ERISA-DOL Advisory Opinion Concludes That Certain Health Care Programs Are MEWAs

In Advisory Opinion 2011-02A, the Department of Labor (the “DOL”) was asked by the State of Florida to determine: (1) whether the health care programs offered by the Depawix Employee Welfare Benefit Plan (the “Depawix Plan”) and by Peck & Peck, Inc. (Peck & Peck) d/b/a Green Cross Managed Health System (the “Green Cross Program”) are “multiple employer welfare arrangements” (or “MEWAs”) within the meaning of ERISA section 3(40), and (2) whether ERISA section 514(a) precludes the State of Florida from applying its insurance laws and regulations to the Depawix Plan or Green Cross Program, or to any persons who sell or market them in Florida. The DOL answered as follows.

The Green Cross Program and Depawix Plan had attempted to establish themselves basically as an employment opportunity that also provides medical benefits. To receive the benefits, an individual had to agree to become employed by the sponsor of the Depawix Plan as a “Research Tester” . This position involved completing an annual risk assessment questionnaire and similar functions. It is clear that the State of Florida is interested in regulating the behavior and marketing of the Green Cross Program and Depawix Plan.

As to question (1), ERISA section 3(40)(A) defines a MEWA, in pertinent part, as an employee welfare benefit plan, or any other arrangement, which is established or maintained for the purpose of offering or providing any benefit described in section 3(1) of ERISA (e.g., medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, and disability) to the employees of two or more employers. The DOL determined that the Green Cross Program and the Depawix Plan were established and are maintained for the purpose of offering or providing those types of benefits. But did they provide or offer those benefits to the employees of more than one employer?

The DOL found that the marketing materials for the Green Cross Program indicated that the program provided the foregoing benefits to the employees of more than one employer. Therefore, the Green Cross Program is a MEWA. The DOL also found that more than one of the Research Testers covered by the Depawix Plan is either a “self-employed individual”, and thus his/her own employer, or an employee of another employer. Accordingly, the Depawix Plan offers benefits to the employees of more than one employer, and is also a MEWA.

As to question (2), the DOL concluded that ERISA section 514(a) does not preempt or preclude the application of Florida insurance laws or regulations to the Green Cross Program or the Depawix Plan, or to any individual who markets or sells the program or plan. This obtains because neither the Green Cross Program nor the Depawix Plan is an employee welfare benefit plan, within the meaning of section 3(1) of ERISA, so that neither the program nor the plan is subject to ERISA or its preemption requirements. The DOL did not state its reason for this conclusion. To be an ERISA-covered employee welfare benefit plan, a plan must be established and maintained by an employer for the benefit of its employees, and it is likely that the Green Cross Program and the Depawix Plan did not meet this requirement.

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