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BENVENUTO v. CONNECTICUT GEN. LIFE INS. CO.

February 11, 1986

CHERYL BENVENUTO, Plaintiff,
v.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: ACKERMAN

 This is an action by the plaintiff Cheryl Benvenuto against defendant Connecticut General Life Insurance Company ("Connecticut General") seeking compensatory and punitive damages for breach of contract, fraud, bad faith and intentional infliction of emotional distress. By stipulation and order filed February 14, 1985, the fourth count of the complaint and other references to the antitrust laws were dismissed. The pretrial order was filed October 10, 1985. The parties cross-move for partial summary judgment with respect to whether plaintiff's common law causes of action are preempted by the Employee Retirement Income Security Act of 1974, 88 Stat. 829, codified as amended at 29 U.S.C. § 1001 et seq. ("ERISA").

 At the outset, plaintiff argues that defendant has waived or is estopped from asserting the defense of preemption. Plaintiff contends that the issue of choice of law has been extensively briefed and decided by this Court and that defendant's failure to mention the possibility of preemption of plaintiff's claims by ERISA until the day of the pretrial conference precludes it from doing so now.

 As stated previously, on October 10, 1985 Magistrate Perretti signed a final pretrial stipulation and order. At page 23 of that order, in Item 6 under the heading "Defendant's Legal Issues," the issue of whether ERISA's preemption claims for damages other than for contract benefits is explicitly raised. Moreover, page 25 of that order contains a list of motions pending or contemplated on behalf of Connecticut General. The first item listed is: "Motion to dismiss all claims for punitive damages other than contract benefits as preempted by [ERISA]."

 Under Federal Rule of Civil Procedure 16, the pretrial order "shall control the subsequent course of the action unless modified by a subsequent order." When entered, the order limits the issues for trial and takes the place of the pleadings covered by the pretrial order. See Basista v. Weir, 340 F.2d 74, 85 (3d Cir. 1965); Hoagburg v. Harrah's Marina Hotel, 585 F. Supp. 1167, 1175 (D.N.J. 1984). Indeed, the pretrial order operates to preserve a claim or defense that would normally be waived by proceeding to trial. See United States versus Hougham, 364 U.S. 310, 316, 5 L. Ed. 2d 8, 81 S. Ct. 13 (1960); reh'g denied, 364 U.S. 938, 5 L. Ed. 2d 372, 81 S. Ct. 376 (1961); Jenkins v. Carruth, 583 F. Supp. 613, 615 (E.D. Tenn.) aff'd, 734 F.2d 14 (6th Cir. 1984); United States v. Texas, 523 F. Supp. 703, 720 (E.D. Tex. 1981). By virtue of the pretrial order, plaintiff had notice that defendant was preserving the right to move for summary judgment on the ERISA preemption issue. Therefore, defendant is not now precluded from raising this defense.

 I now turn to the parties' cross-motions for summary judgment. At the outset, I note that rule 56 of the Federal Rules of Civil Procedure provides that summary judgment is not to be granted unless, after all reasonable inferences are drawn in favor of the non-moving party, there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. See Sames v. Gable, 732 F.2d 49, 50 (3d Cir. 1984). The facts are not in dispute for the purposes of this motion. Rather, the parties each contend they are entitled to judgment on the legal issue.

 Plaintiff was employed as a flight attendant with Braniff Airways in January of 1982. She was at that time an eligible employee under a group medical insurance policy issued by defendant Connecticut General to Braniff Airways, Inc. Braniff was based in Dallas, Texas. Although plaintiff was then domiciled in New Jersey, she spent two and a half to three weeks per month in Dallas.

 On January 11, 1982, plaintiff began allergy treatments with Dr. William Rea as an outpatient at Carrollton Community Hospital ("Carrollton") in Dallas. Plaintiff commenced treatment as an inpatient at Carrollton in February 1982 and was discharged in March 1982 after thirty-nine days of treatment. Plaintiff submitted insurance claims resulting from this treatment totaling $18,235.10.

 On July 13, 1983, Connecticut General paid plaintiff $15,567.17 under the policy. Plaintiff seeks $2,667.93, the balance of the medical costs. Moreover, plaintiff seeks compensatory and punitive damages in excess of $3 million for alleged negligent and intentional mishandling of her claim. The parties now cross-move for a ruling as to the preemptive effect of ERISA over plaintiff's common law claims of fraud, negligence, gross negligence and breach of contract.

 ERISA, 29 U.S.C. § 1001, et seq., provides a comprehensive federal regulatory scheme designed to protect the interests of employees and beneficiaries in employee benefit plans. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1983) (citing Nachman Corporation v. Pension Benefit & Guaranty Corp., 446 U.S. 359 at 361, 362, 64 L. Ed. 2d 354, 100 S. Ct. 1723 (1980); Alessi v. Raybestos Manhattan, Inc., 451 U.S. 504, 510, 101 S. Ct. 1895, 68 L. Ed. 2d 402 (1981)). An "employee benefit plan," under the Act, includes both pension plans and employee welfare benefit plans. 29 U.S.C. § 1002(3). An "employee welfare benefit plan" is defined as:

 
any plan, fund or program which was heretofore or is hereafter established or maintained by an employer or by an employer organization, or by both, to the extent that such plan, fund or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment . . ."

 29 U.S.C. § 1002(1). Plans may self-insure or they may purchase insurance for their members. Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 105 S. Ct. 2380, 2385, 85 L. Ed. 2d 728 (1985). ERISA sets uniform standards on reporting disclosure and fiduciary responsibility for pension and welfare plans. Shaw, 463 U.S. 85, 103 S. Ct. at 2896-97, 77 L. Ed. 2d 490.

 Before reaching the question of ERISA preemption, I must determine whether ERISA is applicable here. Plaintiff challenges its applicability contending that defendant has failed to establish that it is a fiduciary under an employment benefit plan. Indeed, plaintiff's argument calls into question whether an employee benefit plan even exists in this case.

 ERISA mandates certain requirements of employee benefit plans. With regard to fiduciaries, section ...


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