You already know that employee benefit plans established by governmental entities are exempt from ERISA.

But ERISA might apply if the employee benefit for the government employee is established through an association. Moreover, you need to make sure the “governmental entity” is actually a “governmental entity” under ERISA. For example, plans that involve both public and private employers may result in ERISA application. See, e.g., South Cent. Indiana Sch. Trust v. Poyner, No. 1:06-cv-1053-RLY-WTL, 2007 U.S. Dist. LEXIS 78804, 2007 WL 3102149, at *5 (S.D. Ind. Oct. 19, 2007) [*5] (”[T]he Plan at issue involves both public and private employers for the benefit of their respective employees. It is therefore subject to ERISA regulation.”)

This issue is highlighted by the recent case of Raible v. Union Security Insurance Co., 2015 WL 746213 (W.D. Pa. February 20, 2015)(PDF) (Court applies very broad definition of “a plan established by government” to conclude government exemption from ERISA applies).

FACTS: Raible was employed as a school nurse in a school district, a government entity in Pennsylvania. Plaintiff also was a member of the Pennsylvania School Board Association (PSBA). PSBA is not a governmental entity. It provided disability benefits, insured by Union Security Insurance Company, to its members.

After her disability benefits were denied, Raible brought a breach of contract action.

Union removed to federal court, contending the claim was governed by ERISA. Union contended the governmental plan exemption did not apply because: (1) PSBA is the policyholder and is not a governmental entity, and (2) the school district did not sponsor the plan.

ISSUE: Is this government employee’s disability benefit governed by ERISA?

HELD: Claim is NOT governed by ERISA.

  1.  “ERISA broadly applies to ‘any employee benefit plan if it is established or maintained by an employer…or by an employee organization…representing employees engaged in commerce.’” Op. at 4.
  2.  “‘[G]overnmental plans’ are expressly exempted under ERISA[.] The term ‘governmental plan’ means a plan established or maintained for its employees by the Government ….” Op. at 4 (Emph. added).
  3.  “[O]ther circuits have constructed [the term] ‘established’ broadly…. Op. at 5.
  4. The court holds that this plan was “established” by the government because: (a) the school district purchased the plan for the exclusive benefit of its employees through the PSBA Insurance Trust; and (b) The school district is listed as a “participating employer” under the policy. Op. at 6.