, it next turned to the question of whether or not the member policy was governed by ERISA.

    The Tribe next argues that ERISA governs the Member Policy even if that policy is considered a separate plan.

    This court uses a three-part test for determining whether a plan is covered by ERISA.

    First, the court must apply the so-called “safe harbor” regulations established by the Department of Labor to determine whether the program was exempt from ERISA. Second, the court must look to see if there was a “plan” by inquiring whether “from the surrounding circumstances a reasonable person could ascertain the intended benefits, the class of beneficiaries, the source of financing, and procedures for receiving benefits.” Finally, the court must ask whether the employer “established or maintained” the plan with the intent of providing benefits to its employees.

    Thompson v. Am. Home Assurance Co., 95 F.3d 429, 434–35 (6th Cir. 1996) (alteration and internal citations omitted). The Employee Policy, as both parties agree, passes the test for being an ERISA plan, but the Member Policy does not.

    The stumbling block for the Tribe is that it did not establish or maintain the Member Policy with the intent of providing benefits to its employees. As we have already noted, the employment status of the individuals who received coverage under this policy was irrelevant, since coverage depended entirely on whether an individual was a member of the Tribe. The policy therefore appears to have been created to provide a benefit to the Tribe’s members, not to its employees.

    The Tribe’s argument that ERISA applies to the Member Policy rests on two claims: (1) the Member Policy included some participants who were employees of the Tribe and (2) the policy’s non-employee participants are the types of individuals whose participation in the plan does not place it outside of ERISA. The Tribe’s argument is faulty because it ignores the threshold requirement that ERISA covers a plan only when an employer established or maintained it to provide benefits to at least some of its employees.3 See Thompson, 95 F.3d at 438. An employer can meet this requirement only when it offers the benefits to the employees as part of the employment relationship. See Anderson v. UNUM Provident Corp., 369 F.3d 1257, 1263–64 (11th Cir. 2004). That was not the case here since the employees’ participation in the Member Policy was unrelated to their employment status with the Tribe.
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