Geraldine Chesnut; Donald Chesnut, Plaintiffs - Appellants, v. David Montgomery, doing business as Montgomery‘s I.G.A., Defendant - Appellee.
No. 02-1243
United States
Submitted: June 28, 2002 Filed: October 8, 2002
Before McMILLIAN, JOHN R. GIBSON, and LOKEN, Circuit Judges.
The continuation of health insurance coverage is an important concern when a person changes jobs. In the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA“), Congress amended the Employee Retirement Income Security Act (“ERISA“) to require that covered group health plans “provide . . . that each qualified beneficiary who would lose coverage . . . as a result of a qualifying event is entitled . . . to elect . . . continuation coverage under the plan.”
In this case, Geraldine Chesnut left her job as deli manager of Montgomery‘s I.G.A. grocery store. Geraldine declined continuation coverage available under the store‘s group health insurance plan and instead applied for an individual major medical policy. She was rejected because of her medical history, and thereafter incurred substantial health care expenses. Geraldine and her husband Donald commenced this action against the store‘s owner, David Montgomery, to recover these expenses, alleging that Montgomery failed to give them the notice of their right to elect continuation coverage required by
I. Background.
Montgomery purchased a group health insurance policy issued by American National Life Insurance Company of Texas (“American National“) to cover his store managers. The policy was an ERISA welfare benefit plan to which the COBRA amendments applied, see
At trial, Geraldine testified that the day after she gave notice, she asked Montgomery if she could keep her health insurance; he replied, “they won‘t let you.” Geraldine denied that either Montgomery or his American National insurance agent, Scott Kyser, ever advised her that she could keep her health insurance on a temporary basis for up to eighteen months. Montgomery, however, testified that, after consulting with Kyser, he advised Geraldine that she could continue her health insurance for eighteen months at her expense but could not continue that coverage permanently. Kyser testified that he met with Geraldine at the store and later at the Chesnut farm to discuss her insurance options. Kyser informed her that she could elect to continue her present coverage for eighteen months, or she could purchase an
Both Montgomery and Kyser testified that Geraldine repeatedly told them she wanted permanent rather than temporary health insurance. Three store employees testified that they overhead Geraldine complain about the temporary nature of the continuation coverage. After meeting with Kyser at the Chesnut farm, Geraldine submitted an application to Kyser for an individual American National major medical policy covering herself and Donald. Two months later, American National accepted Donald‘s application but denied coverage to Geraldine based on her health history. American National sent Donald‘s policy directly to the Chesnuts along with a letter explaining that Geraldine‘s application was denied and a check refunding one-half of their initial premium payment. The Chesnuts cashed the check but failed to note that Geraldine was now uninsured. She had a heart attack four months later, and the couple incurred $25,196.70 in uninsured medical expenses.
Donald Chesnut testified that he received no separate notice of his continuation coverage rights as a qualified beneficiary. Donald incurred no medical expenses during the eighteen-month COBRA continuation period.
In a thorough post-trial Memorandum Opinion, the district court first ruled that the notice required by
II. Issues Relating to Geraldine Chesnut.
The Chesnuts first argue that Geraldine was entitled to written notice of her COBRA right to elect temporary continuation health insurance coverage. The statute is silent as to the manner in which the required notice must be given. The district court concluded that sufficient oral notice satisfies the statutory requirement, noting that
The Chesnuts have not cited, and we have not found, a decision holding that the notice required by
The Chesnuts next argue that Geraldine did not receive legally sufficient oral notice. The statute does not specify the content of the notice that a qualified beneficiary must receive after a qualifying event has occurred. Neither the Department of Labor nor the Internal Revenue Service -- the two agencies charged with interpreting and enforcing ERISA -- has issued regulations addressing the issue. In Lincoln Gen. Hosp. v. Blue Cross/Blue Shield, 963 F.2d 1136, 1140 (8th Cir. 1992), we held that a plan administrator satisfied its notice obligation by providing information that “adequately informed [the qualified beneficiary] of the coverage she was entitled to receive and the money that she owed in order to maintain this coverage.” Similarly, in McDowell v. Krawchison, the Sixth Circuit stated that “the notice given must be sufficient to allow the qualified beneficiary to make an informed decision whether to elect coverage.” Id. at 958. We agree that these general standards are appropriate. The definition of qualified beneficiary varies depending upon the qualifying event. See
As the district court recognized, Montgomery bore the burden of proving that he gave Geraldine sufficient oral notice. Stanton v. Larry Fowler Trucking, Inc., 52 F.3d 723, 727-29 (8th Cir. 1995). The court credited agent Kyser‘s testimony as to the advice he gave Geraldine -- that she could elect up to eighteen months of continuation coverage, that such coverage was considerably more expensive than an individual policy providing comparable coverage, but that she might be denied an individual policy based upon her medical history. Without challenging this credibility finding, the Chesnuts suggest it is “troubling” to rely upon notice provided by an insurance agent. We disagree. When an employer is responsible for providing the
The Chesnuts next argue that the oral notice did not include the termination date of Geraldine‘s group coverage, why the coverage was being terminated, how to elect continuation coverage, and when to make the first premium payment. The first two items are details both implicit in Geraldine leaving her job and irrelevant to whether she was given enough information to make an informed decision. The second two items are potentially important, but they were not relevant here because Geraldine repeatedly told both Montgomery and
Finally, the Chesnuts argue that the oral notice was insufficient because it did not advise Geraldine of her option to obtain conversion coverage at the end of the eighteen-month continuation coverage period. However, the relevant statute expressly provides that the COBRA conversion coverage option need not be provided until the last 180 days of a qualified beneficiary‘s continuation coverage period:
In the case of a qualified beneficiary whose period of continuation coverage expires . . . the plan must, during the 180-day period ending on such expiration date, provide to the qualified beneficiary the option of enrollment under a conversion health plan otherwise generally available under the plan.
Whether the
III. Issues Relating to Donald Chestnut.
As a qualified beneficiary, Donald was entitled to separate notice of his right to elect continuation coverage. See
On appeal, Donald Chesnut argues that the district court erred in concluding he was not harmed because he is jointly liable for Geraldine‘s uninsured medical expenses. However, there was no testimony at trial suggesting that Geraldine‘s decision to decline continuation coverage would have been different had Donald received separate notice of his right as a qualified beneficiary to elect continuation coverage. Thus, the lack of separate notice to Donald was not the proximate cause of the harm that resulted from Geraldine‘s uninsured medical expenses.
The judgment of the district court is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.