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May 7, 1999


The opinion of the court was delivered by: Spatt, District Judge.


On October 13, 1998 Michael D. Rand (the "plaintiff" or "Rand") commenced this action in the Supreme Court of the State of New York, County of Nassau. On November 13, 1998 The Equitable Life Assurance Society of the United States (the "defendant" or the "Equitable") removed the action from the State Supreme Court to the United States District Court for the Eastern District of New York. Presently before the Court are two motions. The plaintiff moves to remand the case to the New York State Supreme Court, Nassau County or in the alternative, for leave to file an amended complaint. As part of his motion to remand, the plaintiff also seeks the award of costs and attorneys fees pursuant to 28 U.S.C. § 1447(c). On the other hand, the defendant moves to dismiss the plaintiff's complaint for failure to state a cause of action under Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Fed. R.Civ.P.").


The dispute between the parties centers on several insurance policies issued by the defendant. While the plaintiff's six page complaint contains relatively few specific facts regarding the nature of the respective policies and the background of the parties involved, the motions submitted by both parties contain various affidavits and exhibits. As both the plaintiff and the defendant have had the opportunity to respond to the extraneous materials submitted in conjunction with their respective motions, the Court has reviewed these various exhibits in conjunction with the plaintiff's complaint. See G.&A. Books, Inc., 770 F.2d 288, 295 (2d Cir. 1985).

The plaintiff is a chiropractor who operated, as a sole proprietorship, Woodhaven Chiropractic Center (the "Center"), from its inception in October, 1981 to 1984. In 1984, the plaintiff entered into a partnership with Joseph Composto ("Composto") and together, as partners, they operated the Center until the plaintiff alleges he became disabled in February 1997.

On October 26, 1981, the defendant issued and delivered to the plaintiff its disability income policy and its overhead expense disability policy, both effective October 9, 1981. ("the 1981 policies"). At the time the plaintiff purchased the 1981 policies, he had no employees. The premiums for the disability income policy were paid by the plaintiff personally, while the premiums for the overhead expense disability policy, which covered the expenses of the Center in the event of his disability, were paid by checks drawn on the account of the Center.

On November 15, 1989, the defendant issued and delivered to the plaintiff a supplemental disability income policy, effective September 15, 1989. ("the 1989 policy"). The plaintiff's partner, Composto, also obtained a disability income policy that became effective on September 15, 1989. Although the Center had approximately seven employees at that time, only the plaintiff and his partner purchased disability income policies. As the plaintiff and his partner both purchased disability policies, they were eligible and received a discounted group policy rate from the insurance company. Despite the fact that all premium notices were sent to the Center, except for the initial binder check, which was taken by the insurance broker at the time of the application, and which the plaintiff alleges was subsequently reimbursed to the Center by the plaintiff Composto, the premiums for the 1989 policy were paid by the plaintiff and his partner from their personal accounts.

It should be noted that while no other employee received disability insurance benefits, it appears that from May 1997 through February 1998, the Center maintained a group health insurance policy with Oxford Health Plans for all of its employees.

On February 21, 1997, the plaintiff claims to have become totally disabled due to psoriatic arthritis and, secondarily, hepatitis related to the methotrexate prescribed to treat the arthritis. As a result of his disability, the plaintiff filed a notice of claim with the defendant on March 26, 1997. On March 23, 1998, the defendants, in writing, refused to make any payments under either the 1981 or 1989 policies.

On October 13, 1998, the plaintiff filed a complaint in the Supreme Court of the State of New York, County of Nassau. The plaintiff's complaint seeks: (1) a declaratory judgment that the plaintiff is entitled to disability benefits under the three disability policies issued by the defendant; (2) $3,000,000 in punitive damages due to the defendant's alleged breach of its fiduciary duty; and (3) $3,000,000 in actual damages due to the defendant's violation of New York General Business Law § 349.

On November 13, 1998 the plaintiff's complaint was removed to this Court by the defendant. The Notice of Removal asserts that the plaintiff's claim for relief raises a federal question under the Employee Retirement Income Security Act ("ERISA") of 1974, 29 U.S.C. § 1001 et seq. Specifically, the defendant's Notice of Removal states the following:

  Plaintiff's claim for relief raises a federal
  question under ERISA for the following reasons.
  Plaintiff's complaint alleges entitlement to monthly
  disability benefits under disability income insurance
  policies issued by Defendant. In the

  issuance of said policies, Plaintiff secured a
  reduced group rate to the fact that simultaneous
  policies were purchased by other chiropractors in the
  Plaintiff's office. At the request of Plaintiff,
  Defendant sent premium notices for the disability
  income policies directly to Plaintiff's business
  address. The premiums for Plaintiff's policies were
  paid by Plaintiff's employer, Woodhaven Chiropractic
  Center, and Plaintiff's employer took a proactive
  approach in the administration of said policies by
  facilitating the procurement of and premium payments
  for the subject policies. The disability income
  policies under which Plaintiff has filed suit were
  paid for and administered by his employer, and, as
  such, are a benefit flowing from his employment.
  Accordingly, Plaintiff's disability insurance
  contract was part of a "plan, fund or program . . .
  established or maintained by [his] employer . . .
  [and] such plan, fund or program was established or
  maintained for the purpose of providing [plaintiff
  and other employees], through the purchase of
  insurance or otherwise, . . . benefits in the event
  of sickness, accident [and] disability". Because
  Plaintiff's claim for benefits under disability
  policies nos. N81 714 532, N81 714 531, and N89 716
  149 falls under the provisions of ERISA, the Court
  has subject matter jurisdiction over this case.

The defendant now asserts, pursuant to Rule 12(b)(6) of the Fed.R.Civ.P., that because the three insurance policies are governed by ERISA, the plaintiff's state law claims and additional contractual damages are pre-empted and must be dismissed. Conversely, the plaintiff contends that this case should be remanded to the Nassau County Supreme Court as ERISA does not apply to the insurance policies at issue.


A. Motion To Remand

A cause of action that was originally filed in the state court may be removed by the defendant where "the district courts of the United States have original jurisdiction." 28 U.S.C. ยง 1441(a). In order to remove a case from state to federal court, the notice of removal must be filed "within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is ...

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