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A plan, fund, or program under the Employee Retirement Income Security Act is established if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits. To be an employee welfare benefit plan, the intended benefits must be health, accident, death, disability, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits; the intended beneficiaries must include union members, employees, former employees or their beneficiaries; and an employer or employee organization, or both, and not individual employees or entrepreneurial businesses, must establish or maintain the plan, fund, or program.
The Secretary of Labor pursuant to his authority under ERISA § 502(a), 29 U.S.C. § 1132(a), brought this action against the trustees of Union Insurance Trust (UIT) and businesses owned and operated by them, alleging they are fiduciaries subject to the fiduciary responsibility provisions contained in Part 4 of Title I of ERISA, 29 U.S.C. §§ 1101 et seq. Fiduciary duties under ERISA, however, arise only if there are employee benefit plans as defined by the Act. The district court held that this case is controlled by Taggart Corp. v. Life & Health Benefits Administration, 617 F.2d 1208 (5th Cir. 1980), cert. denied sub nom. Taggart Corp. v. Efros, 450 U.S. 1030, 101 S. Ct. 1739, 68 L. Ed. 2d 225 (1981), and dismissed for lack of subject matter jurisdiction because there were no employee benefit plans involved. The Secretary and cross-appellants sought review.
Did the trial court err in following the ruling in Taggart and dismissing the action for lack of subject matter jurisdiction because there were no employee benefit plans involved?
The court reversed and held that certain decisional law would no longer be binding precedent to the extent that it implied that an organization that only purchased a group insurance policy or subscribed to a multiple employer trust to provide employee or member health insurance had not established or maintained an employee welfare benefit plan. The court held that the purchase of a group policy or multiple policies covering a class of employees was substantial evidence that a plan, fund, or program had been established under ERISA if a reasonable person could ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.