ERISA Reaches Overseas: Court Holds ERISA Preempts State-Law Benefit Claims by Foreign Workers Injured Abroad

Ajeti v. Life Insurance Company of North America, No. 26-3249, 2026 WL 2150163 (E.D. Pa. July 27, 2026), addresses whether ERISA governs, and preempts, state-law claims brought by foreign nationals seeking disability benefits under a plan established by their American employer.

Seventeen Plaintiffs, all citizens of Kosovo, worked for AECOM supplying support services to the United States military in Afghanistan between 2011 and 2019. They sought long-term disability benefits under an employee benefit plan AECOM established, insured by Defendant Life Insurance Company of North America. Plaintiffs filed only state-law claims, breach of contract, fraud, conspiracy to commit fraud, negligent misrepresentation, breach of the duty of good faith and fair dealing, promissory estoppel, and negligence, in the Court of Common Pleas of Philadelphia County. Defendant removed the action, asserting complete preemption under ERISA, and moved to dismiss. Plaintiffs moved to remand.

Does ERISA apply to a plan covering foreign workers injured abroad?

The court held that it does. Applying the two-step framework the Supreme Court set out in Yegiazaryan v. Smagin, 599 U.S. 533 (2023), the court first asked whether ERISA gives a clear, affirmative indication that it applies extraterritorially. The court found that it does. Section 1003(a) extends ERISA coverage to any plan established or maintained by an employer engaged in commerce, and the exemption in § 1003(b)(4) for plans “maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens” would be surplusage unless § 1003(a) reached such plans in the first place. The court reasoned that the plan at issue, maintained inside the United States and covering more than 20,000 domestic employees alongside some foreign employees, falls squarely within § 1003(a). The court distinguished EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991), noting that ERISA’s exemption language reaches beyond United States territory, that no international-law clash arises when foreign plaintiffs sue an American insurer in the United States, and that ERISA lacks the administrative enforcement mechanism that concerned the ARAMCO Court.

Did the plaintiffs allege a domestic injury?

The court held that they did, resolving the extraterritoriality question a second, independent way under step two of Yegiazaryan. Although Plaintiffs suffered their physical injuries abroad, the court found they alleged domestic economic injury: Defendant, their domestic insurer, investigated and denied their claims in the United States and failed to pay benefits due under a plan an American company established in the United States. On a case-specific inquiry into the circumstances surrounding the alleged injury, the court concluded the economic injuries arose domestically, rebutting the presumption against extraterritoriality under step two as well.

Does ERISA preempt the plaintiffs’ fraud and misrepresentation claims?

The court held that it does. Plaintiffs argued their fraud, good-faith, and negligent-misrepresentation claims fell outside ERISA even if the statute applied. The court rejected that argument, finding the essence of the complaint to be Defendant’s failure to pay plan benefits and concluding that Plaintiffs sought only to duplicate, supplement, or supplant ERISA’s civil enforcement remedy under § 502(a)(1)(B). The court found no duty independent of ERISA and the policy terms. It relied on the Third Circuit’s recent decision in Ahn v. Cigna Health & Life Insurance Co., 179 F.4th 187 (3d Cir. 2026), reaffirming that ERISA broadly preempts state-law claims tied to benefit determinations, and distinguished National Security Systems, Inc. v. Iola, 700 F.3d 65 (3d Cir. 2012), where the claims concerned pre-plan inducement rather than a post-participation denial of benefits.

What did the court order?

The court denied Plaintiffs’ motion to remand and granted Defendant’s motion to dismiss under Rule 12(b)(6), holding that all of Plaintiffs’ state-law claims are completely preempted and that Plaintiffs had therefore failed to plead any viable claim. The court dismissed the complaint without prejudice to Plaintiffs’ right to file an amended complaint within ten days.