Agrawal v. Paul Revere Life Insur. Co., 205 F. 3d 297 (6^th Cir.  2000); 2000 FED App. 0062P (6th Cir.)-This court reversed the district court's finding of ERISA preemption on Dr. Agrawal's state law claims against Paul Revere Life Insurance Company. After Dr. Agrawal suffered a knee injury in 1992 that inhibited his ability to work, the company paid total disability benefits for about six months.  Paul Revere reduced the benefits when he returned to part-time work. Eventually, in 1996, Paul Revere determined that Dr. Agrawal was no longer residually disabled and discontinued payments altogether.

Dr. Agrawal and his business, Satendra K. Agrawal, M.D., Inc., had acquired three long-term disability insurance policies from Paul Revere Life Insurance Company. At the time of coverage, Agrawal, Inc. had at least two employees other than Dr. Agrawal. The first policy was an individual disability policy that listed Dr. Agrawal as both the insured and the owner.  The terms of the policy required "Dr. Agrawal's employer" to pay for the policy.  The second policy, also individual, was a disability income policy for business overhead expenses. This policy insured Dr. Agrawal, but was owned and paid for by Agrawal, Inc. The third policy purchased by Agrawal, Inc. was a group disability policy that covered Dr. Agrawal and other employees. Paul Revere canceled this group policy in 1995 because the policy required a minimum of two covered employees and no employees other than Dr. Agrawal were eligible for coverage.

The district court granted summary judgment to Paul Revere on the basis that ERISA preempted Dr. Agrawal’s claims. On appeal, the parties disputed whether the business overhead expense policy and Dr. Agrawal's individual policy were ERISA plans. This court concluded that the overhead policy was not an ERISA plan because the policy did not provide employee welfare benefits.  Rather Dr. Agrawal purchase a policy to cover costs in the event that Dr. Agrawal could not work.  As for Dr. Agrawal's individual policy, this court found that an employee benefit plan exists only when the plan covers employees other than the sole owner of a business.  Thus, it was not an ERISA plan.

However, Paul Revere maintained that the three plans together constituted a single ERISA plan. This court commented on this argument, pointing out that courts have come to different conclusions, based on such factors as whether the policies were purchased at the same time and whether there was a common intention to provide coverage for employees. But ultimately the court avoided answering the question by holding that Dr. Agrawal did not have standing to bring a civil action under ERISA and therefore ERISA did not preempt his claims.

Citing its decision in Fugarino v. Hartford Life & Accident Insurance Co., 969 F.2d 178 (6^th Cir. 1992), this court found that Dr. Agrawal was neither a participant nor a beneficiary because he was the sole shareholder of Agrawal, Inc. As an aside, this court pointed out that the reasoning underlying Fugarino was not thoroughly consistent with the goals of ERISA.  Courts should not exclude self-employed individuals from the statutory definition of "employee" such that a self-employed individual who participates in a disability plan that covers him and all of his employees will have the "unique advantage [of being able to] pursue a parade of state law claims that are withheld from his employees by preemption."