Third Circuit Holds Health Plan of a Redevelopment Authority is a Governmental Plan

Benefit plans maintained by governmental entities are exempted from ERISA.  However, sometimes the determination of whether an entity qualifies as a "government" can be difficult.  The Third Circuit in a recent case of Koval v. Washington County Redevelopment Authority held that the Washington County Redevelopment Authority ("WCRA") did constitute a "political subdivision" of the state of Pennsylvania so that a health plan offered by the WCRA was then a governmental plan exempted from ERISA.  The court's analysis is important as the Third Circuit adopted the Second Circuit NLRB test for determining what constitutes a "political subdivision":   

We hereby endorse the NLRB test as the appropriate analysis to apply in determining whether a state-affiliated entity is a “political subdivision” of the state for purposes of 29 U.S.C. § 1002(32).

The court also noted that by statute, the WCRA was given "powers beyond those 'of a private corporation'" which also supported its determination that the authority was a "political subdivision."