Jason JORDAN, Plaintiff-Appellant, v. TYSON FOODS, INC., Tyson Foods Inc. Group Health Plan, IBP, Inc., IBP Welfare Benefits Plan, Defendants-Appellees.
No. 06-6601.
United States Court of Appeals, Sixth Circuit.
Dec. 19, 2007.
257 Fed. Appx. 972
CLAY, Circuit Judge.
Plaintiff Jason Jordan, a former employee of Defendant Tyson Foods, appeals the final judgment entered by the district court rejecting Plaintiff‘s claims for statutory and equitable relief due to Defendants’ alleged failure to provide notice of Plaintiff‘s statutory right to health care continuation coverage in violation of
BACKGROUND
Plaintiff began employment as a general laborer with Defendant IBP, inc.1 on April 23, 2001. As a result of his employment, Plaintiff was able to enroll in two employee benefit plans offered by IBP, the IBP Welfare Benefits Plan (“the IBP Plan“) and the Short Term Disability Plan (“the STD Plan“), which were in effect until September 30, 2002. The required fees for membership in these plans were automatically deducted from Plaintiff‘s paycheck.
On June 6, 2002, Jordan applied for and was granted a medical leave of absence for emotional problems. According to the IBP Plan, the following provision governed plan benefits for employees who are on a leave of absence:
Leave of Absence
Subject to the FMLA leave provisions discussed below, you may continue coverage (including independent coverage) for up to 12 continuous months while on an approved medical leave, and for one month in the case of personal leave. Applicable contributions must continue to be made to the Plan in order to retain coverage during your leave of absence. If you do not return to work at the end
of the approved leave period, then your coverage will terminate, unless continued in accordance with the COBRA continuation provisions.
(J.A. 152.) The FMLA provisions referenced above state, in pertinent part:
If you choose to continue coverage while on an approved leave made available under the Family and Medical Leave Act (“FMLA“), you may do so by paying any required contributions that would have been paid if you had been working. If you fail to pay any required contribution, coverage will terminate on the last day of the period for which contributions were paid.
(J.A. 152.) Because Plaintiff was not receiving monthly paychecks during his leave of absence, his fees were not being automatically deducted from his paychecks every month. Plaintiff did receive short-term disability checks during this leave, but fees were not taken from these checks to pay Plaintiff‘s premiums. Typically, IBP sent a packet to an employee on a leave of absence as a reminder that fees are still due in order to stay enrolled in the benefits programs. This packet contained, among other information, “coupons” that allowed an employee to continue coverage for up to twelve months while on a leave of absence by paying monthly fees. Plaintiff‘s packet, however, was sent to a previous address instead of Plaintiff‘s current address. Plaintiff did not pay his premiums while he was on medical leave. However, the IBP Plan continued to pay his medical claims through September 30, 2002, when Defendant Tyson Foods, Inc. (“Tyson“) acquired IBP. Thereafter, Tyson replaced the IBP Plan with the Tyson Foods, Inc. Group Health Plan (“the Tyson Plan“).
Tyson only allowed employees whose payments were up-to-date in the IBP Plan to enroll in the Tyson Plan. This policy was not expressly stated in the Tyson Plan‘s written Group Health Plan Description. On October 4, 2002, Plaintiff completed the enrollment form and was allowed to enroll in the new Tyson Plan. Plaintiff also provided his new address on this form. In November of 2002, Tyson deducted the premiums for the plan from one of Plaintiff‘s short-term disability checks. On November 26, 2002, Tyson realized that Plaintiff‘s premium payments were in arrears with respect to the IBP Plan and, thus, that his application for the Tyson Plan never should have been accepted. He was therefore “disenrolled” from the Tyson Plan retroactive to October 1, 2002.
On December 10, 2002, Plaintiff‘s attorney and his mother both contacted Tyson on Plaintiff‘s behalf to attempt to have his benefits restored. On the same day, Plaintiff‘s attorney, Charles Yezbak, sent two letters on Plaintiff‘s behalf to Travis Fredrickson and Paul Kirchner at IBP. The letters requested that Plaintiff‘s benefits be reinstated immediately. On January 7, 2003, Yezbak wrote another letter to Kirchner stating that his previous communications had been ignored and demanding again that Plaintiff‘s coverage be reinstated. Kirchner responded that day and explained as follows:
[Plaintiff] received a short-term disability check in November, and the following deductions were taken in error as part of that check: $15.00 (1 week) for the 10-02 Plan and $27.81 (3 weeks at $9.27 week) under the old Plan. The latter deduction was applied to three-fourths of the July premium, the most recent arrearage. Consequently, a portion of July‘s premium was left unpaid along with all of the premiums for August and September. This leaves your client with no medical coverage for part of July, and all of August and September, under the Group Medical Plan for IBP, unless he pays the arrearage of $80.37 in full.
(J.A. 20-21.). Kirchner wrote another letter on January 15, 2003 reminding Yezbak to advise him of what Plaintiff planned to do about his benefits. On January 31, 2003, Plaintiff was terminated when he failed to return to work after his medical leave expired. On February 21, 2003, Yezbak contacted Kirchner formally requesting a number of documents pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA“),
On April 15, 2003, Tyson responded to Plaintiff‘s appeal. Tyson stated that Plaintiff did not give timely notification of his change of address and that he did not make a timely election of COBRA coverage. Tyson offered to reimburse Plaintiff for the money that was deducted from Plaintiff‘s short-term disability checks to pay for premiums for the Tyson Plan. On June 3, 2003, after hiring new counsel, Plaintiff appealed the April 15, 2003 response. He sent a follow-up letter to Tyson on August 15, 2003, stating that if the matter was not settled by September 15, 2003, he would file suit under ERISA.
After several settlement offers were made by Tyson and rejected by Plaintiff, Tyson sent a final administrative determination to Plaintiff on April 28, 2005. In the letter, Tyson conceded that there was some uncertainty about Plaintiff‘s last known address at the time the COBRA election notice was sent.2 Due to this uncertainty, Tyson offered Plaintiff the opportunity to elect COBRA continuation coverage for the maximum COBRA continuation period beginning on October 1, 2002 since Plaintiff was covered under the IBP Plan before that date. Plaintiff was required to elect COBRA continuation coverage within sixty days and to pay the applicable premiums within forty-five days of election. The total cost of premiums for the entire coverage period was $3,631.86. Plaintiff objected to the proposed start date of COBRA continuation coverage and asserted that coverage should have started on January 31, 2003, the date of Plaintiff‘s termination. Tyson responded that the start date had not been contested earlier and that it was appropriate due to Plaintiff‘s reduction in hours. On June 25, 2005, Plaintiff filed a complaint in federal
Plaintiff filed a motion for judgment on the administrative record on April 14, 2006, and his motion was heard by a magistrate judge who determined that the Plaintiff was not a participant under the Tyson Plan and that, as a result, Plaintiff did not have standing to bring a
DISCUSSION
A. Standard of Review
In an ERISA case, this Court reviews the district court‘s grant of judgment de novo. Wilkins v. Baptist Healthcare Sys. Inc., 150 F.3d 609, 613 (6th Cir. 1998). Thus, we apply the same standard of review of a plan administrator‘s action as the district court applies. Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 427 (6th Cir. 2006). We generally review a plan administrator‘s ERISA-related decisions de novo. Id. However, when a plan expressly grants the plan administrator discretionary authority, we must apply the highly deferential arbitrary and capricious standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Borda v. Hardy, Lewis, Pollard, & Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998). “A plan administrator‘s decision will not be deemed arbitrary and capricious so long as ‘it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome.‘” Haus v. Bechtel Jacobs Co., LLC, 491 F.3d 557, 561-62 (6th Cir. 2007) (quoting Davis v. Ky. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir. 1989)). Since the IBP Plan did not expressly reserve discretion for the plan administrator, IBP, decisions made regarding the IBP Plan must be reviewed de novo. The Tyson Plan reserves discretionary authority for the plan administrator, and as a result an abuse of discretion standard is appropriate with respect to evaluating decisions made regarding the application of the Tyson Plan.
B. Analysis
Plaintiff claims that he is entitled to statutory and equitable relief under § 1132 of ERISA. Plaintiff seeks remand of his case to the district court for statutory and remedial relief pursuant to
1. Statutory Standing
ERISA was amended by the Consolidated Omnibus Budget Reconciliation
The Supreme Court has interpreted the statutory definition of “participant” contained in
[i]n determining who is a “participant,” for purposes of standing, the definition found in
29 U.S.C. § 1002(7) must be read in the context of traditional concepts of standing, not in the context of adjudicating the ultimate issue of the merits of plaintiffs’ claim that they are not receiving the full extent of the benefits to which they are entitled from the employee benefit plan which is paying them retirement benefits.
Astor v. International Business Machs. Corp., 7 F.3d 533, 538 (6th Cir. 1993). Thus, the determination of participant status must focus “on a person‘s effort to get his complaint before a court and not on the issue he wishes to have adjudicated.” Id.
Plaintiff claims to have standing as a participant in the Tyson Plan, but he does not claim to have a reasonable expectation of returning to covered employment or that eligibility requirements will be satisfied in the future. Thus, to have standing for purposes of an ERISA claim, Plaintiff must have a colorable claim for benefits. In order to satisfy this standard, one must have “a reasonable claim that (1) [one] will prevail in a suit for benefits or that (2) eligibility requirements will be fulfilled in the future.” Morrison v. Marsh & McLennan Companies, Inc., 439 F.3d 295, 304 (6th Cir. 2006). We have consistently held “that a person who terminates his right to belong to a plan” generally does not have a colorable claim to benefits. Swinney v. General Motors Corp., 46 F.3d 512, 518 (6th Cir. 1995). However, “if the employer‘s breach of fiduciary duty causes the employee to either give up his right to benefits or to fail to participate in a plan, then the employee has standing to challenge that fiduciary breach.” Id. This exception exists in order to prevent employers from “duping [employees] to give up [their] right[s] to participate in a plan.” Id. In order to determine whether a plaintiff has a colorable claim for benefits we have analyzed whether a plaintiff‘s allegations, if taken as true, would establish a claim for benefits. See e.g. Shahid v. Ford Motor Co., 76 F.3d 1404, 1411 (6th Cir. 1996) (“Shahid argues that if Ford had not improperly terminated her, or had not induced her to delay her ‘acceptance’ of the VTP, she may have become eligible to participate in the VTP. Thus, Shahid has standing to bring this action as a ‘participant’ in an ERISA plan.“); Swinney, 46 F.3d at 520
Plaintiff alleges that he would have been a covered employee in the Tyson Plan but for his wrongful termination from the plan. According to Plaintiff, Defendants’ actions were the reason he was not covered by the Tyson Plan at the time of his termination. Plaintiff claims that IBP failed to give Plaintiff notice of his duty to pay health care premiums during his leave of absence. Plaintiff additionally claims that Tyson wrongfully terminated him from the Tyson Plan. Tyson contends in response that Plaintiff‘s non-payment of premiums was the cause of his loss of coverage. However, the statutory standing inquiry cannot end with Plaintiff‘s non-payment of premiums. If, as Plaintiff contends, his non-payment was caused by Defendant IBP‘s wrongful failure to notify him of the necessity of payment, Defendants would remain the “but for” cause of Plaintiff‘s loss of coverage.3 Plaintiff‘s “claim is not so insubstantial that it fails to present a federal controversy.” Moore, 458 F.3d at 445. Since Plaintiff has set forth a colorable claim for benefits, Plaintiff is a participant and thus has standing to bring this suit.
2. Merits
Plaintiff claims that he was entitled to COBRA-compliant notice when he was terminated on January 31, 2003. COBRA requires employers to allow employees to elect to purchase COBRA continuation health coverage when a “qualifying event” occurs threatening the employees’ existing health coverage. “COBRA rights include the option to continue health insurance coverage equivalent to other qualified beneficiaries for at least eighteen months, at a cost of no more than 102 percent of the premium; the beneficiary must elect coverage within sixty days after the qualifying event, and may not be required to make the first premium payment before forty-five days after election.” McDowell v. Krawchison, 125 F.3d 954, 958 (6th Cir. 1997).
According to
Qualifying event
For purposes of this part [
29 U.S.C. §§ 1161 et seq. ], the term “qualifying event” means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this part [29 U.S.C. §§ 1161 et seq. ], would result in the loss of coverage of a qualified beneficiary:(1) The death of the covered employee.
(2) The termination (other than by reason of such employee‘s gross misconduct), or reduction of hours, of the covered employee‘s employment.
(3) The divorce or legal separation of the covered employee from the employee‘s spouse.
(4) The covered employee becoming entitled to benefits under title XVIII of the Social Security Act [
42 U.S.C. §§ 1395 et seq. ].(5) A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan.
(6) A proceeding in a case under title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employ-
ment the covered employee retired at any time.
Thus, an employee‘s termination for reasons other than gross misconduct would constitute a “qualifying event” if the termination would result in a loss of coverage absent COBRA continuation benefits. The parties agree that Plaintiff was not terminated for gross misconduct and that if Plaintiff was a covered employee at the time of his termination, the termination would result in Plaintiff‘s loss of coverage. The parties do, however, dispute whether Plaintiff was entitled to health care coverage when he was terminated.
Plaintiff argues that because he would have been a covered employee if Tyson had not wrongfully disenrolled him from the Tyson Plan, he was entitled to COBRA continuation coverage and to notice of this entitlement when he was terminated from employment. Tyson retroactively discontinued Plaintiff‘s coverage because Plaintiff‘s payments to the IBP Plan were in arrears. This action was consistent with the written policies of both the IBP Plan and the Tyson Plan which stated that coverage will be discontinued for employees who fail to pay their premiums. Plaintiff claims the arrears were attributable to Defendants because IBP failed to send the coupon book outlining Plaintiff‘s payment duties to his correct address. However, Plaintiff had at least constructive notice of his duty to pay his health care premiums while on leave. An employee‘s duty to pay premiums was noted in the IBP Plan Summary Plan Description, and with one exception4 these premiums were not taken out of Plaintiff‘s short-term disability check. See Strotman v. E.I. DuPont de Nemours & Co., 1991 WL 100593, at *1 (6th Cir. June 11, 1991) (stating that a summary plan description gave an employee constructive notice of age restrictions on benefit eligibility); Aguilera v. Landmark Hotel-Metairie, 1992 WL 396842, at *3, 1992 U.S. Dist. LEXIS 19720, at *9 (E.D.La.1992) (“Furthermore, Plaintiff cannot plead ignorance to the policies of her own health care program, since it was her responsibility to make sure she was following its requirements.“). As a result, Plaintiff‘s non-payment cannot be attributed to Defendant IBP.
Plaintiff also claims that he was entitled to COBRA health care continuation coverage due to the provisions of the Family and Medical Leave Act of 1993 (“FMLA“), 107 Stat 6, (codified as amended at
Contrary to Plaintiff‘s assertions, the FMLA does not require Plaintiff‘s employer to give Plaintiff the opportunity to elect COBRA continuation coverage. Plaintiff quotes Treasury Department regulation
Q-3: If an employee fails to pay the employee portion of premiums for coverage under a group health plan during FMLA leave or declines coverage under a group health plan during FMLA leave, does this affect the determination of whether or when the employee has experienced a qualifying event?
A-3: No. Any lapse of coverage under a group health plan during FMLA leave is irrelevant in determining whether a set of circumstances constitutes a qualifying event under Q & A-1 of this section or when such a qualifying event occurs under Q & A-2 of this section.
Even though an inevitable loss of coverage did not occur as a result of the end of the FMLA-eligible portion of his leave, Plaintiff argues that a COBRA qualifying event occurred upon his termination from employment. Plaintiff cites Treasury Department regulations stating that when a plan provides coverage beyond the expiration of FMLA leave, a qualifying event for COBRA purposes occurs on the date coverage is lost even if this date is later than the date FMLA leave expires.
Inasmuch as Plaintiff was not entitled to COBRA continuation notice and Tyson‘s denial of benefits was not arbitrary or capricious, we AFFIRM the judgment of the district court.
RONALD LEE GILMAN
UNITED STATES CIRCUIT JUDGE