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NGS American, Inc. v. Barnes

decided: August 20, 1993; As Corrected.

NGS AMERICAN, INCORPORATED AND MASCO INDUSTRIES SELF-FUNDED EMPLOYEE BENEFIT PLANS, PLAINTIFFS-APPELLEES,
v.
PHILLIP W. BARNES, IN HIS CAPACITY AS COMMISSIONER OF INSURANCE FOR THE STATE OF TEXAS, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Western District of Texas. D.C. DOCKET NUMBER A-92-CV-135. JUDGE James Nowlin

Before Reavley, Duhe, and Barksdale, Circuit Judges.

Author: Duhe

DUHE, Circuit Judge:

Appellee NGS American, Inc. (NGS) and Appellee Masco Industries (Masco) sued to enjoin Appellant Phillip Barnes, in his capacity as Commissioner of Insurance for the State of Texas, from enforcing article 21.07-6 of the Texas Insurance Code against NGS and Masco. The district court granted summary judgment in favor of NGS and Masco, holding that art. 21.07-6, insofar as it relates to administrators of ERISA-governed insurance plans, is pre-empted by ERISA and therefore unconstitutional under the Supremacy Clause of the United States Constitution, 805 F. Supp. 462. We affirm.

FACTS

Masco is based in Michigan with operations in eighteen states, including Texas. Masco established a Self-Funded Employee Benefit Plan (Masco Plan) to provide medical and other benefits to its employees. The Masco Plan is an "employee benefit plan" within the meaning of the Employee Retirement Income Security Act (ERISA).*fn1 NGS, also a Michigan corporation, serves as a third-party administrator to the Masco Plan. Certain beneficiaries of the Masco Plan reside in Texas.

When Appellant Texas Commissioner of Insurance (the Commissioner) sought to enforce Texas Insurance Code article 21.07-6 against both NGS and Masco, they sued in the Eastern District of Michigan, to enjoin the Commissioner from such action on the basis that the article is pre-empted by § 514(a) of ERISA. NGS and MASCO then moved for summary judgment. In addition to his response to the motion for summary judgment, the Commissioner filed a motion to dismiss and notices of discovery. NGS and MASCO sought to quash the Commissioner's notices of discovery, so the Commissioner moved to compel discovery. The court then transferred the case to the Western District of Texas while NGS's and MASCO's motion for summary judgment and the Commissioner's motion to compel discovery were still pending.

The court in Texas ordered NGS and MASCO to submit evidence establishing their standing under ERISA. They responded by submitting the affidavit of an NGS employee, describing NGS's business. Without ruling on the Commissioner's motion to compel discovery, the court granted summary judgment in favor of NGS and MASCO, holding that both had standing pursuant to 28 U.S.C. § 1331 and ERISA to challenge whether ERISA pre-empts art. 21.07-6. The court concluded that the article is pre-empted by ERISA to the extent that it applies to third-party administrators of ERISA-governed insurance plans.

The Commissioner appeals the grant of summary judgment, arguing that (1) art. 21.07-6 is a valid regulation of the business of insurance under § 514(b) of ERISA and therefore is not pre-empted, and (2) summary judgment was premature because the Commissioner was not afforded an opportunity for discovery.*fn2

Discussion

I. Standard of Review

Our standard of review of a district court's grant of summary judgment is plenary. Dorsett v. Board of Trustees for State Colleges & Universities, 940 F.2d 121, 123 (5th Cir.1991). Summary judgment is appropriate if the record discloses "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing the summary judgment, we apply the same standard as did the district court. Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989); Moore v. Mississippi Valley State Univ., 871 F.2d 545, 548 (5th Cir.1989). We must "review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986).

II. ERISA Pre-emption Analysis

A. An Overview of ERISA ...


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