Morstein v. National Insurance Svs.

United States Court of Appeals,

Eleventh Circuit.

No. 94-9152.

Margery A. MORSTEIN, Plaintiff-Appellant,

v.

NATIONAL INSURANCE SERVICES, INC.; Pan American Life Insurance
Company; the Shaw Agency; Scott Hankins, Defendants-Appellees.

Aug. 19, 1996.

Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:92-cv-2686-RLV), Robert L. Vining, Jr.,
Judge.

Before TJOFLAT, Chief Judge, and KRAVITCH, HATCHETT, ANDERSON,
EDMONDSON, COX, BIRCH, DUBINA, BLACK, CARNES and BARKETT, Circuit
Judges.

BIRCH, Circuit Judge:

This case was taken en banc to clarify the law in our circuit

regarding state law preemption by the Employee Retirement Income

Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461 (1985). In

this appeal, we must decide whether state law claims asserted

against an independent insurance agent and his agency for

fraudulent inducement to purchase and negligence in processing an

application for an ERISA-governed insurance plan sufficiently

relate to an employee benefit plan within the meaning of section

514(a) of ERISA, 29 U.S.C. § 1144(a), so as to be preempted.

Because we find that the state law claims in this case do not

sufficiently relate to the employee benefit plan to be preempted by

ERISA, we reverse the district court's grant of summary judgment in

favor of the insurance agent and his agency.

I. FACTS

Plaintiff-appellant, Margery Morstein, is the president,
director, and sole shareholder of Graphic Promotions, Inc.

("Graphic"). At all times relevant to this appeal, Morstein was

one of two employees of Graphic. In 1991, Morstein met with Scott

Hankins, an insurance broker and employee of the Shaw Agency, for

the purpose of obtaining a replacement policy of major medical

insurance for herself and Graphic's other employee. The policy was

to be administered by National Insurance Services, Inc.

("National") and underwritten by Pan-American Life Insurance
1
Company ("Pan-American"). Morstein alleges that during her

meeting with Hankins, she advised him that any policy of major

medical insurance that would replace her current policy would be

unacceptable if it excluded from coverage medical treatment related

to any preexisting medical condition. Morstein asserts that

Hankins assured her that the policy that he proposed would provide

the same coverage for preexisting conditions as her current policy.

The policy offered by Hankins was issued to Graphic, and Graphic

paid the initial premium.

Over one year after the policy was issued, Morstein underwent

total hip replacement surgery. When she submitted a claim for

payment for this procedure, National refused payment because it

asserted that Morstein's surgery treated a preexisting condition,

which she failed to disclose during the application process.

National then rescinded the policy and refunded to Graphic the

premium payments that were made on behalf of Morstein. Morstein

claims that Hankins and the Shaw Agency fraudulently induced her to

1
Morstein voluntarily dismissed National and Pan-American
before the commencement of this appeal, although they were
defendants in the original action.
purchase a policy of major medical insurance and that she therefore

allowed a separate full-coverage insurance policy to lapse. She

further alleges that Hankins and the Shaw Agency were negligent in

processing her application for insurance and that she has state law

claims against them for negligence and fraud.2

Morstein filed an action in state court, alleging negligence,

malfeasance, misrepresentations, and breach of contract.

Defendants removed the action to federal court on the basis that

Morstein's claims were governed by ERISA. The district court

denied Morstein's motion to remand and found that defendants were

entitled to summary judgment as to the state law claims against

them. The district court concluded that Morstein's claims "clearly

relate to the employee benefit plan established by Graphic

Promotions; therefore, those claims are preempted by ERISA." R2-

29-3. Morstein appealed the district court's grant of summary

judgment, and the original appellate panel in this case reluctantly

affirmed the district court's grant of summary judgment and held

that it was bound by our decision in Farlow v. Union Cent. Life

Ins. Co., 874 F.2d 791 (11th Cir.1989). Morstein v. National Ins.

Servs., Inc., 74 F.3d 1135, 1138-39 (11th Cir.), vacated and reh'g

en banc granted, 81 F.3d 1031 (11th Cir.1996).

The original panel found the facts in this case to be

2
The Shaw Agency is an independent agency or brokerage that
is authorized to write policies for several insurance companies.
See Hankins Depo. at 11-14. In Georgia, independent insurance
agents are generally considered to be agents of the insured, not
the insurer. European Bakers, Ltd. v. Holman, 177 Ga.App. 172,
338 S.E.2d 702, 704 (1985), cert. denied (Jan. 17, 1986).
duplicative of the facts in Farlow.3 Id. at 1137. The panel,

therefore, was bound to adhere to the holding of Farlow that ERISA

preempted a designated beneficiary's state law misrepresentation

and negligence claims against an insurance company and its agent.4

Following our decision in Farlow, several district courts in our

circuit, faced with similar state law claims, have attempted to

distinguish their cases from Farlow. See Wiesenberg v. Paul Revere

Life Ins. Co., 887 F.Supp. 1529, 1532-33 (S.D.Fla.1995) (reasoning

that the decision in Farlow was ambiguous with regard to whether or

not its holding applied to independent insurance agent as well as

the insurance company, and turning to law in other circuits to

3
In Farlow, plaintiff was a shareholder, president, and
member of the board of directors of Pace-Plus, Inc. Farlow and
his wife were designated beneficiaries under Pace-Plus's employee
benefit plan. The Farlows alleged that an insurance agent
induced them to purchase a new group health life insurance plan,
and that the insurance agent fraudulently misrepresented that,
among other things, the new policy would provide the same
coverage as the company's old policy. Farlow, 874 F.2d at 792.
After switching to the new policy, Farlow's wife became pregnant.
The Farlows then discovered that, unlike Pace-Plus's old policy,
the new policy did not provide maternity or pregnancy coverage.
Id.
4
Our court found the conduct alleged by the Farlows to be
"intertwined" with the refusal to pay benefits:

[T]he conduct alleged in these claims is not only
contemporaneous with [the insurer's] refusal to pay
benefits, but the alleged conduct is intertwined with
the refusal to pay benefits. Finding the Farlows'
state law claims not wholly remote in content from the
[insurer's] plan, we reject the Farlows' contention
that simply because their claims invoke misconduct in
the sale and implementation of the [insurer's] plan,
their claims do not relate to the plan.

Consequently, we hold that ERISA preempts the Farlows'
misrepresentation and negligence claims.

Farlow, 874 F.2d at 794.
support its holding that Wiesenberg's state law fraud claims

against the insurance agency and its agent were not preempted by

ERISA); Barnet v. Wainman, 830 F.Supp. 610, 611-12 (S.D.Fla.1993)

(finding no preemption of plaintiff's claims against insurance

agent for fraudulent misrepresentation because, unlike Farlow, the

scope of coverage of plaintiff's claim would not be the focus of

the litigation); Martin v. Pate, 749 F.Supp. 242, 246-47

(S.D.Ala.1990) (finding "the applicability of Farlow to the facts

of this case" to be "questionable" and holding that plaintiff's

state law claim of fraudulent misrepresentation of coverage of

policy was not preempted), aff'd sub nom. Martin v. Continental

Investors, 934 F.2d 1265 (11th Cir.1991) (table).

Our decisions in the ERISA preemption area have been neither

consistent nor clear. Since Farlow was decided, the Supreme Court

and several other circuit courts have issued opinions that clarify

the purpose and intent of the ERISA state law preemption doctrine.

Furthermore, the conflict among the district courts in our circuit

demands that we revisit this issue and attempt to provide some

clear guidance in the morass of ERISA preemption law. We find it

helpful, therefore, to trace the development of the preemption

doctrine before applying the words of the statute to the case at

bar.

II. ANALYSIS

Morstein alleges that the district court erred in applying

the preemption doctrine under ERISA to bar her state law claims and

thus erred in granting summary judgment in favor of Hankins and the

Shaw Agency. We review a grant of summary judgment de novo.
Forbus v. Sears Roebuck & Co., 30 F.3d 1402, 1404 (11th Cir.1994),

cert. denied, --- U.S. ----, 115 S.Ct. 906, 130 L.Ed.2d 788 (1995).

A. ERISA Legislative History

The Supreme Court has described the overall intent of ERISA as

follows: "ERISA is a comprehensive statute designed to promote the

interests of employees and their beneficiaries in employee benefit

plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct.

2890, 2896, 77 L.Ed.2d 490 (1983); see also Lordmann Enters., Inc.

v. Equicor, Inc., 32 F.3d 1529, 1533 (11th Cir.1994), cert. denied,
--- U.S. ----, 116 S.Ct. 335, 133 L.Ed.2d 234 (1995). Section

514(a) of ERISA provides that its provisions "shall supersede any

and all State laws insofar as they may now or hereafter relate to

any employee benefit plan described in section 1003(a) of this

title and are not exempt under section 1003(b) of this title." 29

U.S.C. § 1144(a) (1985).5 Unfortunately, the statute does not

5
Section 1003(a) provides that ERISA applies to all employee
benefit plans established or maintained "by any employer engaged
in commerce or in any industry or activity affecting commerce."
28 U.S.C. § 1003(a) (1985). The exemptions described in section
1003(b) are not applicable in this case. Id. at § 1003(b).

An "employee benefit plan" is defined under ERISA as
"an employee welfare benefit plan or an employee pension
benefit plan or a plan which is both an employee welfare
benefit plan and an employee pension benefit plan." Id. at
§ 1002(3) (1985).

The medical insurance policies involved in this case
qualify as "employee welfare benefit plans", which, together
with the term "welfare plan," are defined in ERISA section
3(1) as:

any plan, fund, or program which was heretofore or is
hereafter 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
define the term "relate to," and it has fallen to the courts to

deduce Congress's intent and apply this interpretation to the facts

of each case that arises. A search through the volumes of

legislative history of ERISA provides very little information

regarding federal preemption of state law.

The Supreme Court in Shaw relied heavily on the statements of

Representative Dent and Senators Williams and Javits in support of

its conclusion that the intent of Congress was to preempt broadly.

Shaw, 463 U.S. at 99-100, 103 S.Ct. at 2901. Both Representative

Dent and Senator Williams emphasized the intent of Congress to

broadly preempt state and local regulation of employee benefit

plans. Representative Dent called the preemption doctrine "the

crowning achievement of this legislation," and promised that it

would "eliminat[e] the threat of conflicting and inconsistent State

and local regulation." 120 Cong.Rec. 29,197 (1974). Senator

Williams stated that preemption was "intended to apply in its

broadest sense to all actions of State or local governments, or any

instrumentality thereof, which have the force or effect of law."

Id. at 29,933. Only Senator Javits remarked that the final

language of the preemption clause was a product of compromise

between the House and Senate versions of the bill and that further

evaluation of preemption policy was necessary.6

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,....

Id. at § 1002(1).
6
Senator Javits made the following comments:
B. Supreme Court Case Law

Because the legislative history is sparse, it has fallen to

the courts to interpret the phrase "relate to" and give it meaning

Both House and Senate bills provided for
preemption of State law, but—with one major exception
appearing in the House bill—defined the perimeters of
preemption in relation to the areas regulated by the
bill. Such a formulation raised the possibility of
endless litigation over the validity of State action
that might impinge on Federal regulation, as well as
opening the door to multiple and potentially
conflicting State laws hastily contrived to deal with
some particular aspect of private welfare or pension
benefit plans not clearly connected to the Federal
regulatory scheme.

Although the desirability of further regulation—at
either the State or Federal level—undoubtedly warrants
further attention, on balance, the emergence of a
comprehensive and pervasive Federal interest and the
interests of uniformity with respect to interstate
plans required—but for certain exceptions—the
displacement of State action in the field of private
employee benefit programs. The conferees—recognizing
the dimensions of such a policy—also agreed to assign
the Congressional Pension Task Force the responsibility
of studying and evaluating preemption in connection
with State authorities and reporting its findings to
Congress. If it is determined that the preemption
policy devised has the effect of precluding essential
legislation at either the State or Federal level,
appropriate modifications can be made.

120 Cong.Rec. 29,942 (1974).

The ERISA Oversight Report of the Pension Task Force of
the Subcommittee on Labor Standards was issued in 1977.
Pension Task Force of Subcomm. on Labor Standards of House
Comm. on Educ. and Labor, ERISA Oversight Report, H.R.Rep.
No. 365, 94th Cong., 2d Sess. (1977). The Task Force
concluded that, "[b]ased on our examination of the effects
of section 514, it is our judgment that the legislative
scheme of ERISA is sufficiently broad to leave no room for
effective state regulation within the field preempted.
Similarly it is our finding that the Federal interest and
the need for national uniformity are so great that
enforcement of state regulation should be precluded." Id.
at 9.
in the context of the facts that arise in each particular case.7
The Supreme Court noted as early as 1981 that defining boundaries

of the preemption doctrine would not be an easy task. Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895, 1907,

68 L.Ed.2d 402 (1981). In Alessi, retired employees challenged a

provision in their employer-provided pension plan, which provided

that an employee's retirement benefits are offset by any worker's

compensation awards for which the employee is eligible, as

violating a New Jersey statute that prohibited these offsets. Id.

7
According to Prof. Catherine L. Fisk:

In the twenty-one years since ERISA was enacted,
the Court has rendered decisions with written opinions
in twelve ERISA preemption cases, and has decided a
number of others without opinion. Preemption cases
constitute roughly half of all the ERISA cases the
Court has considered. The relatively large number of
ERISA preemption opinions has not, however, led to
clarity in the law. The lower courts have decided
thousands of preemption cases, yet remain mired in
confusion about basic points. ERISA preemption offers
proof that plain language textualism leads to
uncertainty and incoherence in the law.

Catherine L. Fisk, The Last Article About the Language of
ERISA Preemption? A Case Study of the Failure of
Textualism, 33 Harv.J. on Legis. 35, 58-59 (1996) (footnotes
omitted).

The Supreme Court apparently has not uttered its final
word on the issue of preemption either. The Court recently
granted certiorari in Dillingham Construction N.A., Inc. v.
Sonoma County, 57 F.3d 712 (9th Cir.1995), and requested
briefing on the issue of whether Congress intended, in
enacting ERISA, to preempt states' traditional regulation of
wages, apprenticeship, and state-funded public works
construction through a state prevailing wage law that
restricts a contractor's payment of lower
apprentice-specific wages to apprentices who are registered
in programs approved as meeting federal standards.
California Div. of Labor Standards Enforcement v. Dillingham
Constr. N.A., Inc., --- U.S. ----, 116 S.Ct. 1415, 134
L.Ed.2d 541 (1996).
at 507-08, 101 S.Ct. at 1898. The Court remarked that it "need not

determine the outer bounds of ERISA's pre-emptive language to find

this New Jersey provision an impermissible intrusion on the federal

regulatory scheme." Id. at 525, 101 S.Ct. at 1907. The Court

noted that, "[o]ther courts have reached varying conclusions as to

the meaning of ERISA's pre-emptive language in other contexts....

We express no views on the merits of any of those decisions." Id.

at 525 n. 21, 101 S.Ct. at 1907 n. 21 (citations omitted).

Nevertheless, the Court indicated that it leaned towards a broad

interpretation: "ERISA makes clear that even indirect state action

bearing on private pensions may encroach upon the area of exclusive

federal concern.... ERISA's authors clearly meant to preclude the

States from avoiding through form the substance of the pre-emption

provision." Id.

The Court next addressed the preemption issue in Shaw v. Delta

Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490

(1983). The issue before the Court in Shaw was whether two New

York human rights and disability statutes that prohibited

discrimination on the basis of pregnancy were preempted by ERISA.

Id. at 88, 103 S.Ct. at 2895. The Supreme Court in a prior

unrelated case had determined that discrimination based on

pregnancy was not actionable under Title VII of the Civil Rights

Act of 1964. Id.; General Elec. Co. v. Gilbert, 429 U.S. 125, 97

S.Ct. 401, 50 L.Ed.2d 343 (1976). The Court held that even though

ERISA does not contain any provisions proscribing discrimination in

the provision of employee benefits, the New York laws were

"relat[ed] to" employee benefit plans and, therefore, fell under
section 514(a). Shaw at 96, 103 S.Ct. at 2899. Citing Black's Law

Dictionary in support thereof, the Court made the following attempt

to define "relates to":

A law "relates to" an employee benefit plan, in the normal
sense of the phrase, if it has a connection with or reference
to such a plan. Employing this definition, the Human Rights
Law, which prohibits employers from structuring their employee
benefit plans in a manner that discriminates on the basis of
pregnancy, and the Disability Benefits Law, which requires
employers to pay employees specific benefits, clearly "relate
to" benefit plans. We must give effect to this plain language
unless there is good reason to believe Congress intended the
language to have some more restrictive meaning.

In fact, however, Congress used the words "relate to" in
§ 514(a) in their broad sense. To interpret § 514(a) to
preempt only state laws specifically designed to affect
employee benefit plans would be to ignore the remainder of §
514. It would have been unnecessary to exempt generally
applicable state criminal statutes from preemption in §
514(b), for example, if § 514(a) applied only to state laws
dealing specifically with ERISA plans.

Id. at 96-98, 103 S.Ct. at 2900 (footnote & citations omitted).

Once again, however, the Supreme Court declined to remark on how

broad the preemption language of ERISA sweeps, except to note that

there is some boundary:

Some state actions may affect employee benefit plans in too
tenuous, remote, or peripheral a manner to warrant a finding
that the law "relates to" the plan.... The present litigation
plainly does not present a borderline question, and we express
no views about where it would be appropriate to draw the line.

Id. at 100 n. 21, 103 S.Ct. at 2901 n. 21.

The Supreme Court first addressed the issue of whether ERISA

preempts state common law tort and contract claims in Pilot Life

Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39

(1987). Dedeaux was injured in an employment-related accident and

filed a disability claim with Pilot Life Insurance Company ("Pilot

Life"), the provider of Dedeaux's employer's long term disability
employee benefit plan. Id. at 43, 107 S.Ct. at 1551. When

Dedeaux's benefits were terminated by Pilot Life, he instituted a

diversity suit against the company alleging tortious breach of

contract, breach of fiduciary duties, and fraud in the inducement.

Id. Pilot Life argued that Dedeaux's state law claims were

preempted by ERISA. After discussing the legislative history of

ERISA and emphasizing its broad preemptive intent, the Supreme

Court held that Dedeaux's state law claims were preempted and that

the insurance savings clause did not apply to the claims. The

Court did not hesitate in its conclusion that Dedeaux's common law

causes of action, "each based on alleged improper processing of a

claim for benefits under an employee benefit plan, undoubtedly meet

the criteria for pre-emption under § 514(a)." Id. at 48, 107 S.Ct.

at 1553.8

In Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct.

478, 112 L.Ed.2d 474 (1990), an employee brought a state law action

against his employer alleging that the employer had wrongfully

terminated him in order to avoid contributing to, or paying

benefits under, the employee's pension plan. The Court found that

8
The sticking-point for the Court came in its determination
of whether the causes of action should be saved under the
insurance savings clause. Pilot Life, 482 U.S. at 48-50, 107
S.Ct. at 1553-54; 29 U.S.C. § 1144(b)(2)(A). The Court
determined that the savings clause should be interpreted narrowly
and that Dedeaux's claims could not be saved because his common
law claims could not be viewed as laws that "regulate[d]
insurance" as they were not specifically directed toward the
insurance industry. Pilot Life, 482 U.S. at 50, 107 S.Ct. at
1554. The Court also looked to the intent of Congress that the
civil enforcement provisions of ERISA be the exclusive vehicle
for actions brought by ERISA plan participants and beneficiaries,
who assert claims for improper processing of benefits. Id. at
52-54, 107 S.Ct. at 1555-57.
the employee's claim was preempted under ERISA. Id. at 142, 111

S.Ct. at 484. In discussing whether the claim "relates to" an

employee benefit plan covered by ERISA, the Court stated that:

[I]n order to prevail, a plaintiff must plead, and the court
must find, that an ERISA plan exists and the employer has a
pension-defeating motive in terminating the employment.
Because the court's inquiry must be directed to the plan, this
judicially created cause of action "relate[s] to" an ERISA
plan.

Id. at 140, 111 S.Ct. at 483.

In 1995, the Supreme Court issued its opinion in New York

Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

--- U.S. ----, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (hereinafter

"New York Blues "). The issue in New York Blues was whether ERISA

"pre-empts the state provisions for surcharges on bills of patients

whose commercial insurance coverage is purchased by employee

health-care plans governed by ERISA, and for surcharges on [health

maintenance organizations (HMOs) ] insofar as their membership fees

are paid by an ERISA plan." Id. at ----, 115 S.Ct. at 1673-74.

The district court in the case had determined that the New York

surcharge law was preempted by ERISA because the surcharges would

affect commercial insurers and HMOs, and, therefore, indirectly

affect ERISA plans by increasing plan costs. Id. at ----, 115

S.Ct. at 1675. The Second Circuit affirmed the decision of the

district court and cited Shaw v. Delta Air Lines and Ingersoll-Rand

v. McClendon in support of its finding of broad preemption. See

Travelers Ins. Co. v. Cuomo, 14 F.3d 708, 717-19 (2d Cir.1993),

rev'd, --- U.S. ----, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995).

The Supreme Court rejected the conclusions of the Second

Circuit and essentially turned the tide on the expansion of the
preemption doctrine:

The governing text of ERISA is clearly expansive.... If
"relate to" were taken to extend to the furthest stretch of
its indeterminacy, then for all practical purposes pre-emption
would never run its course, for "[r]eally, universally,
relations stop nowhere," H. James, Roderick Hudson xli (New
York ed., World's Classics 1980). But that, of course, would
be to read Congress's words of limitation as a mere sham, and
to read the presumption against pre-emption out of the law
whenever Congress speaks to the matter with generality. That
said, we have to recognize that our prior attempt to construe
the phrase "relate to" does not give us much help drawing the
line here.

Id. at ----, 115 S.Ct. 1677. The Court next cited the often-quoted

language in Shaw that defined a law "relat[ing] to" an employee

benefit plan as one that " "has a connection with or reference to

such a plan.' " Id. at ----, 115 S.Ct. 1677 (quoting Shaw, 463

U.S. at 96-97, 103 S.Ct. at 2900). After acknowledging that the

statute in question made no reference to an employee benefit plan,

the Court hinged its analysis on interpreting the phrase

"connection with" from Shaw. The Court then stated:

But this still leaves us to question whether the surcharge
laws have a "connection with" the ERISA plans, and here an
uncritical literalism is no more help than in trying to
construe "relate to." For the same reasons that infinite
relations cannot be the measure of pre-emption, neither can
infinite connections. We simply must go beyond the unhelpful
text and the frustrating difficulty of defining its key term,
and look instead to the objectives of the ERISA statute as a
guide to the scope of the state law that Congress understood
would survive.

Id. at ----, 115 S.Ct. at 1677. The Court went on to reason that

a reading of the preemption provision that is so broad as to

displace "all state laws affecting costs and charges on the theory

that they indirectly relate to ERISA plans ... would effectively

read the limiting language in § 514(a) out of the statute...." Id.

at ----, 115 S.Ct. at 1679. This conclusion, the Court stated,
would contradict the "basic principles of statutory interpretation"

and would go against the Court's prior determination that a state

law is not preempted when the law has too tenuous a connection with

the ERISA plan. Id. at ----, 115 S.Ct. at 1679-80. The Court

concluded:

While Congress's extension of pre-emption to all "state laws
relating to benefit plans" was meant to sweep more broadly
than "state laws dealing with the subject matters covered by
ERISA[,] reporting, disclosure, fiduciary responsibility, and
the like," Shaw, 463 U.S., at 98, and n. 19, 103 S.Ct. at
2900, and n. 19, nothing in the language of the Act or the
context of its passage indicates that Congress chose to
displace general health care regulation, which historically
has been a matter of local concern....

Id. at ----, 115 S.Ct. at 1679-80 (citations omitted).

C. Application to Morstein's Claims

While the narrow holding in New York Blues, i.e., state laws

that govern general health care regulation and affect ERISA plans

only by means of indirect economic effects are not preempted, is

not particularly relevant to the instant case, the broad guidance

that the Court gave in analyzing a state law is helpful. Using the

analysis outlined by the Supreme Court in New York Blues, we look

to see whether the state law claims brought by Morstein have a

"connection with" the ERISA plan. To determine that, we examine

whether the claims brought fit within the scope of state law that

Congress understood would survive ERISA.

The Fifth Circuit has found that Congress did not intend for

ERISA preemption to extend to state law tort claims brought against

an insurance agent. Perkins v. Time Ins. Co., 898 F.2d 470, 473

(5th Cir.1990). Such preemption, reasoned the Fifth Circuit, would

"immunize agents from personal liability for their solicitation of
potential participants in an ERISA plan prior to its formation."

Id. We now adopt the rationale of the Fifth Circuit as stated in

Perkins and hold that when a state law claim brought against a

non-ERISA entity does not affect relations among principal ERISA

entities as such, then it is not preempted by ERISA. To the extent

that any of our prior opinions differ from this holding, they

should be deemed overruled.9

Morstein is a plan beneficiary who is bringing a suit against

the insurance agency and agent who allegedly fraudulently induced

her to change benefit plans. The insurance agent and agency are

not ERISA entities. ERISA entities are the employer, the plan, the

plan fiduciaries, and the beneficiaries under the plan. See

Travitz v. Northeast Dept. ILGWU Health & Welfare Fund, 13 F.3d

704, 709 (3d Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 2165,

128 L.Ed.2d 888 (1994); Sommers Drug Stores v. Corrigan Enters.,

Inc., 793 F.2d 1456, 1467 (5th Cir.1986), cert. denied, 479 U.S.

1034, 107 S.Ct. 884, 93 L.Ed.2d 837 (1987). Hankins and the Shaw

Agency had no control over the payment of benefits or a

determination of Morstein's rights under the plan.10

9
We recognize that the factual circumstance now before us is
not the only one in which a state law claim will not be preempted
by ERISA.
10
Our conclusion contradicts the reasoning offered by this
court in Belasco v. W.K.P. Wilson & Sons, Inc., 833 F.2d 277
(11th Cir.1987). There we reasoned that because the preemption
doctrine extended to claims brought by an employee against an
employer, it must extend to claims against insurance agents as
well. "This indicates that the "broad common-sense meaning' of
the term "relate to,' ... is quite broad indeed." Id. at 281
(citation omitted). Subsequent cases have made clear, however,
that employers, unlike independent insurance agents, are ERISA
entities and thus much more closely "related to" the plan.
 In Variety Children's Hosp., Inc. v. Century Medical Health

Plan, Inc., 57 F.3d 1040 (11th Cir.1995), we held that state law

fraud claims can be intertwined with benefit plans "where state law

claims of fraud and misrepresentation are based upon the failure of

a covered plan to pay benefits, the state law claims have a nexus

with the ERISA plan and its benefits system." Id. at 1042. In

Variety, the action was brought by a hospital, via an assignment of

the claims of the parents of the beneficiary, against the plan

itself and alleged that the plan had engaged in fraud and

misrepresentation by allegedly denying coverage of an experimental

bone marrow transplant performed at the hospital. Id. These

claims involved ERISA entities, the beneficiary (before

assignment), and the plan, and the state law claims were based on

an interpretation of the plan's terms. When a state law claim

involves the reliance on an insurer's promise that a particular

treatment is fully covered under a policy, however, a claim of

promissory estoppel is not "related to" the benefits plan. See

Variety at 1043 & n. 5.11

Although the remedy sought may affect the plan in that

Morstein's damages (should she successfully prevail on her claims)

against Hankins and/or the Shaw Agency may be measured based on

what she would have received under her old plan, such indirect

relation between a beneficiary and the plan is not enough for

11
This type of claim can be contrasted with an action
brought by a beneficiary against an insurance company regarding
the scope of the coverage of the plan. The claim brought by
Morstein against Pan-American and National was of the latter type
and would be preempted, but Morstein's claims against Pan-
American and National are not at issue on appeal.
preemption. Forbus, 30 F.3d at 1406-67 (noting that "the mere fact

that the plaintiffs' damages may be affected by a calculation of

pension benefits is not sufficient to warrant preemption"); see

also Smith v. Texas Children's Hosp., 84 F.3d 152, 155 (5th

Cir.1996). The Supreme Court in New York Blues made it clear that

economic impact alone is not necessarily enough to preempt a state

law. New York Blues, --- U.S. at ----, 115 S.Ct. at 1683.

Therefore, the possibility that insurance premiums will be higher

or that insurance will be more difficult to obtain because

independent agents will have less incentive to sell insurance to

employers whose employee benefit plans will be governed by ERISA,

does not provide a reason to preempt state laws that place

liability on agents for fraud. These same agents currently face

the threat of state tort claims if they make fraudulent

misrepresentations to individuals and entities not governed by

ERISA. To hold these agents accountable in the same way when

making representations about an ERISA plan merely levels the

playing field.

Allowing preemption of a fraud claim against an individual

insurance agent will not serve Congress's purpose for ERISA. As

discussed above, Congress enacted ERISA to protect the interests of

employees and other beneficiaries of employee benefit plans. See

Shaw, 463 U.S. at 90, 103 S.Ct. at 2896. To immunize insurance

agents from personal liability for fraudulent misrepresentation

regarding ERISA plans would not promote this objective. If ERISA

preempts a beneficiary's potential cause of action for

misrepresentation, employees, beneficiaries, and employers choosing
among various plans will no longer be able to rely on the

representations of the insurance agent regarding the terms of the

plan. These employees, whom Congress sought to protect, will find

themselves unable to make informed choices regarding available

benefit plans where state law places the duty on agents to deal

honestly with applicants.

III. CONCLUSION

Morstein challenges the district court's conclusion that her

state law claims against an independent insurance agent and his

agency for fraudulent inducement to purchase and negligence in

processing her application for an ERISA-governed insurance plan are

preempted by section 514(a) of ERISA. We conclude that these

claims do not fall within ERISA's broad preemptive scope, as they

do not have a sufficient connection with the plan to "relate to"

the plan. Accordingly, the district court's grant of summary

judgment in favor of Hankins and the Shaw Agency is REVERSED.