Court agrees with Burke Harvey & Frankowski, and finds that Unum disability policy is not subject to ERISA.
On June 21, 2013, Judge William M. Acker, Jr. issued his Order and Memorandum Opinion in McLain v. Unum, 2013 U.S. Dist. LEXIS 87413 (June 21, 2013), attached hereto. The issue before the Court was whether a disability policy the plaintiff purchased through his business was part of an ERISA plan and subject to ERISA preemption. McLain and another co-owner of the business both purchased disability policies for themselves. No policies were ever offered to any non-owner employees of the company. Unum argued that these two policies constituted an ERISA plan and that McLain could not assert a state law claim for bad faith or breach of contract. Judge Acker found that the factual situation resembled that of Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 US 1, 124 S. Ct. 1330, 158 L. Ed. 2d 40 (2004), where the Supreme Court explained that “[p]lans that cover only sole owners or partners and their spouses. . . fall outside of [ERISA’s] domain.” Id. at 4 (emphasis added). He then held that “an “S” corporation with only two shareholders is analogous to and indistinguishable from a partnership for the purposes of defendants’ motion. The reasoning that exempts a plan covering only partners from ERISA also applies to SELS. The plan at issue here covered only two owners and no employees. Therefore, it is much more similar to a plan covering only partners than to a plan covering owner and non-owner employees.”
McLain v. Unum, 2013 U.S. Dist. Lexis 87413 [PDF]