Chavez-DeRemer Confirmed as Secretary of Labor

On March 10, 2025, the Senate confirmed Lori Chavez-DeRemer as Secretary of Labor in a 67-32 vote. We recently wrote about the former Oregon member of Congress and her record that may impact ERISA benefit plans going forward as she oversees the work of the Employee Benefits Security Administration (EBSA). President Trump's pick for the number two spot at the Department of Labor (DOL), Keith Sonderling, who formerly served in the leadership of DOL's Wage and Hour Division and as a commissioner on the Equal Employment Opportunity Commission (EEOC), received a favorable Senate committee vote last week. The nominee to head EBSA, Daniel Aronowitz, has not yet appeared before Congress for his confirmation hearing. On March 11, 2025, Trump named former EEOC Chair Janet Dhillon as his choice to head the Pension Benefit Guaranty Corporation (PBGC). Dhillon has held general counsel and executive leadership roles at large corporations in the private sector, including Burlington Stores, JCPenney, and Dollar Tree.

Ninth Circuit Affirms ERISA Plan Status in Disability Claim Preemption Dispute

In an unpublished February 25, 2025, decision, a Court of Appeals for the Ninth Circuit panel found in favor of Symetra Life Insurance Co. (Symetra) in a disability benefits claim dispute, affirming the lower court's conclusion that the business owner plaintiff created an ERISA-covered benefits plan for the insured benefits at issue and that the plaintiff's claim was preempted by ERISA. Steigleman v. Symetra Life Ins. Co., No. 23-4082 (9th Cir. Feb. 25. 2025). According to the court docket, the case was brought by the owner of an insurance agency seeking damages for state law breach of contract and bad faith claims under a group long-term disability policy issued by Symetra that the plaintiff secured through The Agents Association (TAA), a member association that offers benefits packages to insurance agents and their families. The plaintiff claimed that Symetra improperly denied her disability benefits claim under the terms of the policy and that ERISA did not apply. A central issue in the case was whether the benefits arrangement the plaintiff set up constituted an ERISA-covered plan.

In 2023, the District Court for the District of Arizona issued an order following a bench trial holding that the arrangement did constitute an ERISA plan. The court detailed how employees of the plaintiff's agency were eligible to enroll in TAA coverage though a "benefits package" the plaintiff offered. Among other things, the court stated that the plaintiff set limits on the coverage available to employees and decided which coverages would be the responsibility of the employees to fund. In addition, the agency deducted premiums for the coverage from employees' commission checks and identified premium payments as business expenses for "Employee Benefits Programs" on its tax return. The court also found that agency employees regarded the coverage as an employment benefit tied to their employment relationship with the agency. Citing a host of Supreme Court and Ninth Circuit precedents, the district court held that "[i]t may be true Steigleman and the Agency did not intend to establish an ERISA-governed plan. But that does not establish no such plan was created. An employer may inadvertently create an ERISA-governed plan. And the determination of whether ERISA governs the [Agency's plan] does not turn on whether [the Agency] intended the plan to be governed by ERISA, but rather on whether [the Agency] intended to establish or maintain a plan to provide benefits to its employees as part of the employment relationship." (citations omitted and cleaned up)

On appeal, the Ninth Circuit panel stated that the existence of an ERISA-covered plan is a question of fact to be answered in light of all the surrounding circumstances and that the test for whether benefits are being provided pursuant to an ERISA benefit plan is whether the benefits package implicates an ongoing administrative scheme. According to the court,

[t]his might involve a "responsibility to pay benefits on a regular basis" or "periodic demands on [an employer's] assets that create a need for financial coordination and control." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12 (1987); see Howard Jarvis Taxpayers Ass'n v. Cal. Secure Choice Ret. Sav. Program, 997 F.3d 848, 860–61 (9th Cir. 2021). We have observed that "[a]n employer . . . can establish an ERISA plan rather easily. Even if an employer does no more than arrange for a group-type insurance program, it can establish an ERISA plan, unless it is a mere advertiser who makes no contributions on behalf of its employees." Credit Managers Ass'n v. Kennesaw Life & Acc. Ins. Co., 809 F.2d 617, 625 (9th Cir. 1987) 

(internal citation and quotation omitted).

The panel affirmed the district court's finding of an ERISA welfare benefits plan in the case based not only on the agency's payment of insurance premiums, but also on the additional factors noted by the district court, including the plaintiff's selection of certain coverages for her employees, placement of limitations on which individuals could receive paid premiums, performance of some administrative oversight because the premiums were deducted from commissions, and inclusion of the premiums on the agency's tax filings as a contribution to an employee benefit plan. Consequently, the panel also affirmed the lower court's finding that the plaintiff's state law claims were preempted.

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.