518 F.Supp.3d 973
S.D. Tex.2021Background
- Plaintiff John Juanopulos, owner and alleged sole employee of J&A Paint and Body Shop, purchased an occupational injury benefit plan issued by Life Insurance Company of North America (LINA).
- While at work handling a stuck bullet in a gun he kept for on-premises security, Juanopulos accidentally shot himself and submitted a claim for medical and disability benefits.
- Third-party administrator Salus Claims Management and employee Matt Reiter denied the claim as not within the scope of employment; an administrative appeal was also denied.
- Juanopulos sued in Texas state court asserting Texas Insurance Code, DTPA, fraud, breach of contract, and bad-faith claims; Salus and Reiter removed to federal court, asserting ERISA governs and thus preempts the state claims.
- The central factual dispute was whether the plan is an ERISA-governed employee welfare benefit plan — specifically, whether it covers employees other than the owner (i.e., whether any employees are participants).
- The court found Juanopulos credibly pleaded and supported that he is the sole participant (owner/sole employee), rejected defendants’ contrary evidence as insufficient, held the plan is not governed by ERISA, and remanded the case to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA governs the occupational injury benefit plan (preemption/removal) | Plan is not an ERISA plan because it covers only the owner/sole employee | Plan is an ERISA employee welfare benefit plan and thus federal law preempts state claims | Not governed by ERISA; state-law claims not preempted; remand granted |
| Whether Juanopulos is the sole participant/employee | He is the owner and sole employee; affidavit and payment-per-participant evidence support this | Appeal letter and a witness form suggest the presence of another employee/co-worker | Court credited plaintiff, found defendants’ evidence insufficient, resolved doubts for remand |
| Whether plan language/self-designation controls ERISA coverage | Labeling doesn’t control; statutory definition and precedent determine coverage | Plan expressly calls itself an ERISA employee benefit plan | Court held labels irrelevant; statutory/precedential definition controls |
| Standard for removal and resolution of factual disputes on remand motion | Remand urged because no federal jurisdiction exists absent ERISA applicability | Removal justified if ERISA completely preempts state claims; removing party must show it | Removing party bears burden; doubts resolved against federal jurisdiction; factual issues decided by court and resolved in favor of remand |
Key Cases Cited
- Beneficial National Bank v. Anderson, 539 U.S. 1 (2003) (complete preemption can convert state claims into federal causes of action)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (ERISA preemption of state-law claims involving employee benefit plans)
- Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (2004) (plans covering only sole owners/partners fall outside ERISA; working owners with nonowner employees fall within ERISA)
- House v. American United Life Insurance Co., 499 F.3d 443 (5th Cir. 2007) (owner-only plans are not ERISA plans; factual disputes over plan existence treated as plan-existence inquiry)
- Meredith v. Time Insurance Co., 980 F.2d 352 (5th Cir. 1993) (three-part test for determining ERISA employee welfare benefit plan status)
- Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982) (factors showing an ERISA plan’s establishment: identifiable benefits, beneficiaries, financing, and claims procedures)
- Manguno v. Prudential Property & Casualty Ins., 276 F.3d 720 (5th Cir. 2002) (removal statute strictly construed; removing party bears burden of establishing federal jurisdiction)
- Acuna v. Brown & Root, Inc., 200 F.3d 335 (5th Cir. 2000) (doubts about removal jurisdiction resolved against federal jurisdiction)