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LAWRENCE PAPER CO. v. GOMEZ6/2/1995
The opinion of the court was delivered by
This is a federal preemption case. The Lawrence Paper Company (LPC) seeks a judgment under K.S.A. 60-1701 et seq. declaring that a provision of the Kansas Workers Compensation Act (KWCA), K.S.A. 44-501 et seq., is preempted by the federal Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. (1988).
K.S.A. 44-511(a)(2)(E), the Kansas provision in question, requires that the value of discontinued employer-paid insurance and employer contributions to pension and profit-sharing plans be factored into the computation of disability benefits for injured employees.
The district court held for the defendants George R. Gomez, Workers Compensation Director, and the State, reasoning that
ERISA does not preempt K.S.A. 44-511(a)(2)(E). The district court's conclusion rested primarily on the following determinations:
"1. The challenged provision of the KWCA does not materially alter an existing administrative scheme under ERISA, nor does it affect the primary function of plaintiff's benefit plans.
"2. Any relationship between the challenged provision of the KWCA and any ERISA-covered plan maintained by plaintiff is at most remote, tenuous and peripheral and does not invoke the preemptive or supersedure provisions of 29 U.S.C. § 1144."
The issue is simply whether the way in which the KWCA, through K.S.A. 44-511(a)(2)(E), defines an employee's compensation for purposes of computing disability benefits is preempted by ERISA § 514(a), 29 U.S.C. § 1144(a) (1988). LPC seeks to prevent the State from adding the value of discontinued employer-paid insurance, pension, and profit-sharing benefits into the calculation of workers compensation benefits, which are based on an employee's compensation at the time of injury.
Our jurisdiction is under K.S.A. 60-1709 (declaratory judgments) and K.S.A. 20-3017 (transfer from the Court of Appeals). We hold that the provisions of K.S.A. 44-511(a)(2)(E) do not "relate to" LPC's employee benefit plans within the meaning of ERISA's preemption provision, § 514(a), 29 U.S.C. § 1144(a), and consequently are not subject to preemption. We affirm the district court.
The preemption issue is one of statutory construction. Our standard of review is unlimited. See Gillespie v. Seymour, 250 Kan. 123, 129, 823 P.2d 782 (1991).
FACTS
The material facts are not in dispute. LPC is a Kansas corporation that engages in interstate commerce. It is neither a religious nor a governmental entity. LPC maintains a health insurance plan, a 401(k) savings and profit-sharing plan, and a pension plan for its employees who choose to participate. The employee benefit plans are within the scope of ERISA, and none of the above-described plans are maintained for purposes of complying with the KWCA.
Contributions to the plans are made on behalf of and for the benefit of eligible employees.
LPC is a self-insurer under K.S.A. 44-532. It maintains self-insured status solely for purposes of complying with the KWCA.
DISCUSSION
ERISA preemption is a question of federal law. Decisions of the United States Supreme Court, to the extent they are applicable, control. Ritchie v. Johnson, 158 Kan. 103, 117, 144 P.2d 925 (1944). If there is no controlling Supreme Court opinion, the weight of authority in the lower federal courts> is considered persuasive. 158 Kan. at 118.
K.S.A. 44-511(a)(2)(E) and the KWCA
Under the KWCA, an injured employee ordinarily is entitled to receive benefits based upon a percentage of the employee's
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