Provident Life & Accident Insurance Company v. Sharpless
(April 2004)
Lauren Welch obtained a favorable opinion from the federal Fifth Circuit Court of Appeal in a case involving a number of previously unresolved issues in the Circuit. The Court held that multiple, non-married shareholders can be considered “employees” for purposes of establishing the existence of an ERISA plan. The Court also found that the purchase of multiple individual disability policies at a discounted rate by physicians in a professional medical corporation, when considered with other circumstances, was sufficient to establish the intent to establish an employee welfare benefit plan subject to ERISA. The Court upheld the trial court’s judgment in favor of Provident rescinding a disability insurance policy based on material misrepresentations contained in the application for the policy. Finally, under a new more restrictive test recently adopted by the United States Supreme Court for determining whether state law claims are preempted by ERISA, the Court found that the Louisiana statute governing misrepresentations in applications, as well as all of the physician’s state law claims asserted in a counterclaim, were preempted by ERISA.