An Unusual PA State Court Case Addressing ERISA Preemption

The Superior Court of Pennsylvania issued a non-precedential opinion on Thursday, November 10, 2016, holding that a breach of contract action related to a series of retirement agreements that promised lifetime retiree health care was not…

By Adam Garner

The Superior Court of Pennsylvania issued a non-precedential opinion on Thursday, November 10, 2016, holding that a breach of contract action related to a series of retirement agreements that promised lifetime retiree health care was not subject to ERISA preemption.  Coggins v. Keystone Foods, No. 3814 EDA 2015, 2016 Pa. Super. Unpub. LEXIS 4104 (Pa. Super. November 10, 2016).   Although the rationale underlying the decision is a victory for employees and their advocates, its usefulness is limited because of the Superior Court’s limitations on the citation of unpublished decisions in subsequent cases.  A copy of the Court’s decision may be downloaded here.

The Plaintiffs in Coggins were several former employees of Keystone Foods.  During Plaintiffs’ employment, Keystone entered into a written retirement agreement with the Plaintiffs prior to and upon their retirement from the company.  The retirement agreements stated: “Keystone also agrees to maintain the existing health care benefits, including medical, prescription, dental and vision and the existing Medical Reimbursement Plan, for Employees and qualified dependents for life.”   At the time the retirement agreements were signed, each Plaintiff received all of their health care benefits, including insurance premiums, prescription, dental and vision at no cost.

Each Plaintiff retired from his employment with Keystone and satisfied the age and service requirements necessary to receive the health care benefits described in their retirement agreements.  On June 2, 2014, the company sent each Plaintiff a letter advising him that, as of January 1, 2015, they were required to pay a portion of the health care premium as well as any copays.

On December 30, 2014, Plaintiffs filed a complaint in the Court of Common Pleas of Montgomery County alleging that Keystone’s decision to begin charging them for their retiree health care benefits breached their retirement agreements and also violated the Pennsylvania Wage Payment Collection Law, 43 P.S. § 260.1 et seq. (“WPCL”).  Keystone subsequently removed the case the United States District Court for the Eastern District of Pennsylvania claiming that Section 502 of Employee Retirement Income Security Act of 1974 (“ERISA), 29 U.S.C. § 1132, preempted Plaintiffs’ state law claims.

The federal court held that Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), did not preempt the claims because the Plaintiffs were not seeking benefits from the underlying ERISA-regulated health plans at issue, but rather were seeking to enforce the terms of the retirement agreements, which ERISA did not govern.  Coggins v. Keystone Foods, LLC,  111 F. Supp. 3d 630 (E.D. Pa. 2015).  The case was remanded back to the Court of Common Pleas.

On remand, Keystone sought to have judgment entered in its favor pursuant to Section 514 of ERISA, 29 U.S.C. § 1144.  That provision provides that ERISA preempts and supersedes any and all state laws “insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144 (emphasis added).  The Court of Common Pleas agreed with the company, entered judgment in its favor, and found against the Plaintiffs.

On appeal, the Superior Court reversed the Court of Common Pleas and found that ERISA did not preempt the claims because they did not “relate to” an employee benefit plan.  It noted:

Although the Benefits Plan undisputedly provides health care benefits covered by ERISA, the Retirement Agreements are separate contracts, which merely set forth Plaintiffs’ claimed right to continue receiving no-cost health care benefits, rather than provide new benefits covered under ERISA. When Keystone entered into the Retirement Agreements with Plaintiffs in 2011, Keystone covered all of Plaintiffs’ existing health care expenses. In the Retirement Agreements, Keystone agreed to “maintain [Plaintiffs’] existing health care benefits[,]” and those of their qualified dependents, for life. Accordingly, determining Keystone’s liability for Plaintiffs’ claims turns on Keystone’s disputed contractual obligation under the separate Retirement Agreements to continue to pay for all of Plaintiffs’ health care expenses, which claims are properly enforced under state law and not Section 514(a) [of ERISA].

Coggins, 2016 Pa. Super. Unpub. LEXIS 4104 at *12-13.  The Court distinguished the case at bar from Barnett v. SKF USA, Inc., 38 A.3d 770, 777 (Pa. 2012), a case with somewhat similar facts, because unlike in that case, the Plaintiffs in Coggins had based their case on the written employment agreements as opposed to an oral promise purporting to modify a written retirement plan.  Coggins, 2016 Pa. Super. Unpub. LEXIS 4104 at *18.


From the perspective of an individual representing Plaintiffs in an employee benefits cases, I think the Coggins case is a great outcome.  Nonetheless, I question whether the Superior Court’s decision will stand if this matter is ultimately heard by the Pennsylvania Supreme Court.  I will be following this case as it progresses and will report back with further developments.

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