USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

_________________________

No. 95-1002

JAMES JOHNSON,

Plaintiff, Appellee,

v.

WATTS REGULATOR COMPANY, ET AL.,

Defendants, Appellants.

_________________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]

___________________

_________________________

Before

Selya, Circuit Judge,

_____________

Campbell, Senior Circuit Judge,

____________________

and Cyr, Circuit Judge.

_____________

_________________________

Eleanor H. MacLellan,
_____________________

with

whom Sean M. Dunne, Ross M.

_______________ ________

Weisman, and Sulloway & Hollis were on brief, for appellants.

_______
_________________
Christopher J. Seufert,
________________________

with

whom

Seufert Professional
_____________________

Association was on brief, for appellee.

___________

_________________________

August 23, 1995

_________________________

SELYA,
SELYA,

Circuit Judge.
Circuit Judge.
______________

This

appeal

requires us

to

address,

for

promulgated

the

first

time,

"safe

harbor"

regulation

by the Secretary of Labor (the Secretary) as a means

of exempting certain group insurance programs from the strictures

of the Employee Retirement Income

29 U.S.C.

1001-1461.

Security Act of 1974

(ERISA),

Determining, as we do, that the district

court

appropriately applied

clear

error in the court's

the regulation,

and

factual findings on

discerning no

other issues in

the case, we affirm the judgment below.

I.
I.

BACKGROUND
BACKGROUND

Plaintiff-appellee

operator

at the

Webster

James Johnson worked

Valve division

as a forklift

of defendant-appellant

Watts Regulator Co. (Watts) in Franklin, New Hampshire.

employed, plaintiff

elected to participate in

While so

a group insurance

program made available to Watts' employees by defendant-appellant

CIGNA Employee

North

Benefit Company

America (CIGNA).

d/b/a Life Insurance

Under the

Company of

program plaintiff

received

insurance protection against accidental death, dismemberment, and

permanent disability.

deduction plan.

He

paid

the premium

through a

payroll

Watts, in turn, remitted the premium payments to

CIGNA.

On

June 15, 1990, while

severe

a participant in the program,

plaintiff

sustained

accident.

He remained disabled for the ensuing year, and, having

crossed the policy's temporal

on

July 17,

1991.

CIGNA

head

injury

in

motorcycle

threshold, he applied for benefits

turned

him down,

claiming

that he

retained the residual capacity

to do some work.

Plaintiff then

sued Watts and CIGNA in a New Hampshire state court.

the

existence

of

an

ERISA-related

federal

Postulating

question,

the

defendants removed the action to the district court.

Following

an evidentiary

ruled that ERISA did not pertain.

Co.,
___

No.

92-508-JD,

1994

WL

hearing, the

district court

See Johnson v. Watts Regulator

___ _______
_______________

258788

(D.N.H.

May

3,

1994).

Nevertheless,

the court

denied

plaintiff's

noting diverse citizenship and the

the

requisite amount.

subsequently tried the

evidence, perused

found

plaintiff

awarded the

costs.

See
___

to be

maximum benefit,

See Johnson
___ _______

28 U.S.C.

and

The parties

The judge heard

permanently disabled,

v. Watts Regulator Co., No.

___________________

the

Hampshire law,

together with attorneys'

WL 587801 (D.N.H. Oct. 26, 1994).

II.
II.

1332(a).

policy, applied New

totally

remand,

existence of a controversy in

case to the bench.

the group

motion to

and

fees and

92-508-JD, 1994

This appeal ensued.

THE ERISA ISSUE

THE ERISA ISSUE

The

whether

the

curtain-raiser

program

subject to Title

I of

under

ERISA.

question

in

which Johnson

Confronting

this

sought

case

involves

benefits

this issue

is

requires

that

we

interpret

regulation,

29 C.F.R.

of our analysis into

and

apply

the

2510.3-1(j) (1994).

four segments.

curtain-raiser question matters.

standard

of review.

Secretary's

safe

harbor

We divide this part

First, we explain why

the

Second, we limn the applicable

Third, we discuss the regulation itself and

how it fits into the statutory and regulatory scheme.

Fourth, we

scrutinize the

record and

test the district

court's conclusion

that the program is within the safe harbor.

A.
A.

From

controversy

ERISA

the

The ERISA Difference.

The ERISA Difference.
____________________

earliest

has raged

and the

This controversy

group

over

stages

applies, preemption is

the

the relationship,

insurance program

stems from

of

litigation,

if any,

between

underwritten by

perceived self-interest:

triggered, see 29 U.S.C.

___

CIGNA.

if ERISA

1144(a), and,

in many situations, the substitution of ERISA principles (whether

derived from the statute

state-law

principles

itself or from federal common

can make

pronounced

difference.

example, ERISA preemption may cause potential state-law

to vanish, see,

e.g., Carlo

v. Reed Rolled

law) for

For

remedies

Thread Die Co.,

49

___

____

F.3d 790, 794 (1st Cir.

Technology,
__________

_____

___________________________

1995);

950 F.2d 13, 18

McCoy v. Massachusetts Inst. of

_____
_______________________

(1st Cir. 1991),

cert. denied, 504

_____ ______

U.S. 910 (1992), or may change the standard of review, see, e.g.,
___ ____

Firestone Tire & Rubber Co. v.

____________________________

or may affect the

Bruch, 489 U.S. 101, 115 (1988),

_____

admissibility of evidence, see, e.g.,

___ ____

Taft v.
____

Equitable Life Ins. Co., 9 F.3d 1469, 1471-72 (9th Cir. 1993), or
_______________________

may determine whether a jury trial is available, see, e.g., Blake

___ ____ _____

v. Unionmutual Stock Life Ins. Co., 906 F.2d

_________________________________

1525, 1526

(11th

Cir. 1990).

We are

the

uncertain which of these

minds of the protagonists in this

boggarts has captured

case.

But exploring that

question does not strike us

resources.

Given the

as a prudent use of scarce

marshalled realities

judicial

the parties agree

that the ERISA difference is of potential significance here; they

successfully persuaded the district court to that view; and it is

entirely plausible under the circumstances of this case

that the

applicability vel non of ERISA makes a meaningful difference

___ ___

we

refrain from

speculation about

proceed directly

the parties' tactical

to a determination

of whether the

goals and

court below

correctly concluded that state law provides the rule of decision.

B.
B.

The question

Standard of Review.
Standard of Review.
__________________

of whether ERISA applies

to a particular

plan or program requires an evaluation of the facts combined with

an elucidation of the law.

See, e.g., Kulinski v. Medtronic Bio___ ____ ________

______________

Medicus, Inc., 21 F.3d 254, 256 (8th Cir. 1994) (explaining that
______________

the existence

law);

of an ERISA plan

is a mixed question

Peckham v. Gem State Mut., 964 F.2d

_______
_______________

Cir. 1992)

questions

(similar).

of

fact and

For

1043, 1047 n.5 (10th

purposes of appellate

law ordinarily

of fact and

fall along

review, mixed

a degree-of-

deference

continuum,

dominated

questions

questions.

28

(1st

ranging

to

from

clear-error review

Cir.

1993).

for

for

law-

fact-dominated

Plenary

review

is,

of

course,

review is quite deferential.

Both standards are in play here.

The interpretation

legal question, sparking de

v.

review

See In re Extradition of Howard, 996 F.2d 1320, 1327___ ___________________________

nondeferential, whereas clear-error

See id.
___ ___

plenary

of a

regulation presents

novo review.

See, e.g.,
___ ____

Commissioner, Me. Dep't of Human Serv., 48

_______________________________________

a purely

Strickland
__________

F.3d 12, 16 (1st

Cir. 1994); Liberty Mut. Ins. Co. v. Commercial Union Ins. Co.,
______________________
__________________________

978

F.2d 750,

757 (1st

Cir. 1992).

Once

the meaning

of the

regulation has been clarified, however, the "mixed" question that

remains

the regulation's applicability

in a given

case

may

require factfinding, and if it does, that factfinding is reviewed

only for

plan

clear error.

becomes primarily

To that extent, the existence of an ERISA

question of

Northwestern Nat'l Ins. Co.,

_____________________________

cert. denied,

498 U.S.

908 F.2d

fact.

See
___

1077, 1082

1013 (1990); Kanne

Wickman
_______

v.

(1st Cir.),

v. Connecticut

Gen.

_____ ______

_____

Life Ins. Co., 867 F.2d 489, 492

______________

_________________

(9th Cir. 1988), cert. denied,

_____ ______

492 U.S. 906 (1989).

C.
C.

Statutory and Regulatory Context.

Statutory and Regulatory Context.
________________________________

Congress

enacted ERISA

participants in employee

of

protect the

benefit plans (including

participants' beneficiaries).

see also
___ ____

to

See 29 U.S.C.
___

interests

of

the interests

1001(a) & (b);

Curtiss-Wright Corp. v. Schoonejongen, 115 S. Ct. 1223,

____________________
_____________

1230 (1995); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 15-16
________________________
_____

(1987).

e.g.,

ERISA safeguards

by

creating

these interests in a variety

comprehensive

requirements, see 29 U.S.C.

___

reporting

and

of ways,

disclosure

1021-1031, by setting standards of

conduct

for

fiduciaries,

see
___

id.
___

establishing an appropriate remedial

1145.

worded

An

integral part

of the

preemption clause

benefit plans,

sets to

1101-1114,

framework, see id.

___ ___

statutory scheme

that, in

one side

respect to

"all

is a

and

by

1131-

broadly

covered employee

laws, decisions,

rules,

regulations, or other State

action having the effect of

any State."

The purpose of the preemption clause

Id.
___

1144(a).

law, of

is to enhance the

encouraging

efficient operation of the federal

uniformity

of

regulatory

treatment

statute by

through

the

elimination of state and local supervision over ERISA plans.

See
___

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990); McCoy,

__________________
_________
_____

950 F.2d at 18.

For an employee welfare benefit plan or program to come

within ERISA's sphere of influence, it

be

"established

organization,

or

or maintained"

both.

See
___

by

29

must, among other things,

an

U.S.C.

employer,1 an

employee

1002(1); see
___

also
____

Wickman, 908 F.2d at 1082 (enumerating necessary components of an

_______

ERISA plan);

Donovan v.
_______

Dillingham, 688
__________

F.2d 1367,

1370 (11th

Cir. 1982) (en

banc)(same).

The parties agree

that the

group

insurance program that CIGNA wrote for Watts' employees, covering

accidental

qualifies

death,

as a

dismemberment,

"program" of

term is used in the statute.

Hence, the ERISA question

and

permanent

disability,

employee welfare benefits

See generally 29
___ _________

U.S.C.

reduces to whether the program

as that

1002(1).

is one

"established or maintained" by an employer.

To

address this

very

Labor, pursuant to 29 U.S.C.

promulgate

interpretive

requirement, the

Secretary

of

1135 (authorizing the Secretary to

regulations

in

the

ERISA

milieu),

promulgated a safe harbor regulation describing when (and to what

extent) an

employer or

____________________

a trade union

may be

involved with

an

1The statute also requires that the

commerce" or in an
U.S.C.

1003(2).

employer be "engaged in

industry or activity affecting commerce.

It

is

undisputed

that

Watts meets

29

this

criterion.

employee

welfare benefit

program without

"established or maintained" it.

being deemed

See 40 Fed. Reg.

___

to have

34,527 (1975)

(explaining the rationale underlying the safe harbor regulation);

see also Silvera v. Mutual Life Ins. Co., 884 F.2d

___ ____ _______
____________________

Cir.

1989); see generally

___ _________

Procedure
_________

2.06

Ronald J.

(1994).

423, 426 (9th

Cooke, ERISA Practice and

___________________

The regulation provides

in relevant

part that the term

"employee
include

welfare
a

benefit

group

or

plan" shall

group-type

not

insurance

program offered by an insurer to employees or

members

of

an employee

organization, under

which:

(1) No contributions are made by

an employer

or employee organization;

(2)

Participation

completely

[in]

voluntary

the

for

program

is

employees

or

the employer

or

respect to

the

members;

(3) The

sole

employee

functions of

organization

program are, without

to

permit

program to

the

with

endorsing the

insurer

to

program,

publicize

employees or members,

the

to collect

premiums through payroll

checkoffs and to remit

deductions or
them to the

dues

insurer;

and

(4)

The

employer

or employee

organization

receives no consideration in the form of cash

or otherwise in connection with

the program,

other than reasonable compensation, excluding

any

profit,

for

administrative

actually rendered in connection

services

with payroll

deductions or dues checkoffs.

29

C.F.R.

2510.3-1(j).

regulation's

standards

"established

or

will

program

be

maintained" by

deemed

the

that

not

employer.

satisfies

to

The

have

the

been

converse,

however, is not necessarily true; a program that fails to satisfy

the regulation's

standards is

not automatically deemed

to have

been "established or maintained" by the employer, but, rather, is

subject to further evaluation under the conventional tests.

See
___

Hansenv. Continental Ins. Co., 940 F.2d 971, 976 (5th Cir. 1991).
______
____________________

Here, we need not proceed beyond the regulation itself.

The safe harbor dredged by the regulation operates on the premise

that the

absence of employer involvement

for ERISA safeguards.

force by

arranging for

vitiates the necessity

In theory, an employer can assist its work

the provision

of desirable

coverage at

attractive rates,

itself that, if

but, by complying with

it acts

only as

the regulation, assure

an honest

broker and

remains

neutral vis-a-vis the plan's operation, it will not be put to the

trouble

and expense

that meeting ERISA's

Failure

to fulfill any

one of the

regulation, however, closes the

requirements entails.

four criteria

listed in the

safe harbor and exposes a

group

insurance program, if it otherwise qualifies as an ERISA program,

to the strictures of the Act.

See
___

Qualls v. Blue Cross of Cal.,

______
___________________

Inc., 22 F.3d 839, 843 (9th Cir. 1994); Fugarino v. Hartford Life
____
________
_____________

& Accident Ins. Co., 969

____________________

F.2d 178,

184 (6th Cir.

1992), cert.
_____

denied, 113 S. Ct. 1401 (1993); Memorial Hosp. Sys. v. Northbrook

______
___________________
__________

Life Ins. Co., 904 F.2d 236,

_____________

241 n.6 (5th Cir. 1990); Kanne, 867

_____

F.2d at 492.

In

criteria

the instant

case,

are not in dispute.

the first,

second, and

fourth

Plaintiff paid the premium without

the employer's financial assistance; the decision to purchase the

coverage was his and

his alone; and Watts received

no forbidden

consideration.

We concentrate,

therefore, on

the regulation's

third facet.

has called

"the

This is a fitting focus, as the Department of Labor

the employer neutrality

key to the rationale for not

employee benefit plan . . . ."

In dealing with the

agency's view of

that the third

facet evokes

treating such a program as an

40 Fed. Reg. 34,526.

regulation, courts have echoed the

the importance

of employer

neutrality.

e.g., Hensley v. Philadelphia Life Ins. Co., 878 F.

____ _______
___________________________

See,
___

Supp. 1465,

1471 (N.D. Ala. 1995); du Mortier v. Massachusetts Gen. Life Ins.

__________
____________________________

Co.,
___

805

regulation

an

F. Supp.

816,

821

(C.D. Cal.

itself indicates, remaining

employer to

build a

moat

around a

1992).

the

neutral does not require

program or

itself from all aspects of program administration.

as the employer merely advises

But as

to separate

Thus, as long

employees of the availability

of

group insurance,

accepts payroll

deductions, passes them

on to

the insurer, and performs other ministerial tasks that assist the

insurer in publicizing the program, it will not be deemed to have

endorsed the

867 F.2d

program under

section 2510.3-1(j)(3).

at 492; du Mortier, 805 F. Supp.

___________

See Kanne,
___ _____

at 821.

It is only

when an employer purposes to do more, and takes substantial steps

in

that

neutrality

867

direction,

that

F.2d at 492-93 (holding

plan

offends

the

ideal

and brings ERISA into the picture.

line when it established

of

it

of

employer

See, e.g., Kanne,

___ ____ _____

that an employer

group crossed the

a trust entity in its name for purposes

administration); Brundage-Peterson
_________________

v.

Compcare Health
_______________

Servs. Ins. Corp., 877 F.2d 509, 510-11 (7th Cir. 1989) (finding
__________________

10

that

an

employer

who

determined

eligibility,

contributed

premiums, and collected and remitted premiums paid for dependents

did

not qualify

for

the safe

harbor

exemption); Shiffler
________

Equitable Life Assur. Soc. of U.S., 663 F. Supp.

___________________________________

v.

155, 161 (E.D.

Pa. 1986) (finding that an employer that touted a group policy to

employees

as part

of its

customary benefits package,

and that

specifically endorsed the

policy, did not

harbor exemption), aff'd, 838 F.2d 78

_____

falls

between these

extremes, and

qualify for the

(3d Cir. 1988).

requires us

safe

This case

to clarify

the

standard for endorsement under section 2510.3-1(j)(3).

The

Department of

Labor has

linked endorsement

of a

program on the part of an employee organization to its engagement

"in activities that

that

would lead a

member reasonably to

the program is part of a benefit arrangement established or

maintained by the employee organization."

94-26A (1994).2

gander.

link

conclude

What is sauce

Dep't of Labor Op. No.

for the goose

is sauce for

the

Thus, we believe that the agency, in a proper case, will

endorsement on

an

employer's part

to

its engagement

in

activities that would lead a worker reasonably to conclude that a

particular

group

insurance

program

is

part

of

benefit

arrangement backed by the company.

This conclusion is bolstered by the Department's stated

rationale

to

the

effect

that

communication

to

employees

____________________

2Opinion letters

issued by the

controlling even in the cases

Secretary of Labor

for which they are authored.

Reich v. Newspapers of New Eng., Inc., 44 F.3d 1060,

_____
______________________________
Cir. 1995).

are not

Nonetheless, courts may derive guidance

See id.
___ ___

11

See
___

1070 (1st

from them.

indicating

that an employer has

arranged for a

group or group-

type insurance program would constitute an endorsement within the

meaning of

employer

that

section 2510.3-1(j)(3) if, taken

activities, it leads

the

program

communicator.

is

one

earlier

version

representation to its

benefit of

employees reasonably

established

or

of the safe harbor

requiring

that

the

maintained

by

the

provision replaced

employer

employees that the insurance

employment because critics found

"too vague and

to conclude

See id.; see also 40 Fed. Reg. 34,526 (explaining

___ ___ ___ ____

that the current phrasing

an

together with other

difficult to apply").

make

no

program is a

the earlier version

In short, the agency

has

suggested

that the

employees'

principal frame of

viewpoint should

reference in determining

constitute the

whether endorsement

occurred.

The interpretation of the safe harbor regulation by the

agency charged with administering and enforcing ERISA is entitled

to

substantial deference.

v. ICC, 52 F.3d 378,

___

of the Navy, 853

_____________

See Berkshire Scenic Ry. Museum, Inc.

___ _________________________________

381-82 (1st Cir. 1995); Keyes

_____

F.2d

1016,

1021

(1st

v. Secretary
_________

Cir. 1988).

Here,

moreover, the respect usually accorded an agency's interpretation

of

own

a statute is magnified

regulation.

(1992);

See
___

since the agency

Arkansas v.
________

Oklahoma,
________

is interpreting its

503 U.S.

91, 112

Puerto Rico Aqueduct & Sewer Auth. v. United States EPA,

__________________________________
_________________

35 F.3d 600,

(1995).

604 (1st Cir. 1994), cert. denied,

_____ ______

So long

violence to

the

as the

purpose

agency's

and

115 S. Ct. 1096

interpretation does

wording

of

the

not do

regulation,

or

12

otherwise cross into forbidden terrain, courts should defer.

Martin v. OSHRC, 499

______
_____

United

States, 113

U.S. 144, 150 (1991);

S. Ct.

1913, 1919

see also Stinson

___ ____ _______

(1993) (holding

See
___

v.

that an

______________

agency's

interpretation of

its

own regulations

must be

given

controlling weight unless plainly erroneous, inconsistent with

federal

statute, or

unconstitutional); Kelly v.
_____

United States,
_____________

924 F.2d 355, 361 (1st Cir. 1991) (similar).

In

this instance,

The Secretary's sense of the

with

we believe

that deference

is due.

safe harbor regulation is consonant

both the regulation's text and the overlying statute.

moreover, looking

at the employer's conduct

from the employees'

place of vantage best ensures that employer neutrality

reality rather

judging

than

endorsement

mere illusion.

from

the

viewpoint

And,

Phrased

of

an

remains a

another

way,

objectively

reasonable employee most efficaciously serves ERISA's fundamental

objective:

the protection

of employee benefit plan participants

and their beneficiaries.

We rule,

therefore, that an

endorsed a

safe

harbor regulation if, in light of all the surrounding facts

circumstances,

an

objectively

purview of

said to

have

and

program within the

employer will be

reasonable

the Secretary's

employee

would

conclude on the basis of the employer's actions that the employer

had

not merely

facilitated the

program's availability

but had

exercised control over it or made it appear to be part and parcel

of the company's own benefit package.

D.
D.

Analysis.
Analysis.
________

13

Here,

correctly and

the

concluded that

group insurance

thus,

district court

program.

the company

Santander P.R., 902 F.2d 148, 152

______________

52(a).

set aside unless,

appeals is left

had not

This conclusion is

reviewable only for clear

R. Civ. P.

interpreted

error.3

See
___

with an

endorsed the

fact-driven, and,

Cumpiano v. Banco
________
_____

(1st Cir. 1990); see also Fed.

___ ____

Thus, the trier's findings

on reviewing

the regulation

of fact cannot be

all the evidence,

abiding conviction that

the court

a mistake

of

has

been

committed.

Inc., 972 F.2d

____

152-153.

See Dedham Water Co. v. Cumberland Farms Dairy,

___ ________________
_______________________

453, 457 (1st Cir.

1992); Cumpiano, 902

________

Applying this deferential

F.2d at

standard, we cannot say that

the trial court's "no endorsement" finding is clearly erroneous.

The

anatomy

instructive.

officials

of

the

Based primarily on

Watts'

court's

the testimony of two

benefits administrator

employee relations manager

determination

is

corporate

and Webster

Valve's

the court found that the company had

____________________

3The
fact

question of endorsement vel non is a mixed question of

___ ___

and law.

In some cases

in one direction so that a

conclusion.
Cf.
___

rational factfinder can reach but one

In those cases, endorsement becomes a matter of law.

Griffin v.
_______

(discussing

the evidence will point unerringly

United States,
______________

"adequacy

on

502

the proof

U.S.
as

46,
made"

55

n.1

(1991)

as meaning

not

whether the evidence

found, but, rather,
in

sufficed to

whether the facts adduced at

law to support a

477 U.S. 242,

verdict); Anderson v.
________

251-52 (1986) (describing the

inquiry for directed verdicts and

cases, the legal significance
the

outcome will

chooses to draw.
426 U.S.
Cir.
fact.

enable an alleged

depend on
See, e.g.,
___ ____

In those

be

trial sufficed

Liberty Lobby, Inc.,

___________________

appropriate mode of

summary judgments).

of the facts is less

the inferences that

In

other

certain, and

the factfinder

TSC Indus., Inc. v. Northway, Inc.,

________________
______________

438, 450 (1976); In re Varasso, 37 F.3d

______________

1994).

fact to

cases, endorsement becomes

This case is of the latter type.

14

760, 763 (1st

a question of

made its

employees aware of the opportunity

but

had stopped short of

the

policy and,

Watts

to obtain coverage,

endorsing the program.

presumably,

set the

CIGNA drafted

premium rates.

Although

distributed the sales brochure, waiver-of-insurance cards,

and enrollment cards, those efforts were undertaken to help CIGNA

publicize the program; the documents themselves were prepared and

printed

by CIGNA, and delivered by it to Watts for distribution.

Watts recommended enrollment via a cover letter (reproduced as an

appendix hereto)

and signed by

written on

the letterhead of

its vice-president for

Watts Industries

financial matters.

CIGNA

typeset the letter and incorporated it into the cover page of the

brochure.

The letter explicitly informed

the enrollment

decision

was

theirs to

Watts' employees that

make.

Watts

nowhere

suggested that it had any

control over, or proprietary

in,

program.

the group

insurance

And,

interest

finally, neither

the

letter nor any other passage in the brochure mentioned ERISA.

The

district

activities concerning

through

payroll

issued

certificates

commencement of

for

court

the

Watts

remitted

enrolled

coverage, maintained

its own records, and

examined

program.

deductions,

to

also

the

Watts'

other

collected

premiums

premiums

to CIGNA,

employees

a list of

confirming

the

insured persons

assisted CIGNA in securing appropriate

documentation when claims eventuated.

Watts' activities in this

respect consisted principally of filling out the employer portion

of

the claim form,

in Watts' personnel

inserting statistical information maintained

files (such as the insured's

name, address,

15

age,

classification, and

available to

of

employees (e.g.,

employee eligibility.

determine

date

of hire),

making various

claim forms),4 and

Watts would follow

its status, if CIGNA

forms

keeping track

up on

a claim to

requested that Watts

do so, and

would occasionally answer a broker's questions about a claim.

sum, Watts

performed only

administrative

role in the substantive aspects of

tasks, eschewing

In

any

program design and operation.

It had no

hand in drafting the plan, working

components,

policy

determining

eligibility for

out its structural

coverage, interpreting

language, investigating, allowing and disallowing claims,

handling litigation, or negotiating settlements.

In

Watts' cover

The

the last

analysis, the

letter fell

from the letter,

an endorsement.

neither the letter

nor the brochure

employer endorsed the program.

the court

concluded that

only ministerial activities,

viewed alone or

found that

short of constituting

court pointed out that

expressly stated that the

district court

Watts had

and that these activities

in conjunction

with the cover

Apart

performed

(whether

letter) did

not

rise to the level of an endorsement.

We believe that

this finding deserves

our allegiance.

Drawing permissible inferences from the evidence, the trial court

could

plausibly

conclude

on

this

scumbled

record

that

an

objectively reasonable employee would not have thought that Watts

endorsed

the

group insurance

program.

Several considerations

____________________

4CIGNA prepared

and

printed all

supply of forms to Watts.

16

such

forms, and

sent

lead us in this direction.

We offer a representative sampling.

First, we think that

more

than

merely

recommending

expressed opinion as to

insurance

endorsement of a program requires

more,

probative of) endorsement, will

Watts

undertook

regulation.

and

An

employer's

while relevant

comfortably

Activities such

maintaining a list of

within

perhaps

functions that

the

Secretary's

as issuing certificates of coverage

enrollees are plainly

as answering brokers' questions similarly

assisting the insurer

of an

most often not indicate employer

Second, the administrative

fit

to (and

ancillary to a

permitted function (implementing payroll deductions).

such

publicly

the quality, utility and/or value

plan, without

control of the plan.

it.

in publicizing the plan.

Activities

can be viewed as

Other activities

that

arguably fall closer

eligibility

status,

regulation's aims.

could

to the line, such

are

completely

as the tracking of

compatible

Under the circumstances,

with

the

the court lawfully

find that the employer's activities, in the aggregate, did

not take the case out of

the safe harbor.5

See, e.g., Brundage___ ____ _________

____________________

5Appellants stress the fact that Watts unilaterally prepared

and filed a Form 5500 with the Internal Revenue Service.
an

This is

example of the mountain laboring, but bringing forth a mouse.

Such forms are informational in nature and are designed to comply

with

various reporting

Cooke,

supra,
_____

requirements

3.10, at

3-34.

that ERISA

But, there

imposes.

is no

See
___

evidence to

suggest that Watts' employees knew of this protective filing, and

it

is surpassingly

makes

difficult for

a dispositive

compiling the tax form

ERISA

plan does not

(explaining

us to

difference.

fathom how

Although

the filing

the inference

that

demonstrated Watts' intent to provide

escape us, but
___

cf. Kanne, 867

___ _____

that a brochure describing

a plan as

an

F.2d at 493

an ERISA plan

evidences the intent of the employer to create an ERISA plan, but

the same may

not be said of the

filing of a tax return),

it is

entirely

possible, as the plaintiff

suggests, that the form was

17

Peterson,
________

877

F.2d

at

510

(assuming

that

steps

such

as

"distributing advertising brochures from insurance

providers, or

answering

insurance, or

even

questions

deducting

paychecks and

the

of its

employees concerning

insurance

remitting

them to

premiums

the

from

its

insurers," do

employees'

not

force

employers out of the

Supp.

safe harbor provision); du Mortier,

__________

805 F.

at 821 (holding that activities such as maintaining a file

of informational materials, distributing

submitting completed forms

forms to employees, and

to the insurer, do

not transcend the

boundaries of the safe harbor).

In arguing

for reversal, appellants rely

Continental Ins. Co., a case that

_____________________

In

on Hansen v.
______

involved a similar situation.

Hansen, as here, participation in the plan was voluntary, and

______

premiums were paid by

Hansen,
______

940 F.2d at 973.

remitted them to the

accepted

the employees via payroll deduction.

The employer

collected the premiums,

insurer, and employed an

claim forms and transmitted

See
___

administrator who

them to the

carrier.

See
___

id.
___

at 974.

embossed with

In addition,

the employer's

the

employees received

corporate logo that

plan and encouraged employee participation.

the company had endorsed the plan.

the corporate logo was

booklet

described the

The court found that

See id.
___ ___

Despite the resemblances, there

that distinguish Hansen

______

are two critical facts

from the case at bar.

First, in Hansen
______

embossed on the booklet itself,

see id.,
___ ___

____________________

filed merely as

a precaution.

In any event,

the employer's activities, not its intentions.

18

this case turns on

making

it

appear

that

brochure (and for the

bore its

booklet

imprimatur.

employer

plan).

vouched

for

Here, however, only

Second,

and perhaps

the entire

Watts' letter

more

cogent,

the

at issue in Hansen described the policy as the company's

______

plan, see id. ("our

___ ___

plan"), while here, the letter

the booklet describes

organization.6

merely

the

a matter

determining legal

the policy

Though the

offered by

appellants decry the

of semantics,

rights and

as a plan

words

are often

obligations.

typeset onto

See
___

another

distinction as

significant in

generally Felix
_________

Frankfurter,

(1947)

Some Reflections on the Reading of Statutes

_______________________________________________

("Exactness

in the

use

of words

is the

basis

29

of all

serious thinking.").

In the difference

the

is

quintessential meaning of endorsement.

the

beckon.

Nov.

between "our plan" and "a plan" lies

employer's plan

or program,

the

If a plan or program

safe harbor

does not

See, e.g., Sorel v. CIGNA, 1994 WL 605726, at *2 (D.N.H.

___ ____ _____
_____

1,

employer's

1994)

plan

(holding

on first

endorsement); Cockey
______

that statement

page

of

describing

plan description

v. Life Ins. Co. of N. Am., 804

_________________________

policy

as

indicates

F. Supp.

1571, 1575 (S.D. Ga. 1992) (finding that when employer presents a

program to its

employees as an integral part of its own benefits

____________________

6There

may

also

approach to

the

question of

Hansen.
______

Although the

be

critical

difference

endorsement

between

and that

adopted

Hansen court did not articulate

______

our

in

its ratio
_____

decidendi, at least one district court has come to the conclusion

_________
that Hansen
______
employer

analyzed the

situation from

rather than the employee.

of N. Am., 813
___________
possibility

F.

Supp.

798, 800

renders appellants'

19

of the

See Barrett v. Insurance Co.

___ _______
_____________
(N.D.

reliance

problematic.

the standpoint

Ala.

1993).

on Hansen
______

even

This

more

package, the safe harbor is unavailable); Shiffler, 663 F.

________

at 161

(finding endorsement

employees

unavailable

No. 94-26A, supra (advising that

_____

when

insurance program as its

separates

itself from

union, inter
_____

program).

the program,

that the program is a third

employer's

had been

hawked to

as a part of the company's benefits package); see also

___ ____

Dep't of Labor Op.

is

because policy

Supp.

alia,
____

safe harbor

describes

When, however, the

making it

a group

employer

reasonably clear

party's offering, not subject to the

control, then the safe harbor may be accessible.

Hansen, 940 F.2d at 977; Kanne, 867 F.2d at 493;

______
_____

See
___

Hensley, 878 F.
_______

Supp. at 1471.

This

distinction is

sensible.

When

an

objectively

reasonable

employee reads

belonging to his employer, he

participates,

as

is likely to conclude that, if

he

with the employer

and that he

prophylaxis that ERISA ensures

in such

When the possessive pronoun is eliminated in favor of a

neutral article, however, the

likely

a program

he will be dealing

will therefore enjoy the

matters.

brochure describing

to

be

directly with

that, if

he

a third party

employee's perception is much more

participates,

the

he

insurer

will be

and

dealing

that he

will

therefore be beyond the scope of ERISA's protections.

To sum up, we

are drawn to three conclusions.

First,

the district court did not clearly err in finding that Watts

not endorsed

the group insurance

fact-sensitive determination

that

program.

Second,

the program

had

the court's

fits within

the

parameters

of

the

Secretary's

safe

harbor

regulation

is

20

sustainable.

did

not

Third, since ERISA does not apply, the court below

blunder

in

scrutinizing

the

merits

of

plaintiff's

contract claim through the prism of state law.

III.
III.

THE DISABILITY ISSUE

THE DISABILITY ISSUE

Appellant asseverates

that, even if

New Hampshire law

controls,

the judgment below is

insupportable.

We

turn now to

this asseveration.

The

starting point

policy of insurance is

for

a year, and who thereafter

The

disability

resulting

lasting for at least

the applicable

is "continuous"

and "total"

remains "permanently and totally

from

180 days

injuries sustained

after the

date

in

an accident,

of the

a year, and producing during

Insured's complete inability

occupation."

Here,

rider defines "continuous total disability" as a

"commencing within

"the

claim under

to an insured who has been injured in an

whose ensuing disability

disabled."

virtually any

the policy itself.

rider promises benefits

accident,

for

to perform every

accident,"

that interval

duty of his

If an insured meets this benchmark, he must then

that

he is "permanently and totally disabled."

definitions,

inability,

this

phrase

after one

year

signifies

"the

of continuous

prove

Under the policy

Insured's

complete

total disability,

to

engage in an occupation or employment for which [he] is fitted by

reason of education, training, or experience for the remainder of

his

life."

inspect

It

is against

appellants'

this

assertion that

21

linguistic backdrop

the

trial

that

we

court erred

in

finding plaintiff to be totally and permanently disabled.

A.
A.

In actions

findings

paying

of fact

due

inferences

Cumpiano,
________

902

that are tried

are to

respect

and

Standard of Review.
Standard of Review.
__________________

to

be honored

unless

the judge's

right

to

gauge the

F.2d

at 152

Reliance Steel Prods. Co. v.

__________________________

575, 576 (1st

Cir. 1989).

that, when there are

factfinder's choice

to the

credibility

(citing

Fed.

court, the

clearly erroneous,

to

draw reasonable

of

witnesses.

R.

Civ. P.

A corollary of

them cannot

See
___

52(a));

National Fire Ins. Co., 880

_______________________

this proposition

two permissible views of the

between

judge's

F.2d

is

evidence, the

be clearly

erroneous.

See Anderson v. City of Bessemer City, 470 U.S. 564, 574

___ ________
_____________________

Cumpiano, 902 F.2d at 152.

________

on the facts by

must refrain

In fine, when a case has been decided

a judge sitting jury-waived, an

from any

(1985);

temptation to

retry

appellate court

the factual

issues

anew.

There

are, of

example, de novo

the

the law.

U.S. 174,

Edison Co., 822

__________

to

the rule.

review supplants clear-error review

extent that, findings of

view of

374

course, exceptions

See,
___

195 n.9

fact are predicated

e.g., United States v.

____ _____________

if, and to

on a mistaken

Singer Mfg. Co.,

_______________

(1963); RCI N.E. Servs. Div.

_____________________

F.2d 199, 203

For

(1st Cir. 1987).

mean, however, that the clearly erroneous standard

v. Boston
______

This does

not

can be eluded

by the simple expedient

902 F.2d

of creative relabelling.

at 154; Reliance Steel,

______________

reasons, we will not

880 F.2d at 577.

allow a litigant to subvert

See
___

Cumpiano,
________

For obvious

the mandate of

22

Rule 52(a) by hosting a masquerade, "dressing factual disputes in

`legal' costumery."

Reliance Steel, 880 F.2d at 577; accord Dopp

______________
______ ____

v.

Pritzker, 38 F.3d 1239,

________

1245 (1st Cir.

1994), cert. denied,

_____ ______

115 S. Ct. 1959 (1995).

B.
B.

Appellants

plaintiff's

52(a),

make

Analysis.
Analysis.
________

two

disability claim.

main

arguments

in

regard

to

First, in an effort to skirt Rule

they assert that the district court committed an error of

law, mistaking the meaning of the phrase "permanently and totally

disabled" as

that phrase is used

assertion as

comprising nothing

in the policy.

more than

a clumsy

as an issue

of law

recast a

clear-error challenge

securing

a more welcoming standard of review.

defines

the operative term,

We reject the

and the record

attempt to

in hope

of

The policy itself

makes pellucid that

the district judge applied the term within the parameters of that

definition.

Appellants' second contention posits that

court

misperceived

sufficiently

the

facts,

disabled to

contention also

and

merit

lacks force.

an

The

that

award

the district

plaintiff

was

of benefits.

district court

not

This

had adequate

grounds for

deciding that plaintiff was

totally and permanently

disabled.

The

plaintiff

evidence

showed

that

sustained

devastating brain injury, and that, throughout the year following

his accident, a number

continuous.

of physicians found his disability

By and large, plaintiff's

significantly during that year

to be

condition did not improve

(or thereafter, for that matter).

23

Without

return to

contains

permanent

exception, the

doctors

concluded that

work as a forklift driver.

ample

evidence

and blanketed

plaintiff

a laborer

that

the

he could

never

To cap matters, the record

the plaintiff's

universe of

disability

occupations to

with a high-school education

was

which

might have

aspired.

We

need not

cite

book and

detailed findings, crediting the

verse.

The

court

made

conclusions of four doctors who

judged

plaintiff

physically.7

Sherri

severely

impaired,

both mentally

and

The court also credited an evaluation performed

Krasner,

testimony

to be

of

speech

and language

vocational

pathologist,

rehabilitation

by

and

counselor,

the

Arthur

Kaufman, who offered an opinion that plaintiff was unable to work

without

know

constant supervision.

of a job suitable

Kaufman stated

for a person

that he

did not

in plaintiff's condition.8

____________________

7These

experts

Martino),

included

neurologist

the
(Dr.

neuropsychologist (Dr. Higgins), and

A

fifth

physician,

plaintiff.

Dr.

CIGNA chose

but neglected to

Michele

attending
Whitlock),

Gaier-Rush,

also

a job

Toye).

evaluated

its medical examiner

any of plaintiff's

prior medical records, despite their availability.

that

(Dr.

clinical

a psychologist (Dr.

Dr. Gaier-Rush as

provide her with

physician

plentiful

She concluded

plaintiff could not perform his usual job but could perform
"requiring more

mental capacity than

physical capacity."

She noted, however, that plaintiff had no formal

training beyond

high school,

probably

permanent

and

conceded

disability as

that

there

"[t]his
does not

will
seem

to have

be

been

significant

improvement in

the past

year."

Consequently, she

found it doubtful that plaintiff could ever work again.

8While

Kaufman did say that

some gainful

employment with

plaintiff, like
would

other

probably benefit

expressed

doubt

impairment.

that

plaintiff might be

able to do

"excessive supervision," and

patients with

traumatic brain

from vocational
plaintiff

In short, he lacked

that

injuries,

rehabilitation, Kaufman

would

ever

overcome

the "capacity to retain

his

. . .

24

On

this record,

unimpugnable.

the trial court's

total disability

finding is

Another wave of

the

district

court's

appellants' evidentiary attack targets

finding

permanent.

In

this

physicians'

recommendations

indicative of the

that

plaintiff's disability

respect, appellants

for

rely

mainly

rehabilitative

potential for recovery.

on the

therapy

The district

is

as

court,

however, found appellants' inference unreasonable in light of the

dim

prospects

plaintiff's

require

significant

inability

vocational

receipt of

to

work,

rehabilitation

benefits.

trial court is in

scales.

for

These

recovery,

and the

as

the

duration

of

policy's

failure

to

precondition

are fact-dominated issues,

the best position to calibrate

See Cumpiano,
___ ________

902 F.2d

at 152.

Having

to

the

and the

the decisional

examined the

record with care, we have no reason to suspect that a mistake was

committed.

See, e.g., Duhaime v. Insurance Co., 86 N.H. 307, 308

___ ____ _______
_____________

(1933) (explaining

that, to be permanently

disabled, an insured

need not be in a condition of "utter hopelessness").

IV.
IV.

CONCLUSION
CONCLUSION

We need go

group insurance

court's

no further.

ERISA does not

program at issue

factual

findings

here.

survive

Moreover,

apply to

the district

clear-error

Consequently, the court's resolution of the case stands.

____________________

employment."

25

the

review.

Affirmed.
Affirmed.
________

26