United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
June 27, 2007
FOR THE FIFTH CIRCUIT
_____________________ Charles R. Fulbruge III
Clerk
No. 06-50106
_____________________
CUSTOM RAIL EMPLOYER WELFARE TRUST FUND,
Plaintiff - Appellant,
versus
MICHAEL GEESLIN, Texas Commissioner of Insurance,
Defendant - Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
Before JONES, Chief Judge, and JOLLY and STEWART, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This appeal requires us to interpret a particular provision of
ERISA1 for the first time. In doing so, we focus on the statutory
requirement that the instant employee welfare benefit plan must be
“fully insured” in order for certain state regulation to be
preempted by federal law. The Custom Rail Employer Welfare Trust
Fund (“CREW”) asserts that it is a “fully-insured” multiple
employer welfare arrangement (“MEWA”) and accordingly brought this
injunctive and declaratory action against the Texas Commissioner of
Insurance (“the Commissioner”) to require the state to accept the
preemptive effect of federal law. Here, although as a practical
matter CREW appears to be “fully insured” with Lloyd’s of London,
1
Specifically, 29 U.S.C. § 1144(b)(6)(D) (2006).
the statutory sine qua non of that formal status is nevertheless
missing -- that is, the declaration of the Secretary of Labor that
CREW is “fully insured.” Thus because the Secretary has not
spoken, CREW is not “fully insured” within the meaning of the
statute and we affirm the district court’s grant of summary
judgment to the Commissioner.
I.
CREW is a welfare plan that offers medical, disability and
death benefits to employees of the members of the Small Railroad
Business Owners Association of America. CREW and the Railroad
Owners group are based in Washington, D.C., and cover (among
others) three member railroads that are located in the state of
Texas. The purpose of CREW is to serve as an affordable method for
small railroads, which are not eligible to participate in state
workers’ compensation programs, to cover the costs of occupational
diseases and injuries of employees. As an employee welfare benefit
plan, CREW is designed to qualify as a MEWA within the definitions
of those terms in the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. §§ 1001-1461 (2006).
In May 2003, CREW asked the Texas Department of Insurance
(“TDI”) for a Certificate of Authority to operate as a MEWA in
Texas. On February 26, 2004, TDI advised CREW that it would not be
allowed to function as a MEWA in Texas because, among other
2
reasons, its insurer was not authorized to do business in Texas.2
CREW’s contract of insurance is with Certain Underwriters at
Lloyd’s, London (“Lloyd’s”), which is a licensed insurer in
Illinois but not in Texas. The contract with Lloyd’s guarantees
all claims covered in the program CREW runs and purports thereby to
render CREW a “fully insured” MEWA for ERISA preemption purposes.
II.
In May 2004, having received the formal notice from TDI, CREW
filed suit in federal district court in Austin, Texas, seeking an
injunction and declaratory judgment against the Commissioner,
contending that CREW was “fully insured” and thus exempt from most
state regulation under ERISA’s preemption scheme.
The parties filed cross-motions for summary judgment. In
granting judgment for the Commissioner, the district court reasoned
that the dispositive issue in the case was whether CREW is “fully
insured” within the meaning of ERISA. The district court concluded
that under the plain language of the statute, CREW could not be
“fully insured” without a determination to that effect by the
Secretary of Labor, and none had been made. Thus the district
court denied CREW declaratory and injunctive relief. CREW then
timely filed this appeal.
III.
2
We do not express any opinion on the parties’ arguments to
us on this point. This issue was not part of the district court’s
ruling and is not dispositive of this appeal.
3
A.
This court reviews a grant of summary judgment de novo.
Fuesting v. Lafayette Parish Bayou Vermilion Dist., 470 F.3d 576,
578 (5th Cir. 2006). “Summary judgment may be granted if there is
no genuine issue of material fact and the moving party is entitled
to judgment as a matter of law.” Id.
The statute we are called upon to apply is one of the many
provisions of ERISA, and the relief sought by CREW is preemption
under ERISA of state regulation. Speaking on a general level,
ERISA “supersede[s] any and all State laws insofar as they may now
or hereafter relate to any employee benefit plan” described in
ERISA. 29 U.S.C. § 1144(a) (2006). “The pre-emption clause is
conspicuous for its breadth.” FMC Corp. v. Holliday, 498 U.S. 52,
58 (1990). The breadth of the preemption clause, however, is
limited by a “savings clause,” id., which provides that “[e]xcept
as provided in subparagraph (B), nothing in this subchapter shall
be construed to exempt or relieve any person from any law of any
State which regulates insurance, banking, or securities.” §
1144(b)(2)(A). Finally, the “deemer clause” in subparagraph (B)3
3
The full subparagraph provides: “Neither an employee
benefit plan described in section 1003(a) of this title, which is
not exempt under section 1003(b) of this title (other than a plan
established primarily for the purpose of providing death benefits),
nor any trust established under such a plan, shall be deemed to be
an insurance company or other insurer, bank, trust company, or
investment company or to be engaged in the business of insurance or
banking for purposes of any law of any State purporting to regulate
insurance companies, insurance contracts, banks, trust companies,
or investment companies.” § 1144(b)(2)(B) (emphasis added).
4
restricts the savings clause, as it exempts employee benefit plans
from state regulation as insurance companies. § 1144(b)(2)(B); FMC
Corp., 498 U.S. at 58.
In 1983 Congress became concerned that MEWAs were
insufficiently solvent and reintroduced state regulation over them,
using two different levels of scrutiny. See Bryan A. Liang,
Patient Injury Incentives in Law, 17 YALE L. & POL’Y REV. 1, 86 n.
380 (1998). If a MEWA is fully insured, state regulation is
limited to that necessary for the state to ensure solvency through
requirements for reserve and contribution levels. §
1144(b)(6)(A)(i); Atlantic Healthcare Benefits Trust v. Googins, 2
F.3d 1, 5 (2d Cir. 1993). If, on the other hand, a MEWA is not
fully insured, state insurance regulation “may apply to the extent
not inconsistent” with ERISA. § 1144(b)(6)(A)(ii).
B.
The parties agree that this appeal presents a case of
statutory interpretation. CREW, however, also asserts that we must
turn to a Department of Labor “Guide” to understand the statute.
The Supreme Court has reminded us that “in all cases involving
statutory construction, our starting point must be the language
employed by Congress, ... and we assume that the legislative
purpose is expressed by the ordinary meaning of the words used.”
5
INS v. Phinpathya, 464 U.S. 183, 189 (1984) (quotation marks and
citations omitted).
The statute in question provides:
For purposes of this paragraph, a multiple
employer welfare arrangement shall be
considered fully insured only if the terms of
the arrangement provide for benefits the
amount of all of which the Secretary
determines are guaranteed under a contract, or
policy of insurance, issued by an insurance
company, insurance service, or insurance
organization, qualified to conduct business in
a State.
§ 1144(b)(6)(D) (emphasis added).
On the other hand, when the terms of a statute are ambiguous
we are allowed to consider other sources that may shed light on the
meaning of those terms; here CREW urges us to consider the Guide in
our analysis. The Guide states in relevant part: “In this regard,
a determination by the Department of Labor as to whether a
particular MEWA is ‘fully insured’ is not required in order for a
state to treat a MEWA as ‘fully insured’ for purposes of applying
State insurance law in accordance with Section [1144(b)(6)].”4
The language of the statute seems clear and emphatic in this
crucial respect: A MEWA is “fully insured” only when the Secretary
of Labor says that it is.5 The Secretary has not said so with
4
PENSION AND WELFARE BENEFITS ADMIN., U.S. DEPT. OF LABOR, MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT:
A GUIDE TO FEDERAL AND STATE REGULATION, available at:
http://www.dol.gov/ebsa/publications/mewas.html (last checked: May
23, 2007).
5
We do not interpret the statute to mean that the Secretary
6
respect to CREW. Nevertheless, CREW argues, based primarily on the
Guide, that we should conclude that it is “fully insured” under the
following rationale: (1) that the only relevant determination is a
federal one by the Secretary of Labor –- and not by the
Commissioner -- and the Secretary has used its MEWA Guide to
announce that she need not make individual determinations; (2) that
CREW does not require a determination by the Secretary because
Congress did not provide an administrative procedure to require the
Secretary to respond to such requests; (3) that CREW has complied
with all advisory opinions issued by the Secretary of Labor
regarding fully-insured MEWAs; and (4) that the language of CREW’s
contract with Lloyd’s tracks the language of § 1144(b)(6)(D), thus
guaranteeing that it is “fully insured.”
CREW first posits that, irrespective of what the state
regulators may or may not require, the state has no role in
determining whether a MEWA is “fully insured”; the federal
government is the only relevant interpreter of the meaning of
“fully insured.” CREW elaborates further, suggesting that the
Secretary has acted in this instance when it issued the Guide;
furthermore, there is no difference between the Secretary
permitting a state to treat a MEWA as fully insured, which the
of Labor necessarily must make an individual determination with
respect to each MEWA; we thus do not preclude that the statute
might be satisfied by the Secretary setting forth terms for
qualifying as “fully insured” that would apply to all MEWAs and
further allowing a method for recognition of those that qualify.
7
Guide clearly allows, and the Secretary requiring the state to
treat a MEWA as fully insured. This is true because federal
authority has no power to require regulation by the state, and,
given that it can only preempt the state from acting, we can only
conclude that this is precisely what the Guide in effect does.
This argument fails because CREW misinterprets the MEWA Guide
and draws unsupported conclusions therefrom. Although the Guide
allows the state to reduce state regulation to the minimal level as
if it were preempted by § 1144(b)(6)(D), the reduced level of
regulation does not result from the force of a federal statute but
instead results from the voluntary and revocable decision of the
state regulator. As even CREW implicitly suggests, this state
action cannot be an act of federal preemption. The Guide only
provides that a state may exercise its discretion in determining
the degree of regulatory control it will assert over MEWAs, so long
as the Secretary of Labor has not spoken to the subject. In other
words, this specific statement in the Guide reflects that the
Secretary is clarifying that state regulators may, in their
discretion, decide that a MEWA is fully insured and assert minimal
regulation. There is nothing in the MEWA Guide, however, that
requires a state regulator to do anything.
In sum, the Guide sentence upon which CREW relies cannot be
read as an announcement that a MEWA may declare itself “fully
insured” (and thus render state law preempted) by its own edict on
the basis that state regulators are indulged by the Secretary to
8
exercise their discretion to impose a lesser degree of regulation.
More central to our analysis, however, this reading contradicts the
plain meaning of the statute, which in unambiguous terms requires
a determination by the Secretary for MEWAs to be declared “fully
insured.” Here, the Secretary has not spoken to the point.
Nothing in the Guide puts this omission into doubt. Therefore,
based on the plain language of the statute, we reject CREW’s
arguments on appeal.
IV.
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.
9