Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
Oct. 26 — The Louisiana Regional Transit Authority's welfare benefit plan is a governmental plan exempt from the provisions of ERISA, the U.S. District Court for the Eastern District of Louisiana ruled.
In an Oct. 23 order, Judge Carl J. Barbier dismissed a lawsuit filed by 40 retirees, and granted summary judgment after concluding that the plan was maintained by a political subdivision, and an agency or instrumentality of that political subdivision.
The retirees filed a suit alleging that the Louisiana Regional Transit Authority (RTA) and Transit Management of Southeastern Louisiana Inc. (TMSEL), as plan administrators, denied them premium-free medical insurance, quarterly Medicare premiums and deductible reimbursements in violation of the Employee Retirement Income Security Act and Louisiana state law. The administrators asked the court to dismiss the lawsuit.
In an earlier decision, the court granted the dismissal request and ruled that the plan was a governmental plan exempt from ERISA and therefore, the court lacked jurisdiction.
The retirees appealed and the U.S. Court of Appeals for the Fifth Circuit vacated the district court's dismissal, concluding that the defendants' argument that the plan was exempt from ERISA didn't raise a jurisdictional question.
After the case was remanded to district court, the administrators filed a motion for summary judgment arguing that RTA and TMSEL, as the entities that maintained the plan, qualified as political subdivisions since they were designated as such by state statute and their members were appointed by public officials. The retirees opposed.
The court noted that ERISA doesn't define the term political subdivision and that the Fifth Circuit hasn't directly addressed whether an entity is a political subdivision under the federal benefits law. As a result, the court applied a test articulated by the National Labor Relations Board for determining what constitutes a political subdivision.
The test was adopted by the U.S. Supreme Court in NLRB v. Natural Gas Utility Dist. of Hawkins County. Under this test, the entity is a political subdivision if it is either created directly by the state or is administered by individuals who are responsible to public officials or to the general electorate.
The court held that under Hawkins, RTA qualified as a political subdivision of Louisiana for the purposes of ERISA since it was created by a state statute and it was administered by individuals who were responsible to public officials.
The court also ruled that the appropriate test for determining whether TMSEL was an agency or instrumentality of the RTA was the six-factor test provided in Internal Revenue Service Revenue Ruling 57-128.
The court concluded that TMSEL was an agency or instrumentality of the RTA because it was created to manage and operate the public transportation system and it performed its functions on behalf of the RTA. Moreover, its operating expenses were solely funded by the RTA.
The retirees were represented by Sher, Garner, Cahill, Richter, Klein & Hilbert LLC, Administrators of Tulane Educational Fund, and Daigle Fisse & Kessenich. The administrators were represented by Proskauer Rose LLP.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at firstname.lastname@example.org.
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)