GARDNER, J.
Rarely do we permit a party to raise a new issue on appeal, but we must do so here. At oral argument, counsel for Blue Cross and Blue Shield of Kansas, Inc. (BCBS) alleged, for the first time in this case, that this court lacks subject matter jurisdiction because the only statute which BCBS allegedly violated does not provide a private right of action. Because we agree that both the district court and this court lack subject matter jurisdiction, we vacate the judgment entered by the district court and dismiss this appeal.
Samuel Jahnke (Jahnke) brought suit against Blue Cross and Blue Shield of Kansas, Inc., due to BCBS's refusal to pay medical bills he incurred for his treatment, including
BCBS removed this action to federal court on the basis that the Jahnkes' claims were preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (2006). The federal court disagreed, finding no federal subject matter jurisdiction, and remanded the case to the state district court.
Upon remand, the Jahnkes and BCBS filed cross-motions for summary judgment. The district court granted BCBS's motion for summary judgment on Count I pursuant to the agreement of the parties but granted the Jahnkes' motion for summary judgment on Count II. In doing so, the district court adopted the federal court's ruling that ERISA did not apply due to the safe habor exemption. The district court ruled the policy was subject to the Act, the Act restricted waiting periods to 90 days' maximum, and BCBS's 240-day waiting period violated the Act. The court awarded the Jahnkes damages in the amount of $99,459.97, plus interest. Following a subsequent motion and hearing, the court awarded $93,839.51 in attorney fees to the Jahnkes.
BCBS appeals. In it's briefs, it argues: (1) the district court erred in granting summary judgment to the Jahnkes because the policy's 240-day waiting period does not violate K.S.A. 40-2209f(f); (2) the district court erred in denying summary judgment to BCBS on the basis of ERISA preemption because the safe harbor exemption does not apply; (3) the district court erred in awarding attorney fees to the Jahnkes because BCBS did not act without just cause or excuse in denying the claim.
The facts are largely undisputed. Samuel R. Jahnke & Sons is a family farming enterprise that employed Samuel R. Jahnke, his wife Mary, and their sons Matthew and Eric. The ownership of Jahnke & Sons was divided equally among the family, with Samuel and Mary owning a one-third interest, Matthew owning a one-third interest, and Eric and Kristel Jahnke owning a one-third interest.
Since March 30, 2007, Jahnke & Sons has been a Subchapter S Corporation, thus Jahnke and Sons' income, losses, deductions, and credits passed through to the corporate owners or shareholders who then paid taxes on the corporation's income on their individual tax returns. As an S corporation, Jahnke & Sons did not pay any taxes; rather, all of Jahnke & Sons' tax liability was passed through to its shareholders. Each of the three Jahnke households, as equal shareholders, claimed one-third of Jahnke & Sons' income and expenses on their personal tax returns.
On September 1, 2005, BCBS issued a policy of health insurance for the employees of Jahnke & Sons and their family members. From 2005 to 2008, the owners of Jahnke & Sons were covered by a group policy issued by BCBS. On September 1, 2008, the Jahnkes elected to cancel their group insurance policy and purchase new individual policies for the purpose of dropping unneeded maternity coverage and lowering their premiums. The new policies, which became effective September 1, 2008, deleted maternity coverage but included different terms and conditions.
Jahnke acknowledged and agreed to the different coverage and new conditions by signing the Enrollment Confirmation Form which expressly set out the new policy's waiting periods. That form specifically notified Jahnke of a 240-day waiting period for the "[t]reatment of tumors or growths," stating:
Each of the three shareholders of Jahnke & Sons claimed a self-employed health insurance deduction on their personal tax returns for one-third of the total health insurance premiums paid by Jahnke & Sons. Jahnke & Sons paid its employees' health insurance premiums directly to BCBS "out of the corporate account" and "out of the corporate cash." However, the insurance premiums paid by Jahnke & Sons were allocated equally to the three shareholders as distributions despite the fact that the shareholders' actual individual premium amounts were unequal. The actual amounts of the premium payments were not reported as income on the employees' W-2 forms.
In the correspondence to the Jahnkes noting the change in coverage, BCBS identified the policy as Group Number M008395, projected to be effective on September 1, 2008. When the coverage was changed, BCBS identified the group name as Samuel R. Jahnke & Sons. The package code was identified as "First Choice Business," not "True Group," "First Choice Individual," or "Plan 65." The reissued policy was prefaced by and delivered to Jahnke & Sons under a group name and with a specified group number. Correspondence regarding the policy also specified the group name. The BCBS member summary for the policy provided:
BCBS admits that its correspondence often referred to the policy as a group policy, but it contends such references were for mere convenience and are immaterial because the policy was an individual policy which it never treated as a group policy.
On or about April 19, 2009, approximately 11 days before expiration of the 240-day waiting period, Jahnke underwent an operation to remove a brain tumor. BCBS denied the subsequent related claim under the policy's 240-day waiting period for the treatment of tumors or growths.
After BCBS denied coverage, Jahnke exhausted the internal appeals set forth in the BCBS policy. Before his death, Jahnke filed this case against BCBS in the district court, asserting two claims. Count I of the petition alleged that the policy violated K.S.A. 40-2209(a)(8) in failing to waive the preexisting conditions exclusion. Count II alleged that the policy's 240-day waiting period violated K.S.A. 40-2209f(f)'s provision that health benefit plans covering small employers cannot have a waiting period longer than 90 days.
After conducting limited discovery, BCBS removed this action to the United States District Court for the District of Kansas, alleging preemption by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (2006).
The federal court granted summary judgment to BCBS on Count I based on its "determination that the policy at issue was an individual rather than a group plan." The Jahnkes have since abandoned this theory of relief.
As to Count II, the federal court denied summary judgment, finding a question of material fact as to whether K.S.A. 40-2209f(f) applied to the policy because the evidence failed to establish beyond a reasonable doubt that the Samuel Jahnke policy was issued to him totally independent of the small employer group. See K.S.A. 40-2209e(d), (a). The federal court found a material question of fact as to whether Jahnke & Sons contributed to payment of the policy premiums such that ERISA's safe harbor exemption would apply. In addition, the federal court found
The court later held an evidentiary hearing on the application of ERISA's "safe harbor" provision, 29 C.F.R. § 2510.3-1(j). It ultimately found that the payments to BCBS for the Jahnkes' health insurance had not been made by an employer but had been paid by the individual shareholders of Jahnke & Sons. Accordingly, ERISA's safe harbor exemption applied and the action was not preempted by ERISA. Because no federal question provided a basis for subject matter jurisdiction, the federal court remanded this action to the state district court. Samuel R. Jahnke & Sons, Inc. v. Blue Cross/Blue Shield of Kansas, No. 10-4098-JTM, 2012 WL 3234757 (D.Kan.2012) (unpublished opinion).
On remand, the parties filed cross-motions for summary judgment. The Jahnkes had abandoned Count I, so the district court granted summary judgment in favor of BCBS on that count pursuant to the agreement of the parties.
As to Count II, the Jahnkes argued that the policy's 240-day waiting period violated K.S.A. 40-2209e and K.S.A. 40-2209f(f) because Kansas law places a 90-day limitation on waiting periods. BCBS argued that the Jahnkes' state law claims were preempted by ERISA, that their policy was not subject to the Kansas Small Employer Health Care Act, and that even if the policy were subject to that Act it did not violate K.S.A. 40-2209f(f).
The district court granted summary judgment in favor of the Jahnkes on the remaining issues, adopting the federal court's findings and analysis with respect to ERISA preemption. The court ruled that the policy was exempt from ERISA because the small employer, Jahnke & Sons, had made no contribution to the payment of the policy's premiums. The district court found the policy, although it was an individual and not a group policy, was subject to the Act because the focus is not on whether a policy was issued for a group in terms of coverage, but simply to a group otherwise authorized to supply coverage. The district court concluded that the insurance policy's 240-day waiting period violated K.S.A. 40-2209f(f) because it exceeded the statutory 90-day maximum and found that insurance coverage for the treatment of the brain tumor should have become effective December 10, 2008.
After a hearing, the court awarded the Jahnkes damages in the amount of $99,459.97, plus interest in the amount of $44,945.57 from March 30, 2009, and continuing at the legal rate of interest. The Jahnkes then moved for attorney fees pursuant to K.S.A. 40-256. BCBS did not contest the reasonableness of the amount of the attorney fees sought but alleged no fee award was proper. The court granted the Jahnkes' request for attorney fees because the evidence, taken in its totality, revealed that the denial of coverage was "without just cause or excuse." The court thus awarded fees in an amount over $93,000. BCBS timely appealed from the judgment.
At oral argument of this case, counsel for BCBS began by notifying the court and opposing counsel that it wished to raise a new argument on appeal. Neither the court nor opposing counsel had any prior notice of this new argument. BCBS contended that the Jahnkes had no private right of action under the Act, including K.S.A. 40-2209f, thus the district court lacked and this court lacks subject matter jurisdiction. This court ordered supplemental briefing, and the parties responded. BCBS contends that violations of the Act may be enforced only by the Commissioner of Insurance, divesting this court of subject matter jurisdiction. The Jahnkes respond that the issue of subject matter jurisdiction cannot be raised this late in the case, and that this is a simple breach of contract action for which a private right of action clearly exists.
We first address the Jahnkes' assertion that they have stated a claim for breach
The Jahnkes point to various oral arguments and communications between the parties which refer to this case, in its earlier stages, as a breach of contract case, or to policy language giving the insured a right to sue in court after exhausting BCBS's internal appeal procedure for claims alleging breach of contracts. But that focus is misdirected. Our determination of the nature of the case is based on the pleadings that the Jahnkes filed in this case, since no pretrial order was entered.
The Jahnkes' petition alleges no constitutional or common-law violations and no breach of contract. It states, in Count II:
We recognize that "a host of Kansas decisions have interpreted the provisions of K.S.A. 60-208 to provide for a liberal construction of the pleadings with the emphasis on substance rather than form." Oller v. Kincheloe's, Inc., 235 Kan. 440, 446, 681 P.2d 630 (1984). And we may permit issues not raised by the pleadings to be treated as if they were raised by the pleadings when such issues are tried by express or implied consent of the parties. K.S.A. 60-215(b).
But here, the parties submitted the case via cross-motions for summary judgment on Count II on the sole legal theory that the policy breached the statute, not that BCBS breached the policy. This case has been subject to multiple evidentiary hearings, both in federal and state court, in which the Jahnkes' sole claim under Count II was that BCBS violated the Act. We find no breach of contract included in Count II of the petition, and no such claim has been tried by express or implied consent of the parties. Nor is any such breach apparent from the facts, as the 240-day waiting period for tumors was clearly disclosed and unambiguously stated in the policy, and Jahnke's treatment for his tumor indisputably fell within that 240-day period. Under these circumstances, we find no merit to the Jahnkes' claim that this is a breach of contract case. Therefore, if the Jahnkes have no private right of action under the Act, then they cannot prevail.
Accordingly, we must determine whether we have jurisdiction to reach the alleged violation of K.S.A. 40-2209f(f), the 90-day maximum waiting period prescribed by statute.
The Jahnkes contend that it is too late in the day to raise the issue of subject matter jurisdiction. Although we share the Jahnkes' view that this issue should have been raised years ago, we cannot find it time-barred.
The issue of subject matter jurisdiction may be raised at any time, in any manner, before any court. State v. Ernesti, 291 Kan. 54, 60, 239 P.3d 40 (2010); Mid-Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, 185, 106 P.3d 483 (2005). Moreover, this court has an independent duty to determine whether subject matter jurisdiction exists. See Associated Wholesale Grocers, Inc. v. Americold Corporation, 293 Kan. 633, 637, 270 P.3d 1074 (2011).
Whether jurisdiction exists is a question of law over which this court's scope of review is unlimited. Frazier v. Goudschaal, 296 Kan. 730, 743, 295 P.3d 542 (2013). Parties cannot confer subject matter jurisdiction by consent, waiver, or estoppel, and a failure to object will not invest the court with the requisite jurisdiction. Ryser v. State, 295 Kan. 452, 456, 284 P.3d 337 (2012). Moreover, if the district court lacks jurisdiction to enter an order, an appellate court does not acquire jurisdiction over the
Subject matter jurisdiction authorizes the court to hear and determine a case. See State v. Bickford, 234 Kan. 507, 508-09, 672 P.2d 607 (1983). Subject matter jurisdiction is ordinarily conferred by statute. Kingsley v. Kansas Dept. of Revenue, 288 Kan. 390, 395, 204 P.3d 562 (2009).
"Which party should win a lawsuit is an altogether different question from that of whether the court has the power to say who wins." Frazier v. Goudschaal, 296 Kan. 730, 743, 295 P.3d 542 (2013). Subject matter jurisdiction refers to the power of a court to hear and decide a particular type of action. Wichita Eagle & Beacon Publishing Co. v. Simmons, 274 Kan. 194, 205, 50 P.3d 66 (2002). Jurisdiction over subject matter is the power to decide the general question involved and not the exercise of that power. Babcock v. City of Kansas City, 197 Kan. 610, 618, 419 P.2d 882 (1966).
The parties tacitly agree that the absence of a private right of action defeats the court's subject matter jurisdiction. Although we find no Kansas case so stating, cases sufficiently analogous to ours support that conclusion. Kansas courts have often held that a failure to exhaust administrative remedies warrants dismissal based on a lack of subject matter jurisdiction. See, e.g., Dean v. State, 250 Kan. 417, 427-28, 826 P.2d 1372, cert. denied 504 U.S. 973, 112 S.Ct. 2941, 119 L.Ed.2d 566 (1992) (so stating); Zarda v. State, 250 Kan. 364, 374, 826 P.2d 1365 (1992) (finding plaintiffs had a clear and certain statutory remedy for full, adequate, and complete relief so the district court lacked jurisdiction to grant such relief, and properly dismissed that part of plaintiffs' action). Similarly, exhaustion of administrative remedies is a precondition to judicial review under the Kansas Judicial Review Act (KJRA). Jones v. State, 279 Kan. 364, 368, 109 P.3d 1166 (2005). Strict compliance with the pleading requirements of K.S.A. 77-614(b) is necessary before a court may exercise subject matter jurisdiction over a petition for judicial review. Kingsley v. Kansas Dept. of Revenue, 288 Kan. 390, 408-09, 204 P.3d 562 (2009) (finding no subject matter jurisdiction to consider a petition when a person does not exhaust all available administrative remedies under the Kansas Judicial Review Act). The Kansas Supreme Court has recently held that a party's failure to comply with the notice requirement in K.S.A. 2012 Supp. 12-105b(d) for claims against a municipality under the Kansas Tort Claims Act implicates subject matter jurisdiction. Sleeth v. Sedan City Hospital, 298 Kan. 853, 862-63, 317 P.3d 782 (2014).
Kansas appellate courts may exercise jurisdiction only under circumstances allowed by statute. Flores Rentals v. Flores, 283 Kan. 476, 481, 153 P.3d 523 (2007), as modified (May 11, 2007). Thus, if a statute requires that violations of the statute's provisions be enforced exclusively by a governmental entity, as BCBS contends here, this court lacks subject matter jurisdiction over a claim brought by a private party. See Nichols v. Kansas Political Action Committee, 270 Kan. 37, 50-51, 11 P.3d 1134 (2000) (affirming dismissal for lack of subject matter jurisdiction where statute provided no private right of action); see also K.S.A. 20-301 (providing for "general original jurisdiction of all matters, both civil and criminal, unless otherwise provided by law") (emphasis added). Such a statute affects the court's power to hear and decide a particular type of action. "Appellate courts and administrative tribunals have jurisdiction to entertain an appeal only if an appeal is prescribed by statute. McDonald v. Hannigan, 262 Kan. 156, 160, 936 P.2d 262 (1997)." Wasson v. United
Accordingly, for this court to have subject matter jurisdiction over the Jahnkes' claim that BCBS violated their right under the statute, we must find that they have a private right to enforce that statute by bringing this action in court.
Some statutes expressly impose personal liability on persons or entities for violation of the provisions thereof, or for failure to perform specified duties. For example, the Kansas Supreme Court found a private right of action under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(3) (2006), which provided that for each violation a person is entitled to $500 or actual damages, whichever is greater, as well as treble damages if the violation is willful or knowing. Critchfield Physical Therapy v. The Taranto Group, Inc., 293 Kan. 285, 291, 263 P.3d 767 (2011).
"Most statutes do not, however, explicitly confer on potential plaintiffs a civil remedy." Shirley v. Glass, 297 Kan. 888, 894, 308 P.3d 1 (2013). Nor does the statute allegedly violated here — K.S.A. 40-2209f. Nonetheless, a private right of action may be implied. In such cases, a two-part test guides our determination:
To determine whether the legislature intended to grant a private cause of action for a violation of a statute, we primarily look to the form or language of the statute.
Where the plain language of the statute is unambiguous, we do not speculate as to the legislative intent behind it.
Our analysis is informed by other Kansas cases which have examined whether a private right of action exists.
In Pullen, the Kansas Supreme Court found the provisions of the Kansas Fire Prevention Act (KFPA) and National Fire Prevention Association pamphlet 1123 (NFPA 1123) do not expressly create a private cause of action. 278 Kan. at 200-01, 92 P.3d 584. Disobeying the requirements for permits, licenses, and safety procedures is wrong only because the state fire marshal adopted NFPA 1123 as a regulation through the authority granted by the legislature. The provisions of the KFPA create criminal and administrative penalties for violations of NFPA 1123. Accordingly, Pullen failed to demonstrate that the legislature intended to create a private cause of action.
Similarly, in Nichols, 270 Kan. at 50-51, 11 P.3d 1134, the Kansas Supreme Court found no private right of action because the legislature had designed a comprehensive scheme for enforcement of the Campaign Finance Act, evidencing its intent that alleged violations of that Act be processed by the Commission rather than by the courts.
The Court of Appeals found a private right of action, however, in Dietz v. Atchison, Topeka & Santa Fe Rwy. Co., 16 Kan.App.2d 342, 823 P.2d 810 (1991), rev. denied 250 Kan. 804 (1992). There, survivors of a truck driver who was killed by driving his truck into the side of a moving train brought a wrongful death action. The deceased had violated a Kansas Corporation Commission regulation requiring drivers hauling hazardous materials to stop, look, and listen at railroad crossings. The relevant statute stated:
We held that a plain reading of the statute indicated the legislature's intent to create, on behalf of "any person or corporation" injured as a direct result of a common carrier's violation of provisions of law regulating common carriers, an individual right of action against the common carrier. 16 Kan.App.2d at 347, 823 P.2d 810.
Similarly, in Nora H. Ringler, Revocable Family Trust v. Meyer Land and Cattle Co., 25 Kan.App.2d 122, 129, 131-32, 958 P.2d 1162 (1998), we determined that K.S.A.1994 Supp. 65-171d, which contained distance requirements between livestock feeding facilities and habitable buildings, was intended to protect a particular class of persons. We then found that the legislature, knowing of KDHE's limited resources and citizens' complaints that small feedlots were causing considerable nuisance problems, intended to allow private citizens to enforce the distance requirements by injunctive relief.
We first review the enabling legislation to determine whom the statute was designed to protect. K.S.A. 40-2209b states the purpose of the Small Employer Health Care Act:
From this and other language used in the Act, see K.S.A. 40-2209g(a)(3), (d), we find that the purpose of the Act is to enhance the efficiency and fairness of the small employer health insurance marketplace, which primarily benefits small employers. Nothing in the Act itself indicates an intent to protect a specific group of persons which would include Jahnke.
Nor does the specific statute Jahnke relies on demonstrate an intent to protect a specific group of persons. That statute, K.S.A. 40-2209f(f), places a 90-day limitation on "waiting periods," stating:
The Act then defines "waiting period" by stating: "For the purposes of this section, the term `waiting period' means with respect to a group policy the period which must pass before the individual is eligible to be covered for benefits under the terms of the policy." K.S.A. 40-2209f(j). In setting limits on what small employer health benefits plans can do and mandating what they shall do with respect to group policy waiting periods, this statute reflects regulation of an industry primarily for the protection of small employers, and only incidentally, if at all, for the benefit of their individual employees.
Two provisions of the Act are particularly relevant in determining whether the legislature intended to create a private right of action. The first states: "Violations of this act shall be treated as violations of the unfair trade practices act and subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411 and amendments thereto." K.S.A. 40-2209o. The second provides: "The commissioner may adopt rules and regulations necessary to carry out the provisions of this act." K.S.A. 40-2209n. This language has remained unchanged since the Act was enacted, yet we find no precedent interpreting it.
The United States District Court for the District of Kansas has held, however, that no private right of action exists under the Kansas Unfair Trade Practices Act (KUTPA) statutes referenced above. In Earth Scientists (Petro Services) Ltd. v. U.S. Fidelity & Guaranty Co., 619 F.Supp. 1465, 1468 (D.Kan.1985), Judge O'Connor examined K.S.A. 40-2407 and 40-2411, and found that the overriding goal of the KUTPA is to provide the public with the benefits that flow from a well-regulated insurance industry. He concluded that the statute vests all power under the Act in the Commissioner of Insurance, who has the sole duty to enforce it, noting:
The Earth Scientists decision was based largely on the plain meaning of the KUTPA:
The court found no private right of action primarily because the KUTPA vests all power and duty to enforce the Act in the Commissioner of Insurance. See Earth Scientists, 619 F.Supp. at 1468-69.
In Spencer v. Aetna Life & Casualty Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980), our Supreme Court addressed whether the tort of bad faith was actionable in Kansas. In doing so, the court discussed the provisions of the KUTPA and the insured's possible remedies. The court concluded it would not recognize the tort of bad faith, reasoning:
The Earth Scientists court relied on our Supreme Court's reasoning in Spencer to conclude that it would not expand the KUTPA to imply a private cause of action. The remedies are thus limited to: (1) a suit for breach of the insurance contract; and (2) a report to the Commissioner of Insurance who may proceed under the KUTPA. Earth Scientists, 619 F.Supp. at 1470. The Earth Scientists court found it significant that the KUTPA contained no language authorizing a private cause of action:
For additional support that the KUTPA was not intended to provide for a private cause of action, the Earth Scientists court noted:
Here, the Act expressly states that violations of the Act shall be treated as violations
Given this statutory language, which is substantially unchanged from the date Judge O'Connor reviewed it, we find the rationale of Earth Scientists persuasive and agree that KUTPA affords no private right of action. This Act, in mandating that its violations "shall be treated as violations of the unfair trade practices act" and subject to its penalties, expresses clear legislative intent that it creates no private right of action. See K.S.A. 40-2209o
Other provisions of the Act support our conclusion that no private right of action is intended. The Act's references to enforcement and the administration of the Act refer exclusively to the Commissioner of Insurance. See K.S.A. 40-2209d(k)(1) (deemed by the commissioner to be in hazardous financial position); K.S.A. 40-2209g(c) and (d) (commissioner may adopt rules and regulations and approve the establishment of additional classes of businesses to enhance the efficiency and fairness of the small employer marketplace); K.S.A. 40-2209h(a)(10) (commissioner may establish regulations to assure that rating practices used are consistent with the purposes of the Act); K.S.A. 40-2209h(c) (the commissioner may suspend the application of subsection [a][1] for a specified time period and under certain conditions); K.S.A. 40-2209j (carriers must file actuarial certificate with commissioner demonstrating compliance with the Act); K.S.A. 40-2209m(g) (commissioner may adopt rules and regulations setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers). Further, judicial review is available for decisions, actions, or orders of the Insurance Commissioner. See K.S.A. 40-2407(b); 40-2408(a), (b); Golden Rule Ins.
Additionally, courts generally presume that the legislature acts with full knowledge of existing law. In re Adoption of H.C.H., 297 Kan. 819, 831, 304 P.3d 1271 (2013). When the legislature fails to modify a statute to avoid a standing judicial construction of the statute, this court may presume that the legislature intended the statute to be interpreted as it had been in the past. Cady v. Schroll, 298 Kan. 731, 737, 317 P.3d 90 (2014).
Accordingly, we presume the legislature knew when it enacted the Act 7 years after the Earth Scientists decision that the KUTPA did not contain a private cause of action, yet it made sure to align the Act's remedies and penalties with the KUTPA. See K.S.A. 40-2209o. Since that time, the legislature has had many opportunities to add a provision creating a private cause of action under the KUTPA but has not done so. We therefore find no private right of action under the Kansas Small Employer Health Care Act.
We thus conclude that in this Act, as in the KUTPA, the legislature provided no express or implied private cause of action. Because neither this court nor the district court has subject matter jurisdiction over the Jahnkes' direct action in court, we must dismiss this appeal and vacate the judgment entered by the district court.
Nonetheless, we briefly address BCBS's contention that ERISA preempts this state court action. Both the federal court and the district court addressed this issue, rejecting BCBS's claim of ERISA preemption. Suffice it to say that we have reviewed the record of the evidentiary hearing held in federal court and agree, for the reasons stated by Judge Marten, that ERISA's safe harbor exemption applied, precluding federal subject matter jurisdiction. See Samuel R. Jahnke & Sons, Inc. v. Blue Cross/Blue Shield of Kansas, No. 10-4098-JTM, 2011 WL 4526778, at *8 (D.Kan.2011) (unpublished opinion); Samuel R. Jahnke & Sons, Inc. v. Blue Cross/Blue Shield of Kansas, No. 10-4098-JTM, 2012 WL 3234757 (D.Kan.2012) (unpublished opinion). We do so recognizing that his decision is not binding on us. See McIntosh v. Atchison, Topeka & Santa Fe Rwy. Co., 19 Kan.App.2d 814, Syl. ¶¶ 3, 4, 877 P.2d 11, rev. denied 255 Kan. 1002 (1994).
The facts show that BCBS did not raise a material question of fact that Jahnke & Sons contributed to payment of the premiums. Rather, the evidence shows that even though the premiums were paid via a corporate check, the entire amount was passed on to the shareholders. Jahnke & Sons did not absorb any costs of the premiums but was a mere conduit for premium payments. We do not believe that a mistake, if any, by the shareholders in claiming a personal deduction on their tax returns is determinative of whether the employer contributed to the premiums. The entire amount of the premiums was paid by the three shareholders, not by Jahnke & Sons. That the premiums were allocated equally among the shareholders is not determinative, as that fact does not show that Jahnke & Sons absorbed any portion of the premiums' costs. We find the federal court decision persuasive in its analysis of ERISA and adopt its rationale here, finding the safe harbor exemption of 29 C.F.R. § 2510.3-1(j) applicable.
Judgment vacated and appeal dismissed.
