ERISA-New York Court Rules That Claims Of Breach Of Contract, Fraud, And Promissory Estoppel Are Preempted by ERISA

In Runfola v. Siegel, Kelleher & Kahn, 2011 NY Slip Op 08410 (Appellate Div. of the Supreme Court of New York, Fourth Department, November 18, 2011), the plaintiff had brought suit against the defendant, Siegel, Kelleher & Kahn (“SKK”), in which the plaintiff was a former partner. He alleged, among other matters, breach of contract, fraud, and promissory estoppel against SKK.

In 1992, SKK had purchased a group long-term disability insurance policy for the benefit of the firm’s partners. An internal letter circulated in the law firm announced the existence of the disability policy and outlined the coverage provisions. Over the next several years, the plaintiff suffered several physical and medical ailments and, although he continued to work, his ability to practice law was impaired. In December 1997, the group disability policy lapsed based on the nonpayment of premiums. According to the plaintiff, he was not notified when the policy was allowed to lapse, nor did he learn that the policy had been cancelled until a few years thereafter, when he was inquiring about the coverage. The plaintiff continued working at SKK until May 2001 and thereafter commenced this action. The case made its way to the Appellative Division of the New York Supreme Court (the “Court”).

The Court ruled that the plaintiff’s case must be dismissed, since his claims are preempted by ERISA. The Court noted that ERISA states that it shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan (29 USC § 1144(a)). For this purpose, a law relates to an employee benefit plan if it has a connection with or reference to the plan. The Court found that, in this case, the plaintiff’s claims have the proscribed relation to a plan, and are therefore preempted by ERISA.

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