

                  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 &amp; Hollis were on brief, for appellants.                                        
     Christopher  J.  Seufert,  with  whom  Seufert  Professional                                                                           
Association was on brief, for appellee.                     

                                             

                         August 23, 1995

                                             

          SELYA,  Circuit  Judge.   This  appeal  requires us  to                    SELYA,  Circuit  Judge.                                          

address,  for   the  first  time,  a   "safe  harbor"  regulation

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

of exempting certain group insurance programs from the strictures

of the Employee Retirement Income  Security Act of 1974  (ERISA),

29 U.S.C.    1001-1461.  Determining, as we do, that the district

court  appropriately applied  the regulation,  and  discerning no

clear  error in the court's  factual findings on  other issues in

the case, we affirm the judgment below.

I.  BACKGROUND          I.  BACKGROUND

          Plaintiff-appellee  James Johnson worked  as a forklift

operator  at the  Webster  Valve division  of defendant-appellant

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

employed, plaintiff  elected to participate in  a group insurance

program made available to Watts' employees by defendant-appellant

CIGNA Employee  Benefit Company  d/b/a Life Insurance  Company of

North  America (CIGNA).    Under the  program plaintiff  received

insurance protection against accidental death, dismemberment, and

permanent disability.   He  paid  the premium  through a  payroll

deduction plan.  Watts, in turn, remitted the premium payments to

CIGNA.   

          On  June 15, 1990, while  a participant in the program,

plaintiff  sustained  a  severe   head  injury  in  a  motorcycle

accident.  He remained disabled for the ensuing year, and, having

crossed the policy's temporal  threshold, he applied for benefits

on  July 17,  1991.   CIGNA  turned  him down,  claiming  that he

                                2

retained the residual capacity  to do some work.   Plaintiff then

sued Watts and CIGNA in a New Hampshire state court.  Postulating

the  existence  of   an  ERISA-related   federal  question,   the

defendants removed the action to the district court.

          Following  an evidentiary  hearing, the  district court

ruled that ERISA did not pertain.  See Johnson v. Watts Regulator                                                                           

Co.,  No.  92-508-JD,  1994  WL  258788  (D.N.H.  May  3,  1994).             

Nevertheless,  the court  denied  plaintiff's  motion to  remand,

noting diverse citizenship and the  existence of a controversy in

the  requisite amount.   See  28 U.S.C.    1332(a).   The parties                                      

subsequently tried the  case to the bench.   The judge heard  the

evidence, perused  the group  policy, applied New  Hampshire law,

found  plaintiff  to be  totally  and  permanently disabled,  and

awarded the  maximum benefit,  together with attorneys'  fees and

costs.  See Johnson  v. Watts Regulator Co., No.  92-508-JD, 1994                                                     

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

II.  THE ERISA ISSUE          II.  THE ERISA ISSUE

          The  curtain-raiser  question  in  this  case  involves

whether  the  program  under  which Johnson  sought  benefits  is

subject to Title  I of  ERISA.  Confronting  this issue  requires

that  we   interpret  and  apply  the   Secretary's  safe  harbor

regulation,  29 C.F.R.   2510.3-1(j) (1994).  We divide this part

of our analysis into  four segments.   First, we explain why  the

curtain-raiser question matters.   Second, we limn the applicable

standard  of review.  Third, we discuss the regulation itself and

how it fits into the statutory and regulatory scheme.  Fourth, we

                                3

scrutinize the  record and  test the district  court's conclusion

that the program is within the safe harbor.

                    A.  The ERISA Difference.                              A.  The ERISA Difference.                                                      

          From   the  earliest  stages   of  the   litigation,  a

controversy  has raged  over  the relationship,  if any,  between

ERISA  and the  group  insurance program  underwritten by  CIGNA.

This controversy  stems from  perceived self-interest:   if ERISA

applies, preemption is  triggered, see 29 U.S.C.    1144(a), and,                                                

in many situations, the substitution of ERISA principles (whether

derived from the statute  itself or from federal common  law) for

state-law  principles  can make  a  pronounced  difference.   For

example, ERISA preemption may cause potential state-law  remedies

to vanish, see,  e.g., Carlo  v. Reed Rolled  Thread Die Co.,  49                                                                      

F.3d 790, 794 (1st Cir.  1995);  McCoy v. Massachusetts Inst.  of                                                                           

Technology,  950 F.2d 13, 18  (1st Cir. 1991),  cert. denied, 504                                                                      

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

Firestone  Tire &amp; Rubber Co. v.  Bruch, 489 U.S. 101, 115 (1988),                                                

or may affect the  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  uncertain which of these  boggarts has captured

the  minds of the protagonists in this  case.  But exploring that

question does not strike us  as a prudent use of scarce  judicial

resources.   Given the  marshalled realities    the parties agree

                                4

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  the parties' tactical  goals and

proceed directly  to a determination  of whether the  court below

correctly concluded that state law provides the rule of decision.

                     B.  Standard of Review.                               B.  Standard of Review.                                                     

          The question  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  of an ERISA plan  is a mixed question  of fact and

law);  Peckham v. Gem  State Mut., 964 F.2d  1043, 1047 n.5 (10th                                           

Cir. 1992)  (similar).  For  purposes of appellate  review, mixed

questions  of  fact and  law ordinarily  fall along  a degree-of-

deference  continuum,  ranging  from  plenary   review  for  law-

dominated  questions  to  clear-error review  for  fact-dominated

questions.  See In re Extradition of Howard, 996 F.2d 1320, 1327-                                                     

28   (1st  Cir.   1993).     Plenary   review   is,  of   course,

nondeferential, whereas clear-error  review is quite deferential.

See id.  Both standards are in play here.                 

          The interpretation  of a  regulation presents  a purely

legal question, sparking de  novo review.  See, e.g.,  Strickland                                                                           

v.  Commissioner, Me. Dep't  of Human Serv., 48  F.3d 12, 16 (1st                                                     

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

                                5

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  clear error.  To that extent, the existence of an ERISA

plan  becomes primarily  a  question of  fact.   See  Wickman  v.                                                                       

Northwestern  Nat'l  Ins. Co.,  908 F.2d  1077, 1082  (1st Cir.),                                       

cert. denied,  498 U.S.  1013 (1990); Kanne  v. Connecticut  Gen.                                                                           

Life Ins.  Co., 867 F.2d 489, 492  (9th Cir. 1988), cert. denied,                                                                          

492 U.S. 906 (1989).

              C.  Statutory and Regulatory Context.                        C.  Statutory and Regulatory Context.                                                            

          Congress  enacted ERISA  to  protect the  interests  of

participants in employee  benefit plans (including  the interests

of  participants' beneficiaries).  See 29 U.S.C.   1001(a) &amp; (b);                                                

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

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

(1987).  ERISA safeguards  these interests in a variety  of ways,

e.g.,   by  creating   comprehensive  reporting   and  disclosure

requirements, see 29 U.S.C.    1021-1031, by setting standards of                           

conduct   for  fiduciaries,   see  id.       1101-1114,   and  by                                                

establishing an appropriate remedial  framework, see id.    1131-                                                                  

1145.  An  integral part  of the  statutory scheme  is a  broadly

worded  preemption clause  that, in  respect to  covered employee

benefit plans,  sets to  one side  "all  laws, decisions,  rules,

regulations, or other State  action having the effect of  law, of

any State."  Id.   1144(a).  The purpose of the preemption clause                          

                                6

is to enhance the  efficient operation of the federal  statute by

encouraging  uniformity  of  regulatory  treatment   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  must, among other things,

be  "established  or maintained"  by  an  employer,1 an  employee

organization,  or  both.   See  29  U.S.C.     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  death,  dismemberment,   and  permanent   disability,

qualifies  as a  "program" of  employee welfare benefits  as that

term is used in the statute.  See generally 29  U.S.C.   1002(1).                                                     

Hence, the ERISA question  reduces to whether the program  is one

"established or maintained" by an employer.  

          To  address this  very  requirement, the  Secretary  of

Labor, pursuant to 29 U.S.C.   1135 (authorizing the Secretary to

promulgate  interpretive   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  employer be "engaged in
commerce" or in an  industry or activity affecting commerce.   29
U.S.C.     1003(2).   It  is  undisputed  that  Watts meets  this
criterion. 

                                7

employee  welfare benefit  program without  being deemed  to have

"established or maintained" it.   See 40 Fed. Reg.  34,527 (1975)                                               

(explaining the rationale underlying the safe harbor regulation);

see also Silvera v. Mutual Life Ins. Co., 884 F.2d  423, 426 (9th                                                  

Cir.  1989); see generally  Ronald J.  Cooke, ERISA  Practice and                                                                           

Procedure    2.06  (1994).   The regulation provides  in relevant                   

part that the term 

          "employee  welfare  benefit  plan" shall  not
          include  a  group  or   group-type  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   [in]  the   program  is
          completely   voluntary   for   employees   or
          members;

          (3) The  sole  functions of  the employer  or
          employee  organization  with  respect to  the
          program are, without  endorsing the  program,
          to   permit  the  insurer  to  publicize  the
          program to  employees or members,  to collect
          premiums through payroll  deductions or  dues
          checkoffs and to remit  them to the  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  services
          actually rendered in connection  with payroll
          deductions or dues checkoffs.

29  C.F.R.     2510.3-1(j).     A  program  that  satisfies   the

regulation's  standards   will  be   deemed  not  to   have  been

"established  or  maintained" by  the  employer.   The  converse,

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

                                8

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  vitiates the necessity

for ERISA safeguards.  In theory, an employer can assist its work

force by  arranging for  the provision  of desirable  coverage at

attractive rates,  but, by complying with  the regulation, assure

itself that, if  it acts  only as  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  requirements entails.

Failure  to fulfill any  one of the  four criteria  listed in the

regulation, however, closes 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                                                                           

&amp; 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  the instant  case,  the first,  second, and  fourth

criteria  are not in dispute.  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

                                9

consideration.   We concentrate,  therefore, on  the regulation's

third facet.  This is a fitting focus, as the Department of Labor

has called  the employer neutrality  that the third  facet evokes

"the  key to the rationale for not  treating such a program as an

employee benefit plan . . . ."  40 Fed. Reg. 34,526.

          In dealing with the  regulation, courts have echoed the

agency's view of  the importance  of employer  neutrality.   See,                                                                          

e.g., Hensley v. Philadelphia  Life Ins. Co., 878 F.  Supp. 1465,                                                      

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

Co.,  805  F. Supp.  816,  821  (C.D. Cal.  1992).    But as  the             

regulation  itself indicates, remaining  neutral does not require

an  employer to  build a  moat  around a  program or  to separate

itself from all aspects of program administration.  Thus, as long

as the employer merely advises  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  program under  section 2510.3-1(j)(3).   See Kanne,                                                                          

867 F.2d  at 492; du  Mortier, 805 F. Supp.  at 821.   It is only                                       

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

in  that  direction,  that  it  offends  the  ideal  of  employer

neutrality  and brings ERISA into the picture.  See, e.g., Kanne,                                                                          

867  F.2d at 492-93 (holding  that an employer  group crossed the

line when it established  a trust entity in its name for purposes

of  plan  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  v.                                                                       

Equitable Life Assur. Soc.  of U.S., 663 F. Supp.  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  qualify for the  safe

harbor exemption), aff'd, 838 F.2d 78  (3d Cir. 1988).  This case                                  

falls  between these  extremes, and  requires us  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  would lead a  member reasonably to  conclude

that  the program is part of a benefit arrangement established or

maintained by the employee organization."  Dep't of Labor Op. No.

94-26A (1994).2   What is sauce  for the goose  is sauce for  the

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

link  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  a  benefit

arrangement backed by the company.

          This conclusion is bolstered by the Department's stated

rationale  to  the  effect  that  a  communication  to  employees
                                                  

     2Opinion letters  issued by the  Secretary of Labor  are not
controlling even in the cases  for which they are authored.   See                                                                           
Reich v. Newspapers  of New Eng.,  Inc., 44 F.3d 1060,  1070 (1st                                                 
Cir. 1995).   Nonetheless, courts may derive guidance  from them.
See id.                 

                                11

indicating  that an employer has  arranged for a  group or group-

type insurance program would constitute an endorsement within the

meaning of  section 2510.3-1(j)(3) if, taken  together with other

employer  activities, it leads  employees reasonably  to conclude

that  the  program  is  one  established  or  maintained  by  the

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

that the current phrasing  of the safe harbor  provision replaced

an  earlier   version  requiring   that  the  employer   make  no

representation to its  employees that the insurance  program is a

benefit of  employment because critics found  the earlier version

"too vague and  difficult to apply").   In short, the agency  has

suggested  that the  employees'  viewpoint should  constitute the

principal frame of  reference in determining  whether endorsement

occurred.

          The interpretation of the safe harbor regulation by the

agency charged with administering and enforcing ERISA is entitled

to  substantial deference.  See Berkshire Scenic Ry. Museum, Inc.                                                                           

v. ICC, 52 F.3d 378,  381-82 (1st Cir. 1995); Keyes  v. Secretary                                                                           

of  the  Navy, 853  F.2d  1016,  1021  (1st  Cir. 1988).    Here,                       

moreover, the respect usually accorded an agency's interpretation

of  a statute is magnified  since the agency  is interpreting its

own  regulation.   See  Arkansas v.  Oklahoma,  503 U.S.  91, 112                                                       

(1992);  Puerto Rico Aqueduct &amp; Sewer Auth. v. United States EPA,                                                                          

35 F.3d 600,  604 (1st Cir. 1994), cert. denied,  115 S. Ct. 1096                                                         

(1995).    So long  as the  agency's  interpretation does  not do

violence to  the  purpose  and  wording  of  the  regulation,  or

                                12

otherwise cross into forbidden terrain, courts should defer.  See                                                                           

Martin v. OSHRC, 499  U.S. 144, 150 (1991);  see also Stinson  v.                                                                       

United  States, 113  S. Ct.  1913, 1919  (1993) (holding  that an                        

agency's  interpretation of  its  own regulations  must be  given

controlling weight unless plainly erroneous, inconsistent with  a

federal  statute, or  unconstitutional); Kelly v.  United States,                                                                          

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

          In  this instance,  we believe  that deference  is due.

The Secretary's sense of the  safe harbor regulation is consonant

with  both the regulation's text and the overlying statute.  And,

moreover, looking  at the employer's conduct  from the employees'

place of vantage best ensures that employer neutrality  remains a

reality rather  than  a  mere illusion.    Phrased  another  way,

judging  endorsement  from  the   viewpoint  of  an   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  employer will be  said to

have  endorsed a  program within the  purview of  the Secretary's

safe  harbor regulation if, in light of all the surrounding facts

and  circumstances,  an  objectively  reasonable  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.  Analysis.                                    D.  Analysis.                                                

                                13

          Here,  the  district court  interpreted  the regulation

correctly and  concluded that  the company  had not  endorsed the

group insurance  program.   This conclusion is  fact-driven, and,

thus,  reviewable only for clear  error.3  See  Cumpiano v. Banco                                                                           

Santander P.R., 902 F.2d 148, 152  (1st Cir. 1990); see also Fed.                                                                      

R. Civ. P.  52(a).  Thus, the trier's findings  of fact cannot be

set aside unless,  on reviewing  all the evidence,  the court  of

appeals is left  with an  abiding conviction that  a mistake  has

been  committed.  See Dedham Water Co. v. Cumberland Farms Dairy,                                                                           

Inc., 972 F.2d  453, 457 (1st Cir.  1992); Cumpiano, 902  F.2d at                                                             

152-153.  Applying this deferential  standard, we cannot say that

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

          The   anatomy   of   the   court's   determination   is

instructive.  Based primarily on  the testimony of two  corporate

officials    Watts'  benefits administrator  and Webster  Valve's

employee relations manager   the court found that the company had

                                                  

     3The  question of endorsement vel non is a mixed question of                                                    
fact  and law.  In some cases  the evidence will point unerringly
in one direction so that a  rational factfinder can reach but one
conclusion.  In those cases, endorsement becomes a matter of law.
Cf.  Griffin v.  United  States,  502  U.S.  46,  55  n.1  (1991)                                         
(discussing  "adequacy  on  the proof  as  made"  as meaning  not
whether the evidence  sufficed to  enable an alleged  fact to  be
found, but, rather,  whether the facts adduced at  trial sufficed
in  law to support a  verdict); Anderson v.  Liberty Lobby, Inc.,                                                                          
477 U.S. 242,  251-52 (1986) (describing the  appropriate mode of
inquiry for directed verdicts and  summary judgments).  In  other
cases, the legal significance  of the facts is less  certain, and
the  outcome will  depend on  the inferences that  the factfinder
chooses to draw.  See, e.g.,  TSC Indus., Inc. v. Northway, Inc.,                                                                          
426 U.S.  438, 450 (1976); In  re Varasso, 37 F.3d  760, 763 (1st                                                   
Cir.  1994).  In those  cases, endorsement becomes  a question of
fact.  This case is of the latter type.

                                14

made its  employees aware of the opportunity  to obtain coverage,

but  had stopped short of  endorsing the program.   CIGNA drafted

the  policy and,  presumably,  set the  premium rates.   Although

Watts  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)  written on  the letterhead of  Watts Industries

and signed by  its vice-president for  financial matters.   CIGNA

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

brochure.   The letter explicitly informed  Watts' employees that

the enrollment  decision  was  theirs to  make.    Watts  nowhere

suggested that it had any  control over, or proprietary  interest

in,  the group  insurance  program.   And,  finally, neither  the

letter nor any other passage in the brochure mentioned ERISA.

          The  district   court   also  examined   Watts'   other

activities concerning  the  program.   Watts  collected  premiums

through  payroll  deductions,  remitted  the  premiums  to CIGNA,

issued   certificates  to   enrolled  employees   confirming  the

commencement of  coverage, maintained  a list of  insured persons

for  its own records, and  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,  inserting statistical information maintained

in Watts' personnel  files (such as the insured's  name, address,

                                15

age,  classification, and  date  of hire),  making various  forms

available to  employees (e.g.,  claim forms),4 and  keeping track

of  employee eligibility.   Watts would follow  up on  a claim to

determine  its status, if CIGNA  requested that Watts  do so, and

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

sum, Watts  performed only  administrative  tasks, eschewing  any

role in the substantive aspects of  program design and operation.

It had no  hand in drafting the plan, working  out its structural

components,  determining  eligibility for  coverage, interpreting

policy  language, investigating, allowing and disallowing claims,

handling litigation, or negotiating settlements.

          In  the last  analysis, the  district court  found that

Watts' cover  letter fell  short of constituting  an endorsement.

The  court pointed out that  neither the letter  nor the brochure

expressly stated that the  employer endorsed the program.   Apart

from the letter,  the court  concluded that  Watts had  performed

only ministerial activities,  and that these activities  (whether

viewed alone or  in conjunction  with the cover  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  such  forms, and  sent  a
supply of forms to Watts.

                                16

lead us in this direction.  We offer a representative sampling.

          First, we think that  endorsement of a program requires

more  than  merely  recommending  it.    An  employer's  publicly

expressed opinion as to  the quality, utility and/or value  of an

insurance  plan, without  more,  while relevant  to (and  perhaps

probative of) endorsement, will  most often not indicate employer

control of the plan.   Second, the administrative  functions that

Watts   undertook   fit   comfortably   within   the  Secretary's

regulation.  Activities such  as issuing certificates of coverage

and  maintaining a list of  enrollees are plainly  ancillary to a

permitted function (implementing payroll deductions).  Activities

such  as answering brokers' questions similarly  can be viewed as

assisting the insurer  in publicizing the plan.  Other activities

that  arguably fall closer  to the line, such  as the tracking of

eligibility   status,   are   completely  compatible   with   the

regulation's aims.   Under the circumstances,  the court lawfully

could  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.  This is
an  example of the mountain laboring, but bringing forth a mouse.
Such forms are informational in nature and are designed to comply
with  various reporting  requirements  that ERISA  imposes.   See                                                                           
Cooke,  supra,   3.10, at  3-34.   But, there  is no  evidence to                       
suggest that Watts' employees knew of this protective filing, and
it  is surpassingly  difficult for  us to  fathom how  the filing
makes  a dispositive  difference.   Although  the inference  that
compiling the tax form  demonstrated Watts' intent to provide  an
ERISA  plan does not  escape us, but  cf. Kanne, 867  F.2d at 493                                                         
(explaining  that a brochure describing  a plan as  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  questions  of its  employees concerning  insurance, or

even  deducting  the  insurance  premiums  from   its  employees'

paychecks and  remitting  them to  the  insurers," do  not  force

employers out of the  safe harbor provision); du Mortier,  805 F.                                                                  

Supp.  at 821 (holding that activities such as maintaining a file

of informational materials, distributing  forms to employees, and

submitting completed forms  to the insurer, do  not transcend the

boundaries of the safe harbor).

          In arguing  for reversal, appellants rely  on Hansen v.                                                                        

Continental  Ins. Co., a case that  involved a similar situation.                               

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

premiums were paid by  the employees via payroll deduction.   See                                                                           

Hansen,  940 F.2d at 973.   The employer  collected the premiums,                

remitted them to the  insurer, and employed an  administrator who

accepted  claim forms and transmitted  them to the  carrier.  See                                                                           

id.  at 974.    In addition,  the  employees received  a  booklet             

embossed with  the employer's  corporate logo that  described the

plan and encouraged employee participation.  The court found that

the company had endorsed the plan.  See id.                                                     

          Despite the resemblances, there  are two critical facts

that distinguish Hansen  from the case at bar.   First, in Hansen                                                                           

the corporate logo was  embossed on the booklet itself,  see id.,                                                                          
                                                  

filed merely as  a precaution.  In any event,  this case turns on
the employer's activities, not its intentions.

                                18

making  it  appear  that  the  employer  vouched  for  the entire

brochure (and for the  plan).  Here, however, only  Watts' letter

bore its  imprimatur.    Second,  and perhaps  more  cogent,  the

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

plan, see id. ("our  plan"), while here, the letter  typeset onto                       

the booklet describes  the policy  as a plan  offered by  another

organization.6   Though the  appellants decry the  distinction as

merely  a matter  of semantics,  words  are often  significant in

determining legal  rights and  obligations.  See  generally Felix                                                                     

Frankfurter,  Some  Reflections on  the  Reading  of Statutes  29                                                                       

(1947)  ("Exactness  in the  use  of words  is the  basis  of all

serious thinking.").

          In the difference  between "our plan" and "a plan" lies

the  quintessential meaning of endorsement.  If a plan or program

is  the  employer's plan  or program,  the  safe harbor  does not

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

Nov.  1,  1994)  (holding  that statement  describing  policy  as

employer's  plan  on first  page  of  plan description  indicates

endorsement); Cockey  v. Life Ins.  Co. of  N. Am., 804  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  be  a  critical  difference  between  our
approach to  the  question of  endorsement  and that  adopted  in
Hansen.  Although the  Hansen court did not articulate  its ratio                                                                           
decidendi, at least one district court has come to the conclusion                   
that Hansen  analyzed the  situation from  the standpoint  of the                     
employer  rather than the employee.  See Barrett v. Insurance Co.                                                                           
of  N.  Am., 813  F.  Supp.  798, 800  (N.D.  Ala.  1993).   This                     
possibility  renders appellants'  reliance  on Hansen  even  more                                                               
problematic.

                                19

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

at 161  (finding endorsement  because policy  had been  hawked to

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

Dep't of Labor Op.  No. 94-26A, supra (advising that  safe harbor                                               

is  unavailable  when  a  union, inter  alia,  describes  a group                                                      

insurance program as its  program).  When, however, the  employer

separates  itself from  the program,  making it  reasonably clear

that the program is a third  party's offering, not subject to the

employer's  control, then the safe harbor may be accessible.  See                                                                           

Hansen, 940 F.2d at 977; Kanne, 867 F.2d at 493;  Hensley, 878 F.                                                                   

Supp. at 1471.

          This  distinction is  sensible.   When  an  objectively

reasonable  employee reads  a  brochure describing  a program  as

belonging to his employer, he  is likely to conclude that, if  he

participates,  he will be dealing  with the employer  and that he

will therefore enjoy the  prophylaxis that ERISA ensures  in such

matters.  When the possessive pronoun is eliminated in favor of a

neutral article, however, the  employee's perception is much more

likely  to  be  that, if  he  participates,  he  will be  dealing

directly with  a third party    the  insurer   and  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  had

not endorsed  the group insurance  program.  Second,  the court's

fact-sensitive determination  that  the program  fits within  the

parameters  of   the  Secretary's  safe   harbor  regulation   is

                                20

sustainable.   Third, since ERISA does not apply, the court below

did  not  blunder  in  scrutinizing  the  merits  of  plaintiff's

contract claim through the prism of state law.

III.  THE DISABILITY ISSUE          III.  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  for  virtually any  claim under  a

policy of insurance is  the policy itself.  Here,  the applicable

rider promises benefits  to an insured who has been injured in an

accident,  whose ensuing disability  is "continuous"  and "total"

for  a year, and who thereafter  remains "permanently and totally

disabled."  The  rider defines "continuous total disability" as a

disability  resulting  from  injuries sustained  in  an accident,

"commencing within  180 days  after the  date  of the  accident,"

lasting for at least  a year, and producing during  that interval

"the  Insured's complete inability  to perform every  duty of his

occupation."

          If an insured meets this benchmark, he must then  prove

that  he is "permanently and totally disabled."  Under the policy

definitions,  this  phrase   signifies  "the  Insured's  complete

inability,  after one  year  of continuous  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."   It  is against  this  linguistic backdrop  that  we

inspect  appellants'  assertion that  the  trial  court erred  in

                                21

finding plaintiff to be totally and permanently disabled.

                     A.  Standard of Review.                               A.  Standard of Review.                                                     

          In actions  that are tried  to the  court, the  judge's

findings  of fact  are to  be honored  unless  clearly erroneous,

paying  due  respect  to  the judge's  right  to  draw reasonable

inferences  and  to  gauge the  credibility  of  witnesses.   See                                                                           

Cumpiano,  902  F.2d  at 152  (citing  Fed.  R.  Civ. P.  52(a));                  

Reliance Steel Prods.  Co. v.  National Fire Ins.  Co., 880  F.2d                                                                

575, 576 (1st  Cir. 1989).   A corollary of  this proposition  is

that, when there are  two permissible views of the  evidence, the

factfinder's choice  between  them cannot  be clearly  erroneous.

See Anderson v. City of Bessemer City, 470 U.S. 564, 574  (1985);                                               

Cumpiano, 902 F.2d at 152.  In fine, when a case has been decided                  

on the facts by  a judge sitting jury-waived, an  appellate court

must refrain  from any  temptation to  retry  the factual  issues

anew.

          There  are, of  course, exceptions  to  the rule.   For

example, de novo  review supplants clear-error review  if, and to

the  extent that, findings of  fact are predicated  on a mistaken

view of  the law.  See,  e.g., United States v.  Singer Mfg. Co.,                                                                          

374  U.S. 174,  195 n.9  (1963); RCI  N.E. Servs. Div.  v. Boston                                                                           

Edison Co., 822  F.2d 199, 203  (1st Cir. 1987).   This does  not                    

mean, however, that the clearly erroneous standard  can be eluded

by the simple expedient  of creative relabelling.  See  Cumpiano,                                                                          

902 F.2d  at 154; Reliance Steel,  880 F.2d at 577.   For obvious                                          

reasons, we will not  allow a litigant to subvert  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.  Analysis.                                    B.  Analysis.                                                

          Appellants   make  two  main  arguments  in  regard  to

plaintiff's  disability claim.  First, in an effort to skirt Rule

52(a),  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  in the policy.   We reject the

assertion as  comprising nothing  more than  a clumsy  attempt to

recast a  clear-error challenge  as an issue  of law  in hope  of

securing  a more welcoming standard of review.  The policy itself

defines  the operative term,  and the record  makes pellucid that

the district judge applied the term within the parameters of that

definition.

          Appellants' second contention posits that  the district

court  misperceived  the  facts,   and  that  plaintiff  was  not

sufficiently  disabled to  merit  an  award  of benefits.    This

contention also  lacks force.   The  district court  had adequate

grounds for  deciding that plaintiff was  totally and permanently

disabled.    The  evidence  showed  that  plaintiff  sustained  a

devastating brain injury, and that, throughout the year following

his accident, a number  of physicians found his disability  to be

continuous.  By and large, plaintiff's  condition did not improve

significantly during that year  (or thereafter, for that matter).

                                23

Without  exception, the  doctors  concluded that  he could  never

return to  work as a forklift driver.  To cap matters, the record

contains  ample  evidence  that  the plaintiff's  disability  was

permanent  and blanketed  the  universe of  occupations to  which

plaintiff   a laborer  with a high-school education    might have

aspired.

          We  need not  cite  book and  verse.   The  court  made

detailed findings, crediting the  conclusions of four doctors who

judged  plaintiff  to be  severely  impaired,  both mentally  and

physically.7  The court also credited an evaluation performed  by

Sherri  Krasner,  a  speech  and language  pathologist,  and  the

testimony  of  a   vocational  rehabilitation  counselor,  Arthur

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

without  constant supervision.   Kaufman stated  that he  did not

know  of a job suitable  for a person  in plaintiff's condition.8
                                                  

     7These  experts   included  the  attending   physician  (Dr.
Martino),    a   neurologist    (Dr.   Whitlock),    a   clinical
neuropsychologist (Dr. Higgins), and  a psychologist (Dr.  Toye).
A  fifth  physician,  Dr.  Michele  Gaier-Rush,   also  evaluated
plaintiff.   CIGNA chose  Dr. Gaier-Rush as  its medical examiner
but neglected to  provide her with  any of plaintiff's  plentiful
prior medical records, despite their availability.  She concluded
that  plaintiff could not perform his usual job but could perform
a job  "requiring more  mental capacity than  physical capacity."
She noted, however, that plaintiff had no formal  training beyond
high school,  and  conceded  that  "[t]his  will  probably  be  a
permanent  disability as  there  does not  seem  to have  been  a
significant  improvement in  the past  year."   Consequently, she
found it doubtful that plaintiff could ever work again.

     8While  Kaufman did say that  plaintiff might be  able to do
some gainful  employment with  "excessive supervision," and  that
plaintiff, like  other  patients with  traumatic brain  injuries,
would  probably benefit  from vocational  rehabilitation, Kaufman
expressed   doubt  that   plaintiff   would  ever   overcome  his
impairment.   In short, he lacked  the "capacity to retain  . . .

                                24

On  this record,  the trial court's  total disability  finding is

unimpugnable.

          Another wave of  appellants' evidentiary attack targets

the  district  court's  finding  that  plaintiff's disability  is

permanent.    In  this  respect, appellants  rely  mainly  on the

physicians'   recommendations   for  rehabilitative   therapy  as

indicative of the  potential for recovery.   The district  court,

however, found appellants' inference unreasonable in light of the

dim  prospects   for  significant   recovery,  the   duration  of

plaintiff's  inability  to  work,  and the  policy's  failure  to

require  vocational  rehabilitation  as  a  precondition  to  the

receipt of  benefits.  These  are fact-dominated issues,  and the

trial court is in  the best position to calibrate  the decisional

scales.   See Cumpiano,  902 F.2d  at 152.   Having  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.  CONCLUSION          IV.  CONCLUSION

          We need go  no further.   ERISA does not  apply to  the

group insurance  program at issue  here.  Moreover,  the district

court's    factual    findings   survive    clear-error   review.

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

                                                  

employment."

                                25

Affirmed.          Affirmed.                  

                                26
