Rebecca Morehouse v. Steak N Shake, 938 F.3d 814

Rebecca Morehouse worked for Steak N Shake (SNS) and enrolled herself and her husband in the employer-sponsored health plan beginning Sept. 1, 2012.
On May 25, 2013 she injured her knee at work, opened a workers’ comp claim, and was placed on leave beginning May 26, 2013; SNS treated the leave as FMLA for the first 12 weeks and sent an FMLA paperwork letter.
Because she stopped receiving regular paychecks, SNS began deducting her employee insurance contributions from her workers’ compensation checks; premiums were not paid in full and SNS stopped coverage effective Aug. 14, 2013 for nonpayment.
The Morehouses later had coverage lapse and Mr. Morehouse incurred dental expenses; Mrs. Morehouse’s employment was terminated in Feb. 2014.
The Morehouses sued, alleging SNS failed to provide required COBRA notice after a qualifying event and breached ERISA fiduciary duties; the district court granted summary judgment to the Morehouses, finding the reduction in hours plus change in payment method was a qualifying event.
The Sixth Circuit reversed, holding that altering the premium-payment method alone did not change the plan’s "terms and conditions" and thus did not create a COBRA qualifying event; it remanded with instructions to grant SNS summary judgment and vacated awards and fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Mrs. Morehouse’s reduction in hours/change in premium-payment method was a COBRA "qualifying event" causing a loss of coverage	The reduction in hours and the employer’s switch to deducting premiums from workers’ comp checks changed the terms/conditions and constituted a qualifying event triggering COBRA notice	The change in how premiums were collected did not alter plan terms or conditions; coverage remained available so no qualifying event occurred	No. A change in contribution method alone did not alter the "terms and conditions" and therefore did not produce the required loss of coverage for COBRA
Whether FMLA leave itself triggered COBRA notice	FMLA leave plus nonpayment resulting from leave constituted a qualifying event	Taking FMLA leave does not itself constitute a qualifying event; any loss is due to nonpayment	Court did not decide FMLA status here as unnecessary; cited Jordan and explained FMLA alone does not automatically create a qualifying event when coverage would continue with payment
Whether failure to provide COBRA notice supports an ERISA fiduciary-duty claim	Failure to notify of COBRA rights also breached ERISA fiduciary duties	The fiduciary claim duplicates the COBRA claim and fails if there is no COBRA violation	Dismissed as duplicative at district court; Sixth Circuit held no COBRA violation, so no basis for fiduciary-liability relief

Jordan v. Tyson Foods, Inc., [citation="257 F. App'x 972"] (6th Cir. 2007) (change in premium-payment method accompanying leave did not by itself create a qualifying event; FMLA leave does not automatically trigger COBRA notice)
CLARCOR, Inc. v. Madison Nat’l Life Ins. Co., Inc., [citation="491 F. App'x 547"] (6th Cir. 2012) (a reduction in hours is a qualifying event only insofar as it leads to a loss of coverage)
Bartling v. Fruehauf Corp., 29 F.3d 1062 (6th Cir. 1994) (abuse-of-discretion standard for reviewing §1132(c) penalty awards)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard governing genuine dispute of material fact)
Youngstown Aluminum Prods., Inc. v. Mid-West Benefit Servs., Inc., 91 F.3d 22 (6th Cir. 1996) (describing COBRA’s purpose to ensure continuation coverage after qualifying events)