ORDER AND REASONS

MARCEL LIVAUDAIS, JR., United States District Court Judge.

Pending before the Court are the following motions:

1) Motion of defendant Fortis Benefits Insurance Company for Summary Judgment;

2) Motion of plaintiff Bonnie Steiner to remand this action to state court for lack of subject matter jurisdiction.

Both motions are opposed.

Facts

Plaintiff Bonnie Steiner ("Steiner") is a lawyer who was shareholder in the law firm of Hoffman, Sutterfield, Ensenat and Bankston ("Hoffman Sutterfield"). On April 11, 1995, Hoffman Sutterfield applied to Fortis Benefits Insurance Company ("Fortis") for a group long-term disability policy. The applicant was Hoffman Sutterfield, all employees were to be covered immediately, the policy was initially non-contributory, and the initial premium of $1,923.21 was paid by Hoffman Sutterfield with a firm check. The policy was converted to a contributory policy retroactive to the date off its inception. While the policy defines a "contributory policy" as one in which the employees paid a portion of the premium, plaintiff contends that the employees paid the entirety of their share of the premium and did not have to participate. Defendant has adduced no evidence on these two points. The minimum participation requirements provision in the policy required that there be at least 10 participants and that there be 85% participation, which suggests that participation was voluntary on the part of the employee. There was a notice to applicants contained in the policy application which stated as follows, in pertinent part:

F. ERISA — The coverage applied for provides benefits for the employee welfare benefit plan established and maintained by the employer under the Employee Retirement Income Security Act (ERISA), unless otherwise exempted by law. The employer is the Plan Administrator unless otherwise noted.

* * * * H. All insurance coverage may be terminated if the number of participants falls below that required by the policy.

Fortis Exhibit 4 to Motion for Summary Judgment.

Fortis issued a policy (the "Policy") of group long term disability insurance to Hoffman Sutterfield. The Policy states that it was delivered in Louisiana and governed by its laws. Under the Policy, there are two eligible classes of persons who may be covered. Class I of the eligible classes includes "[e]ach Active, full-time Director, Associate, and Administration employee of the policyholder." Plaintiff Steiner was a member of Class I.

Under the Policy, a covered person is disabled if in a particular month that person satisfies the "Occupation Test" or the "Earnings Test." In this instance, the "Occupation Test" is relevant. A covered person satisfies the "Occupation Test" fort long term disability benefits in the following circumstances:

If you are a covered person in Class I:

during a period of disability (including the qualifying period), an injury, sickness, or pregnancy requires that you be under the regular care and attendance of a doctor, and prevents you from performing at least one of the material duties of your specialty, if your employment is based upon the performance of your specialty.

Fortis Exhibit 4.

The qualifying period "means the length of time during a period of disability that you must be disabled before benefits are payable." The qualifying period in the policy in question was three months.

Plaintiff Steiner submitted a claim for long term disability benefits under the policy. She claims that the date she was first unable to work because of her disability was March 15, 1996, which was in fact the last day she worked at Hoffman Sutterfield.

Fortis reviewed medical information submitted by plaintiff from four different physicians, including Dr. V. J. Zeringue, an orthopedist, Dr. John Finney, a family practice physician, Dr. Donna Waters, an obstetrician/gynecologist, and Dr. Yvonne Osborne, a clinical psychologist. Plaintiff describes the nature of her illness as "lower back-onset of pain was gradual and progressively became worse." While severe back pain was the initial disabling condition, Steiner also suffered a miscarriage during the summer of 1996 and experienced clinical depression in the fall of 1996. Fortis also reviewed information from Hoffman Sutterfield detailing the nature of plaintiff's duties as an attorney for the firm.

Fortis submitted all of the information to its Clinical Services Department and to two physicians for peer review. Fortis denied the plaintiff's claim for benefits because the medical documentation submitted did not establish that she was disabled from performing any one of the material duties of her job prior to October 7, 1996.

Plaintiff filed the instant suit in Civil District Court for the Parish of Orleans, seeking long-term disability benefits, penalties and attorney's fees under Louisiana law. Fortis removed the action to this federal court on the grounds that the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. completely preempts all claims by employees to recover benefits under an employee welfare benefit plan.

Plaintiff Steiner and defendant Fortis then filed a "Joint Ex Parte Motion and Order for Stay of Proceedings pending Administrative Review of Plaintiff's Claim for Benefits." In the motion, plaintiff and defendant represent that plaintiff has filed a claim for long term disability benefits under an employee welfare benefit plan sponsored by Hoffman Sutterfield, which plan was funded by a group insurance policy issued to Hoffman Sutterfield and governed by ERISA. Both parties then stated that because no cause of action for ERISA benefits arise until claimant exhausts the plan's administrative remedies, defendant agreed to provide plaintiff an opportunity to appeal the denial of her claim for benefits under the Policy. The action was stayed in order for the plaintiff to exhaust those administrative remedies. Fortis denied plaintiff's claim for benefits. The motion to stay was lifted and the instant motions were filed.

Motion to Remand

Plaintiff has filed a motion to remand on the grounds that this Court does not have subject matter jurisdiction of this action because (1) there is no federal question as the subject matter of this action does not fall under ERISA or falls under an exception to ERISA, and (2) there is no diversity jurisdiction because the amount in controversy does not meet or exceed $75,000, the jurisdictional amount necessary for diversity jurisdiction to lie.

Pretermitting the ERISA question for the moment and addressing diversity jurisdiction first, plaintiff prayed in her petition for long term disability benefits accrued to December 15, 1996, in the amount of $41,346.18, plus $6,891.03 per month, with attendant medical expenses and for costs, attorney's fees and penalties. Twelve months of disability payments in 1997 at the rate claimed by the plaintiff, $6,891.03, amount to $82,692.86. Disability benefits alone for 1996 and part of 1997 exceed $75,000, not including costs, attorney's fees or penalties. In plaintiff's complaint, it is clear that she seeks continuing disability benefits after the date the suit was filed. Jurisdictional amount for diversity purposes is present. Because there is diversity of citizenship between the plaintiff and the defendant and jurisdictional amount, there is subject matter jurisdiction and the motion to remand must be denied on this basis alone, regardless whether ERISA provides federal question jurisdiction.

Motion for Summary Judgment

Defendant Fortis seeks summary judgment on plaintiff's claim for disability benefits on the grounds that ERISA governs the dispute and that under ERISA, there is no material issue of fact in dispute and plaintiff cannot establish liability as a matter of law. Plaintiff opposes the motion, arguing principally that ERISA does not govern this action, and outstanding discovery precludes summary judgment.

The threshold issue to be determined is whether ERISA is applicable to this case. The Fifth Circuit in Vega v. National Life Insurance Services, Inc., 188 F.3d 287 (5th Cir. 1999) (en banc), considered those circumstances when ERISA governs claims for benefits under insurance policies in the context of an employer-sponsored group medical plan issued to a Subchapter S corporation whose sole owners are the plaintiffs, as follows:

ERISA preempts all state claims that "relate to any employee benefit plan." 29 U.S.C. § 1144(a). In order for ERISA to govern the Vegas's claims, two criteria must be met: (1) an employee benefit plan must exist, and (2) Mrs. Vega must have standing to sue as a participant or beneficiary of that employee benefit plan.

188 F.3d at 291.

Thus, the first task is to determine whether an employee benefit plan exists. In Memorial Hospital System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir. 1990), the Fifth Circuit adopted the test created by the Eleventh Circuit in Donovan v. Dil1ingham, 688 F.2d 1367, 1373 (11th Cir. 1982) (en banc) to determine whether an ERISA plan is established. The Fifth Circuit observed that:

The Eleventh Circuit, sitting en banc, has held that an ERISA plan is established "if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits." [688 F.2d at 1373]. A formal document designated as "the Plan" is not required to establish that an ERISA plan exists; otherwise, employers could avoid federal regulation merely by failing to memorialize their employee benefit programs in a separate document so designated.

The Memorial Hospital System court recognized that ERISA itself "encompasses welfare plans provided through the purchase of insurance. 29 U.S.C. § 1002(1). Moreover, it is a common practice for employers to provide health care benefits to their employees through the purchase of a group health insurance policy from a commercial insurance company." 904 F.2d at 240. The ERISA definition of an "employee welfare benefit plan" includes:

any plan, fund, or program . . . established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment.

The Fifth Circuit explained, citing its decision in Taggart Corp. v. Life Health Benefits Admin., 617 F.2d 1208, 1211 (5th Cir. 1980), cert. denied, 450 U.S. 1030, 101 S.Ct. 1739 (1981), that "[w]hile the bare purchase of an insurance policy may not exclusively establish the existence of an ERISA plan," it agrees with the Donovan reasoning that "the purchase is evidence of the establishment of a plan, fund, or program; the purchase of a policy or multiple policies covering a class of employees offers substantial evidence that a plan, fund, or program has been established." Memorial Hospital System, 904 F.2d at 242, quoting Donovan, 688 F.2d at 1373.

The Fifth Circuit reiterated the criteria to be examined in determining whether an ERISA plan exists in Meredith v. Time Insurance Company, 980 F.2d 352 (5th Cir. 1993), stating:

We have devised a comprehensive test for determining whether a particular plan qualifies as an "employee welfare benefit plan"; we ask whether a plan: (1) exists; (2) falls with the safe-harbor provision established by the Department of Labor; and (3) satisfied the primary elements of an ERISA "employee benefit plan" — establishment or maintenance by employer intending to benefit employees. If any part of the inquiry is answered in the negative, the submission is not an ERISA plan.

In the instant case, Hoffman Sutterfield provided long term disability insurance for his employees, including particularly its attorneys, through the purchase of the Fortis policy. Plaintiff was an attorney and shareholder of the firm and was a beneficiary of the Policy. The purchase of long term disability insurance through a group policy for its employees is a "plan," assuming Hoffman Sutterfield actually purchased the benefits through its own funds for its employees. This raises the question of who financed the plan, which is discussed below.

The next question is whether the benefits provided through the disability policy fall within the safe harbor provision promulgated by the Department of Labor. A plan is not an ERISA plan and falls with the safe harbor provision if (1) the employer does not contribute to the plan; (2) participation is voluntary; (3) the employer's role is limited to collecting premiums and remitting them to the insurer; and (4) the employer received no profit from the plan." 29 C.F.R. §§ 2510.3-1(j)(1)-(4). In order to be exempt, the plan must meet all four criteria.

There is insufficient evidence in this record to determine whether the safe harbor provision applies. While initially the plan was non-contributory, i.e., the firm was to pay all of the premiums, and paid the first premium payment, the policy was amended, retroactive to its effective date off April 1, 1995, to be contributory, with only 85% of the employees participating. It is not certain whether the employer continued to fund the plan, i.e., whether the firm paid any part of the beneficiaries' premiums, whether each employee could voluntarily choose to participate or not, since each employee had to pay part or all of the premium due, or whether the employee profited from the plan in any way. Plaintiff suggests that the policy was entirely contributory and that her employer paid no portion of her premium, a fact which is not disputed or otherwise commented on by defendant. While plaintiff's employer initially applied for the group policy, as far as can be discerned from the record, its role after that point was collecting and remitting premiums to Fortis, and possibly not contributing any funds toward those premiums.

There is simply insufficient information in the record to determine whether the plan in question falls within the safe harbor provision of the Department of Labor and thus is outside of the scope of ERISA. If ERISA does not apply, then Louisiana law is applicable to the provisions of the policy and will determine whether plaintiff will succeed on her claim. Because there are material issues of fact not established by the mover in determining whether the plan falls within the safe harbor provision, and because the defendant's motion is based upon the application of ERISA and does not suggest that it is seeking summary judgment under Louisiana law as well, the motion must be denied.

Accordingly, for the above and foregoing reasons,

IT IS ORDERED that the motion of plaintiff Bonnie Steiner to remand this action for lack of subject matter jurisdiction be and is hereby DENIED; IT IS FURTHER ORDERED that the motion of defendant Fortis Benefits Insurance Company for summary judgment be and is hereby DENIED AT THIS TIME as there are material issues of fact not established by the mover.