Chapter 22 - § 22.1 • NO ISSUE OF PREEMPTION UNLESS AN ERISA PLAN EXISTS

• Jurisdiction: Colorado

§ 22.1 • NO ISSUE OF PREEMPTION UNLESS AN ERISA PLAN EXISTS

In Peters v. Boulder Insurance Agency, Inc., 829 P.2d 429 (Colo. App. 1991), the principal issue was whether the plaintiff's common law claims for breach of contract and bad faith were preempted by ERISA. The defendant, Boulder Insurance, administered a multiple employer trust (MET) health insurance program, which was underwritten by co-defendant Durham Life Insurance Company. Paragon Standard Corporation was one of about 450 employers participating in the plan. In June 1985, the plaintiff, Peters, entered into an agreement with Davis, a co-owner of Paragon, in which Davis agreed to finance a new company, Aero Defense Recruiting Technologies. Davis told Peters he would receive health insurance and asked him to fill out an application and list Paragon as his employer.

In August 1985, Peters submitted a claim to Boulder in which he listed Aero, not Paragon, as his employer. Boulder paid no attention to the issue of Peters's correct employer and denied the claim on the grounds that coverage would not go into effect until September 1, 1985. Several days later, Boulder issued Peters a certificate of insurance, which led him to believe he was insured, even though he had incorrectly identified his employer. On September 4, 1985, Peters was involved in a serious automobile accident and submitted claims to Boulder. In these claims, he again listed Aero as his employer. More than five months later, Boulder denied coverage and told Peters to submit his claims to his automobile insurance carrier, even though Peters had informed Boulder that he had no auto coverage. Eight months after the accident, Boulder again denied the claims because of Peters's lack of eligibility. Peters then sued Boulder and Durham for breach of contract and bad faith. The defendants moved to dismiss both claims on the grounds that they were preempted by ERISA. The trial court denied...