McNeil v. Time Insur. Co., 205 F.3d. 179 (5^th Cir. 2000)-This appeal concerns, ERISA preemption. In the spring of 1994, Dr. McNeil, sought to cover himself and his employee in his optometry practice under a general health insurance plan. The policy contained no limitation on pre-existing conditions and provided lifetime maximum benefits of $ 2 million.  However, the policy limited coverage for AIDS and AIDS Related Complex ("ARC") to $ 10,000 during the first two years of the policy, with maximum benefits after that.

In September 1994, Dr. McNeil’s physician diagnosed him with AIDS.  Time paid the first $ 10,000 of his hospital costs, but none of the subsequent $ 400,000. When he died on March 1, 1995, his father took over the suit. Time removed the case based on ERISA preemption and diversity.  Mr. McNeil asserted several common law causes of action and alleged violations of a host of state and federal statutes, including the Texas Deceptive Trade Practices Act ("DTPA"), the Texas Insurance Code, the Texas Commission on Human Rights Act ("TCHRA"), the Americans with Disabilities Act ("ADA"), and ERISA. The court dismissed the common law and statutory claims and held that ERISA preempted the remaining state law claims.

On the ERISA question, this court affirmed the district court’s determinations that Time's policy constituted an ERISA plan, and that the state law claims did not fall within ERISA's safe harbor for the operation of laws regulating insurance. Citing Meredith v. Time Ins. Co., 980 F.2d 352, 355 (5^th Cir. 1993), this court stated that to determine whether a particular plan qualifies as an ERISA plan, it asks whether the plan (1) exists; (2) fails to fall within the safe harbor exclusion established by the Department of Labor; and (3) meets the ERISA requirement of establishment or maintenance by an employer for the purpose of benefiting the plan participants. The evidence satisfied this test.

This court agreed that a plan in which the only participants are the owners or partners does not constitute an ERISA benefit plan. However, here, the plan covered both Dr. McNeil and the secretary, Ms. Jay.  The fact that Dr. McNeil usually paid his own premium, while he used partnership funds to pay the employee’s premium was not enough to overcome other factors suggesting that a single plan covered both Dr. McNeil and Ms. Jay.  Specifically, before either obtained coverage, Dr. McNeil filled out an employer application. Then, both he and Ms. Jay sent in their individual employee enrollment forms. The partnership then paid the first premium for both of them. After that, Time sent premium bills to the partnership and referred to both Ms. Jay and Dr. McNeil.

Each of Mr. McNeil’s state law claims addresses the right to receive benefits under the terms of an ERISA plan, and therefore ERISA preempted them.  Furthermore, these claims failed to meet the ERISA preemption exception for state laws regulating insurance under 29 U.S.C. § 1144(b)(2)(A).