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South Central United Food & Commercial Workers Unions & Employers Health & Welfare Trust v. Appletree Markets, Inc.
19 F.3d 969
5th Cir.
1994
Check Treatment

*2 *, SMITH, Before VAN GRAAFEILAND WIENER, Judges. Circuit SMITH, Judge: JERRY E. Circuit issue in case: There is one When employer multi-employ- an withdraws from a er health insurance and establishes remaining employees, for its new health who continue to the health must quali- mandated COBRA to the insurance withdrawing employ- fying of the employees multi- er? The district court held that the responsible for the plan remains employees. Finding this COBRA-qualified language plain consistent with the conclusion goals, policy of the and coherent we statute affirm.

I. im- This involves issue of first matter pression concerning the Con- coverage under Budget Act solidated Omnibus Reconciliation seq. et (“COBRA”), of 1985 U.S.C. * Circuit, designation. sitting by Judge Circuit Second (“COBRA”).1 The issue former was submitted are entitled to COBRA disagreement court on for sum- district cross-motions benefits: The whether mary on an record. judgment uncontroverted UFCW or should it. the facts set forth Accordingly below Relying upon of CO- undisputed. *3 BRA, granted court summary the district Markets, Defendant-appellee AppleTree judgment AppleTree, § holding that 29 chain, 1161(a) (“AppleTree”), supermarket Inc. a § spon- U.S.C. defines UFCW as the that, employer pursuant a collective an sor plan therefore is responsible agreement, bargaining provided bene- health coverage. for the We affirm. employees through plaintiff, fits to a mul- its ti-employer plan health Cen- known as South II. Food & Workers tral United Commercial grant summary judg We review Employers Welfare Unions Health & ment de novo. Hanks v. Transcontinental (“UFCW’). multi-employ- is a Trust UFCW (5th Pipe Corp., Gas Line 953 F.2d 997 employee pur- plan er welfare benefit Cir.1992). Summary judgment appropri ERISA, 1002(1), poses provid- § U.S.C. pleadings, depositions, ate “if the answers ing employees and medical health benefits to file, interrogatories, and admissions on to industry. food is funded the retail UFCW gether affidavits, any, with the show that through participating from em- contributions genuine any there is no issue as to material ployers; AppleTree became a moving party fact and that the is entitled to a employer plan in the there- June 1988 and judgment a matter of as law.” Fed.R.Civ.P. monthly. after contributed UFCW 56(c). Here, our task is simpler made be January AppleTree bank- filed undisputed cause are the facts and we deal chapter Bankruptcy ruptcy under 11 of the exclusively question almost with a of statuto bankruptcy pro- In the course of Code. its ry interpretation. AppleTree approval ceedings, court obtained bargaining agreements. to shed its collective III. agree- As a result the termination of the ments, AppleTree’s UFCW withdrew mem- A. bership plan agreement in the when no could 1161(a) Section reads as follows: AppleTree’s prospective on con- reached plan. tribution rate to the plan plan sponsor group each health provide, part, shall accordance with this group established its own qualified beneficiary that each who would 1,1992, plan September covering health as of coverage plan lose under the as a result only employees active at not that time but its entitled, qualifying even is under employees coverage receiving former from elect, plan, period, within the election words, Ap- UFCW under COBRA. In other coverage continuation under the pleTree employees its withdrew active Thus, sponsor but left its COBRA of a behind employ- insureds. must offer continuation ees, dependents be- spouses, who sued, claiming AppleTree had qualified for such come while cov- obligation an under COBRA to cover- extend by plan, ered and that is to be age employ- its new under to its former provided in which the benefi- receiving un- ees now benefits from UFCW ciary participated at the time the der COBRA. contended id.; § 1167. event2 occurred. See 29 U.S.C. obligated to UFCW was extend the party “plan sponsor” Neither defines disputes benefits. include, Although by "Qualifying among COBRA is 2. events" other referred to own 1. name, technically death, termination, it is a set of amendments to the things, or of a divorce Security Employee Retirement Income Act of employee. See covered 29 U.S.C. ("ERISA”), seq. U.S.C. 1001 et plans, transfer for all (i) its health in the case of COBRA-qualified as well. Ac- maintained or plan established ee benefit UFCW, (iii) “similarly cording in the situated benefi- employer, ... or single by a AppleTree’s active or maintained ciaries” plan established of a case dependents jointly by experi- who have one or and their employers or more two or Further, employee COBRA-qualifying event. more enced and one or more association, committee, “coverage” employees’ active was when the organizations, “modified,” trustees, beneficiaries cover- joint or other similar board identically. changed parties age who must be representatives of the group of maintain the establish is strained reading of the statute UFCW’s 1002(16)(B). The UFCW 29 U.S.C. insupportable by *4 “joint” plan. multi-employer, Under 1162(1) a 1162(1). was § reading A of § natural statute, “associ- language of plan sponsors an intent forbid reveals board, ation, committee, joint other similar or discriminating COBRA and ac- between of UFCW is representatives” of given plan. employees within a tive 1161(a), Therefore, § plan under sponsor. position support is no for UFCW’s There responsible for UFCW, AppleTree, is from one that a discrete movement coverage to the CO- providing continuation of qualify can as a modification cov- another employees. BRA erage original plan. The statute under statutory relationship is estab- Once coverage to a modification of under the refers only for one of lished, terminated it can be implication This that the statute is plan. in 29 U.S.C. enumerated the reasons prevent discrimination within a intended any 1162(2). alleged that § has not UFCW reasonably be single cannot read to 1162(2) occurred; §in has of listed the events separate those in a extend to therefore, no for UFCW legal basis there coverage of these COBRA em- to terminate 1162(1) Thus, apply § does not this case ployees. only if and would become relevant UFCW coverage employees partic- modified to active B. 1162(1) so, § in its If ipating similarly require modify it to the benefits of 1. coverage. beneficiaries continuation however, contends, that 1162(1) entity § Nothing requires an 1162(1), by 29 controlled U.S.C. case is previously sponsored has never health care by coverage,” and not defining “continuation coverage for an individual to continu- 1162(1) 1161(a). provides: Section coverage simply to him because it later ation coverage coverage must consist of The coverage to gives others. being which, time coverage pro- provided, is identical to similarly situated under vided upon proposed Trea UFCW relies respect under the with

beneficiaries sury Department regulations to its buttress has not oc- even to whom claim that “modification” includes elimination If is modified curred. similarly employees. situated similarly any group situated plan for authority regulations proposed has beneficiaries, be shall also by this circuit. not been addressed for all indi- modified in the same manner un- qualified viduals who opinions court upon relies district pursuant part in con- der the to this proposed regulations are holding that enti group. nection with such judicial “great See tled to deference.” Swint 1162(1) Co., 532, F.Supp. requires Ins. 779 v. Protective UFCW claims Life (S.D.Ala.1991); v. coverage for Johnson Reserve employer that modifies health 554 Life (C.D.Cal. Co., 1478, F.Supp. one 765 1480-82 employees by transferring them from Ins. 1991). another, AppleTree argues proposed all of but not terminate does

973 for-, regulation program has no force or effect until it ed ... necessarily requires the Oakley City Long becomes final. See v. mulation policy making of rules to' mont, (10th 1128, Cir.1989), left, 890 F.2d any gap fill implicitly explicitly, by or denied, 1082, 1814, cert. 843, 494 U.S. 110 S.Ct. Congress.” Id. at 104 S.Ct. at 2782 (1990). Thus, proposed reg 108 L.Ed.2d 944 Ruiz, (quoting 199, 231, Morton v. 415 U.S. judicial ulations are not entitled to deference 1055, 1072, (1974)). 94 S.Ct. 39 L.Ed.2d 270 carry weight position no more than effect, In statutory ambiguity legis- cedes advanced in a parties. brief one of the authority lative to the Executive. The Exec- Am., Commissioner, See Natomas N. Inc. v. utive Branch promulgate need not rules that 11, 1988 (1988); 90 T.C. 718 n. WL 33539 intent; legislative best mirror its rules Commissioner, F.W. Woolworth Co. v. arbitrary need not capricious. Absent 1233, 1265-1266, (1970). T.C. WL executive rulemaking,, it duty remains the agree We with pro and hold that courts construe the in order to statute posed regulations are entitled to no defer congressional divine words, intent. In other ence until final. if final regulations executive interpreting an Our view accords with other circuits ambiguous promulgated, statute are then the question. Oakley, have considered the “gap-filling” Executive is the institution; 890 F.2d at the Tenth Circuit noted there is no authoritative statement from the *5 agency completes the “[u]ntil formal Executive, the “fill gap” by courts the at- rule-making promulgates regula- final tempting congressional to divine intent. tions, rules, proposed the which the Internal recognized Once it is that Executive rule- already Revenue Service has deemed inter- making actually legislation, interstitial it pretive regulations, unpersuasive.” are Simi- inappropriate becomes proposed to defer to larly, presented proposed when with regula- regulations, upset as that would the constitu- tions from Exchange the Securities and Com- power tional among balance of the branches mission, the Fourth Circuit refused to consid- in the same manner as would deference to effect, noting er their “regulations that the laws considered but not enacted Con- when, are not effect and we do not know gress. ever, they Telvest, will become effective.” Bradshaw, v. Inc. 618 F.2d 1036 n. 10

(4th Cir.1980). C. argues by contributing UFCW give regulations

To to effect to that have plan, AppleTree the merely “established and proposed upset been main the bal plan tained” the powers language within the among ance of the constitutional 1002(16)(B). Thus, § Apple- U.S.C. branches. when Deference is due the Executive quit contributing plan, Tree to the no Congress delegates when UFCW “authority to the longer plan was agency the as to specific sponsor these provision elucidate a reading, individuals. by regulation. legislative statute regu Such Under sponsor changes as members enter given lations are and exit controlling weight unless indicates, however, they The statute arbitrary, capricious, manifestly multi-employer plans contrary have one the statute.” Chevron U.S.A sponsor, joint board of Council, Inc. v. trustees. Mem Natural Resources Defense bership changes 843-44, 104 do not affect this 2778, 2782, 467 U.S. S.Ct. (1984) added). definitional fact. L.Ed.2d (emphasis The upon sepa- Furthermore, Chevron doctrine is based once the UFCW board be- powers: ration As Justice Stevens’s use of sponsor, came the it could not be re- “legislative the term regulations” suggests, duty lieved of this until the occurrence of an Congress 1162(2). delegating § the Executive event listed in admits UFCW. authority Branch to act in an essentially plan sponsor that it was the for at least the legislative fill manner to interstices of the time that plan; to the contributed power statute. “The of an administrative from then it plan sponsor, on remained the agency 1162(2) congressionally administer a nothing creat- permits plan spon- it its intent. claims that is more multi-employer plan to terminate sional UFCW

sor of require equitable to subsidize qualified individuals obligation COBRA risks, having the poor subse- rather than remain- its because Thus, cov- them. ing plan for other members subsidize we sponsors own quently plain ignore stat- persons. should ered AppleTree to cover the ute and force CO- BRA beneficiaries. IV. reject argument for two We UFCWs Apple- adopting contends First, ignore plain language reasons. lead to reading of the statute would Tree’s improp- the statute would to substitute be therefore should result and

inequitable policy for the erly predilections our own ex- allowing Ap argues that eschewed. Second, Congress. intent of coherent press responsibility for relieve itself of pleTree to policies undergird plain lan- and sensible create an beneficiaries would the COBRA guage statute. Apple- problem allowing selection” “adverse poor-risk beneficiaries to foist Tree A. retaining good risks plan, while onto in its new allegedly inequitable result 1161(a) language of commands results arises be problem selection An adverse caps Congress’s on rates and its forbid- though the cause even conditioning availability ding on evidence they pay premiums, the amount continue insurability, statutory from the defini- Moreover, charged by law. is limited can be “plan sponsor.” If tion of could availability of cannot condition the charge insuring market price these insurability. coverage on evidence of individuals, no high-risk there would be ad- 1162(4); 26 U.S.C. 29 U.S.C. See *6 problem. verse selection 4980B(f)(2)(C). result, As “Former em § only coverage accept price choose continuation ployees would us the have mar cheaper insurance at given “plan that is than term caps when and define the Cable prices.” Herrmann v. Cencom sponsor” ket to account for the side-effects of the Cir.1992). (7th Assocs., 1161(a)’s F.2d easily accept § could as caps. We to treat con employees would like plan sponsor, of and then “[FJormer definition declare exer option, as an to be price caps inequitable. tinuation the invalid as There they they that face only ground are sure ignoring statutory cised no more the for If exceeding premiums. the “plan ignoring costs sponsor” medical definition of than for they healthy, do not they out to be caps turn rate on evidence of the the ban pay nothing. If medical needs insurability. enroll and loom, option.” Id. Be they exercise their UFCW has cited no evidence Con- COBRA-qualified ration cause regulation gress price was aware that premiums ally only if their will elect process or created an adverse selection benefits, remaining their the will be less than Congress rectify problem by intended to the the subsidize their benefits. members of requiring deliberately courts to misread turn, prefer In 1161(a). can unintended We avoid the con- risks, only good than rather spawned price sequences caps COBRA’s COBRA-qualified risks subsidizing the bad 1161(a). Correcting only eviscerating as well. price by choosing ill caps the effects of which in provisions “complex highly ERISA’s and

Allowing AppleTree to abandon regulatory given COBRA-qualified ex-employees program”3 allows will be of its technical judi- duty good Congress, its new effect is the of bring it to risks within leaving ciary. in the us to plan, risks Such course invites substitute while the bad preferences policy that this re- our for those reflected in plan. UFCW contends reject contrary eongres- We inequitable and the statute. sult is Cir.1993). Co., (5th v. Meredith Time Ins. 980 F.2d 1161(a) according invitation and construe is entitled judgment as a plain meaning. Therefore, to its matter of law. we AFFIRM the

district grant court’s of summary judgment. B. WIENER, Judge, specially Circuit policies If we examine underlying concurring. statutory language, reject we must fully that, I recognize inasmuch Ias am UFCW’s classification of them as absurd or concurring Judge typically Smith’s well-

inequitable. Multi-employer plans benefit opinion crafted panel case, for the in this such as partici UFCW are concerned that affirming equally opinion well-crafted pants such as plan, will exit the court, the district I run the gilding risk of leaving high risk behind. But proverbial lily when I write separately. I do coverage agreement employ between the so hope nonetheless of adding a bit of er and the is a voluntarily-bargained perspective to thereby the situation document; thus, bol- agreement can stering position further this court’s in the for this concern. Since all elements of the appeal. instant I am satisfied that when agreement between employ and an instant case is viewed in the framework freely negotiated er are at joining the time of purposes which plans plan, parties can allocate this risk. created, are types types workers and Indeed, establishing actuarial risk is easier of industries plans which such generally participant as the size of the pool grows. serve, intended to overarching certain Thus, strong there are countervailing forces ERISA, features of “Type as its providing AppleTree with incentives to re- Coverage” Benefit provision and its ‘Written program. main in the For smaller requirement, Instrument” ruling our today ers, pressures these to remain in a multi- will solely be seen not product as the of a fair employer plan fact, stronger. are even reading language of the statute multi-employer plans can refuse to admit vacuum,” “in a broadly but more as a fair prospective members who pay are unable to and sensible determination wholly way. consistent goals with the purposes statutory solution to a loss of revenue general ERISA multiemployer plans because of a withdrawal participants is not particular. *7 some, to coverage terminate for as UFCW attempted Rather, to do here. if revenue I 1162(1) defections, falls § because of requires joint the change coverage board to for all PLAIN LANGUAGE REVISITED participants, not to coverage terminate for First, I re-emphasize point the retaining some coverage while full for others. “Type Coverage” ERISA’s provi- Benefit Finally, reject premise we UFCW’s that it sion require AppleTree does not as an em- “equitable” is somehow more for ployer participating multiemployer in a wel- than for the plan other UFCW members to plan, provide fare benefit COBRA benefits coverage subsidize for the COBRA beneficia- AppleTree’s to those of employees former ries. When plan spon- UFCW. became the dependents and their who had been receiv- sor, it responsibility assumed for these bene- ing, eligible receive, or became COBRA ficiaries. It inequitable is not to hold it to its coverage under the prior Septem- statutory responsibilities. (“SCP Beneficiaries”). Qualified ber 602(1) Section provides: of ERISA4

V. (1) coverage The coverage must consist of Giving statutory the language plain which, its coverage as of the time the meaning construing light it in being of reason- provided, is identical to the cov- congressional able policy goals, we erage provided conclude plan under the to simi- 1162(1). § 4. 29 U.S.C. 602(1) § meaning of coverage within the under the beneficiaries

larly situated qualifying group plan respect sponsored to whom a it its own health when plan with coverage Qualified If has not occurred. employees the SCP event for after any group under the eligible began modified Beneficiaries became beneficiaries, similarly such situated coverage COBRA the to receive under in modified coverage shall also be the The refers to a modification UFCW. statute for all individuals who manner same plan. same The lan- under qualified beneficiaries 602(1) are § guage of reflects that the intent of part in pursuant to this connec- plan sponsor Congress prohibit was to a group.5 tion with modifying provide coverage to coverage to 602(1) case, qualified different from COBRA beneficiaries § the instant applying (the “Board”) “similarly coverage provided situated” des- joint board UFCW’s —the Nothing plan. active of the same sponsor interprets term ignated plan — 602(1) requires entity under an has never “similarly beneficiaries situated coverage for qualifying sponsored a event has not health care an indi- plan for whom employees. provide AppleTree’s mean vidual to COBRA benefits for occurred” to interpretation ignores simply entity hap- Board’s because the But the individual wording employer of the statute which unambiguous pened to have his when he been similarly specifies situated beneficiaries experienced event un- participating are entity who multiemployer plan are those beneficiaries der qualified the COBRA in the same subsequently establishes a health majority employees. beneficiaries. opinion for its own The abundantly clear. makes this 602(1) “type of bene- describes Section quali- provided to COBRA coverage” to be fit To reach a conclusion would not different plan. Specifically, under a fied beneficiaries language of the ignore statute 602(1) requires sponsor recognize purpose also but would fail to care to the COBRA identical plans. multiemployer structure of pro- as is qualified beneficiaries persons “similarly are other who vided to primary purpose them and who situated” to plans is workers of objective, To achieve this same particular industry Through area. 602(1) plan spon- requires that if the also structure, are able to continue workers “similarly for such sit- sor modifies plan despite moving under .the modify it must also cov- persons, uated” phenome- from one to another —a qualified erage for industries, including typical non of certain Correctly applying manner. the same food sales and retail service—within statute, quoted no above employers participating group of discerned for the Board’s support can be To terminate individual’s cover- *8 that individuals become “simi- interpretation just multiemployer plan age under because larly qualified to COBRA beneficia- situated” happened particular to for one em- he work partici- individuals plan when the ries of one among many at the time ployer the he be- Instead, pate plan. the in another eligible to un- came receive COBRA benefits n 602(1) that the intent §of demonstrates of fly in der the the face of a prohibit sponsors to from Congress was multiemployer principal purpose plans. of qualified discriminating between COBRA Applying forego- the More about later. employees who and active 602(1) ing principles, applicable would be in the same participating in the instant if—-but if—the Board case employ- the of the active Further, modified plain language of the statute dependents participat- and their who are ees support Board’s contention that does not similarly formerly ing in the and who are AppleTree —a respect of situated beneficiaries with to er—somehow caused a modification added). (emphasis 5. Id. (or Here, permitted join) no Qualified to withdraw from Beneficiaries.

SCP Accord- of occurred. modification 602(1) inapplicable and does

ingly, obligation the Board of its Ill relieve Qualified to the SCP Bene- COBRA THE MULTIEMPLOYER PENSION 602(1) ficiaries; can stretched to neither PLAN AMENDMENT ACT —A obligation AppleTree. shift such COMPARISON

' strong support Indirect but for the conclu- II employer sion that withdrawal of an from multiemployer welfare benefit does not DEFINITION OF PLAN SPONSOR change designated party plan sponsor as plan sponsor” “definition of actu- ERISA’s adoption by Congress is found in the of the ally prohibits AppleTree replacing the Multiemployer Pension Plan Amendment Act plan sponsor Qualified Board as of the SCP (“MPPA”). Congress of 1980 enacted the Beneficiaries, express absent some written response MPPA in to concerns about the provision to that effect in or its the UFCW hardships extreme financial of multiemployer amicus, Nevertheless, plan documents. as (as pension plans distinguished from mul- Coordinating for the National Committee tiemployer plans) and re- welfare benefit (“NCCMP”) insists, Multiemployer Plans on sulting potential liability of the Pension Ben- Board, AppleTree behalf was Corporation Guaranty pay efit for certain required to reheve the Board of COBRA its pension unfunded benefits. These concerns August disagree. obligations on 1992. I arose because the tension between the plan sponsors on the one hand and the con- Recognizing as it must that re- tributing employers multiemployer pen- “plan quires sponsor” plans resulting sion on other —tension coverage, proceeds argue NCCMP disparate from the identities and interests of AppleTree “established and maintained” the parties. those thereto; making contributions AppleTree that as result when con- ceased concerns, response to those Congress tributing to the UFCW and established a redesignate plan sponsor elected not to Sep- for on pension plan a multiemployer upon the with- 1, 1992, the tember Board ceased be the Instead, employer. drawal therefrom an plan sponsor AppleTree’s as to former and legislative impose solution was to with- employees, duty providing active liability on an drawal who with- reverted to MPPA, Through draws. the enactment of plan sponsor of those on that individuals Congress require amended ERISA an em- legal leger- date. On basis of that bit of ployer from a who withdraws demain, NCCMP concludes that pension plan pay to continue to additional party responsible providing is the adequately contributions to fund Qualified SCP Beneficiaries with COBRA pension certain unfunded benefits. September as of significance history The obvious contention, however, support This no finds the MPPA to the instant case is no statute, plan documents, reality. comparable in the adopted amendment act was ever provides specific statutory plans. ERISA defini- And the reason welfare benefit *9 “plan sponsor”: Multiemployer plans equally pertinent tion of obvious: The rules that plan sponsor, joint plans simply have one apply pension apply board to do not to Changes identity of plans. trustees. in the of em- welfare benefit Given the substantial ployers participate pension who from time to plans time differences between and wel- designat- have no party just effect on the fare plans, benefit latter do not “plan sponsor.” experience funding problems ed ERISA to be the that are joint of “plan board trustees remains the former. example, pen- endemic to the For regardless sponsor” plans subject vesting of which are to sion are ERISA’s V funding obligations, where- and requirements are plans not. benefit as welfare ‘WRITTEN INSTRUMENT”

ERISA’s REQUIREMENT IV helps to aspect of Another ERISA EVENT QUALIFYING perspective proper THE frame within which narrow issue of this case is consider the sponsor of the on the imposes COBRA requirement. statute’s “written instrument” he the individual when covered shifting prohibits It the Board from its CO- duty of qualifying event the experienced a the re- obligation BRA absent statutory coverage. This COBRA providing quired which documentation —documentation moment the individu- obligation at the arises fully appreciate To here non-existent. .trig- qualifying experiences a event al in the requirement true of this significance plan, and coverage under the gers a loss of explanation appeal, instant a more extensive only upon of one of the the occurrence ends purpose alluded to and structure above 602(2) §in of terminating specified events plans multiemployer prove should benefi- permits Nothing therein contained ERISA. cial. multiemployer to termi- sponsor of a plans typically are estab- Multiemployer obligation to a its COBRA nate or transfer employee to provide lished maintained and because, simply a

withdrawing at particular workers industries.6 benefits experiences quali- individual time after the Multiemployer plans prevalent tend to be event, employer withdraws from fying that have lower those industries in common sponsors its own employment-peripatet- level who are workers contrary, employees. the obli- On own food, by nature, garment, ic such as the retail provide coverage to the gation to COBRA construction, mining, trucking, and entertain- plan sponsor with individual remains plans are Multiemployer ment industries. recap: multiemployer plan, The UFCW and other similar indus- common these plan, lan- multiemployer is a tries, typified by many com- are small which expressly designates the guage of ERISA justify panies that are “too small to an indi- plan sponsor the UFCW. Board as the Multiemployer plans vidual com- plan.”7 Qualified experienced Beneficiaries The SCP prise pooled assets numerous prior Sep- events (each usually ers which makes contribu- 1, 1992, they time when were at a tember agree- bargaining tions to collective pursuant the UFCW. Thus COBRA covered under ments) generated by the income those duty on the Board the expressly imposes Thus, multiemployer plans general- assets.8 Quali- to the provide SCP ly populations larg- participant that are have terminating until event fied Beneficiaries single-employer plans, er than those ceased occurs. The fact generally experience risk-spreading better on Au- making contributions opportunities. To the extent 31, 1992, sponsored a gust and thereafter plans larger, they enjoy also economies for its could largest unavailable all but scale result, Board obli- relieve the of its plans. does not As multiem- single-employer n gations ployer benefits to often more favorable plans participants Qualified coverage to the and their benefi- SCP Beneficiaries. States, Wolk, Ar Langbein Employee 8.See and Southwest 6. & Pension and Central Southeast See Transport, 48-52; 359-2d, v. Central 472 U.S. Law, eas Pension Fund Manage- BNA Tax Benefits ment, 559, 2833, (1985); S.Ct. 86 L.Ed.2d 447 Rules," Special "Multiemployer A- Plans — v, Robbins, Storage Moving & Co. Schneider 1. (1984); U.S. 104 S.Ct. 80 L.Ed.2d States, Southeast and Southwest Areas Central Wolk, Langbein Employee Pension and Bene- & *10 Truck, Gerber 870 F.2d Fund v. Pension Law at 49. fits (en Cir.1989) banc). (7th single employer plans ciaries than plan.13 are able to The United Depart- States provide. (“DOL”) ment of Labor recognizes also multiemployer plans are primarily estab- particular importance Of to the instant lished and purpose maintained for the widely recognized case is the fact that mul- permitting portability of benefits for the tiemployer plans are common those indus- particular of a industry.14 workers which, tries in irregular due seasonal or employment high mobility, and labor few framework, Within that the “written in qualify workers would under requirement strument” is all the more mean employer’s plan individual if one were estab- 402(a)(1) ingful. Section expressly of ERISA example, lished.9 For construction workers requires “[ejvery benefit shall be frequently by hired a contractor for a established and pursuant maintained to a single project takes a matter of written instrument.”15 The written instru complete.10 weeks or months to Once the “provide ment must for one or more named finished, project may those workers be jointly fiduciaries who or severally shall have unemployed until another contractor needs authority manage to control and op particular project.11 skills for a different eration and administration plan.”16 Thus, multiemployer plans, in contrast purpose One of ERISA’s “written instru single-employer plans, promote portability of requirement ment” protect is to the interests generally workers not on benefits who— employees and their em their own employer volition—move from one ployee plans by benefit giving them to another.12 a clear understanding rights obligations of their and A eligible participate worker is in a plan.17 under Recognizing that ERISA single-employer plan because of his requires employee plans any benefit and relationship particular ment with one em- changes plans made to such writing, be in we contrast, ployer. eligible a worker is have held that lack power we to create a participate in a multiemployer plan because remedy federal common law in this area be employment of his relationship partic- with a specifically cause clearly ERISA ad industry ular employers and the several Thus, dresses the participants issue.18 participate which Consequently, employee plans beneficiaries of benefit must multiemployer plans single-employer —unlike rely plans’ able to on the written instru plans portability able to achieve of ben- —are ments for determination of through efits benefits and de permits structure that party termination of responsible pro worker who moves from one Here, another plan’s group viding within the those participat- benefits. the UFCW des ing employers enjoy ignates continuous responsible party, the Board as that Wolk, Langbein trade, 9. Employee & covering portion Pension a substantial aof craft or Benefit Law at industry (2) 49. locality; in terms of relationship years closeness of of benefits to trade, 10. Id. industry service within the craft or rather (3) given employer; than with a extent of collec- 11. Id. bargaining employee tive in matters than other plans employer organization benefit between the (4) 12. Id. at 52. employers maintaining plan; the extent to which the administrative burden 13. Id. expense providing through single- employer plans greater through would be than 2510.3-37(c). 14. See 29 multiemployer plans. C.F.R. The DOL re- quires purpose a substantial business before a multiemployer plan may 1102(a)(1). be established. Such 15. 29 U.S.C. purpose business includes the interest of a labor organization securing employee plans benefit 16. Id. for its members. The DOL examines four factors Co., to determine the existence aof substantial busi- v. B.F. Goodrich 871 F.2d Cefalu purpose, any (5th Cir.1989). may ness one of which be suffi- (1) plan by cient: maintenance of a a substantial contributing number of unaffiliated 18. Id. at 1297. *11 deny partici- plans would be able to writing.19 ployer and in expressly and does so right “portability of benefits” pants their grants its expressly Further, the UFCW plan’s being required to amend the without right the' and beneficiaries participants required by ERISA. instrument as written coverage under the UFCW elect COBRA right turn, portability the the denial of triggering loss of event when a rights severely benefit affect other could There experienced.20 is coverage thereunder multiemployer plans. For participants in however, UFCW, in the nothing written pro- required to example, AppleTree if were indi- to terminate an the Board permits that Qualified with Beneficiaries vide SCP. coverage under vidual’s new, single-em- coverage under the employ- former individual’s and when Qualified AppleTree plan, the SCP ployer subsequently and er withdraws participants in would become Beneficiaries plan for its own group health sponsors a terminated AppleTree plan and would be statute, pertinent employees. Under August as of participants the UFCW as legal au- applicable plan provisions, 31,1992. coverage under This termination of formerly thorities, a is the Board —not it produce harsh conse- might well the UFCW obligated participating —which Qualified Beneficiaries. quences to SCP terms of by under the and law First, that the level of to the extent Quali- to the SCP provide COBRA plan were less provided us to hold otherwise For Beneficiaries. fied coverage provided under than the favorable instrument” ERISA’s “written violate would UFCW, Qualified Beneficiaries the SCP deny improperly the SCP requirement (for, suffer a diminution would right to uninter- Qualified Beneficiaries earlier, plans generally multiemployer noted coverage under UFCW. rupted COBRA single- than provide more favorable rule in this case Additionally, for us to scale). employer plans given economies of by the Board could broad- urged the manner n Second, participation such a termination of structure adversely affect the current ly but might adversely affect the level SCP multiemployer plans, includ- operation coverage under the Qualified Beneficiaries’ partici- obligations of the rights and ing the subsequently they and if were UFCW when employers alike. As pants participating by employed other to become time, noted, periods of workers longer over coverage pe- during employers their COBRA numer- industry tend' to work for given in a Qualified Ben- example, if an riod. For SCP industry. It was employers within ous subsequently employed eficiary were to be revolving recognition of this principally in UFCW, participating employer of the a employment that door facet of again required to meet be that worker representatives devised union ers and eligibility requirements of the UFCW plan provides a Such coverage to receiving the level of prior maintenance of de- to ensure the means immediately be- been entitled which he had toil in for workers who of benefits sired level on participation in the UFCW ended fore his industry change and who em- particular Also, August 1992.21 to the extent frequency. Through par- ployers with some exclusion of cer- “pre-existing condition” multiemployer plan, both the ticipation in might apply to the tain ailments diseases employers understand workers and.the Beneficiary, Qualified he would now SCP cov- continue will conditions, even coverage for such denied they may though erage workers even to such have continued though he would otherwise employers par- which or more work for two had his coverage for them be entitled to times. Clear- ticipate at different coverage not been terminated.22 permit plan sponsors to ly, if we were now the intent Clearly, public interest —and obligations shift their COBRA encouraging the formation Congress sponsors of multiem- AppleTree, such as —in 7.1, UFCW; 1.8, §§ §§ 2.3 and 2.5 of the UFCW. 21. See §§ 4.5 of the 19. See 1.33 7.2, 7.3, Agreement. of UFCW’s Trust 8.1 and 9.2 § 4.4 of the UFCW. 22. See UFCW. 20. See 2.8 of the *12 plans adversely in employee strong could be the Board this case. of benefit Given the AppleTree, if were to hold that affected we organizations motivation of the entities and Board, obligated provide rather than the to bargain vigorously so with the Qualified to the Bene- COBRA benefits SCP adoption for ers of just participants ficiaries. And as and bene- plans central feature of which is the des- —a rely plan’s ficiaries must be able on the ignation of the Board rather than the em- instrument, so too must be written ployer plan sponsor illogical, as the find if —I rely plan’s on able written instrument disingenuous, not urgings the strident of the obligations. Employers to determine their Board to this court that mystically pass we frequently discouraged participat- plan sponsor the mantle of from the Board to ing forming employee plans in or benefit if employer, thereby imposing liability on they perceive potential exposure to unlimited AppleTree for the costs of providing COBRA liability participants’ for benefits. This is Qualified benefits to the SCP Beneficiaries. requires another reason for which ERISA emphasis is, The constant bargaining of such writing in the instrument to define the em- above, ability as noted to ensure to the ployers’ obligations portability workers the Notably, any neither the UFCW nor other coverage the avoidance of breaks in expressly impliedly plan document either or requalification, such attendant delay evils as permits the Board to shift its COBRA obli- periods eligibility, exposure to denial gations AppleTree simply because coverage pre-existing “new” conditions Qualified happened SCP Beneficiaries that were pre-existing thus were —and employed have been when coverage not excluded from purposes of —for experienced those beneficiaries their COBRA participation former the same It ill Ap- event under the UFCW —and behooves those whose minions benefit so pleTree subsequently sponsored greatly from position the Board’s employees. health its own That is sponsor gainsay sponsorship for the say not to that the or the other expediency shifting COBRA costs to the provided. documents could not I have so departing withdrawing employer. simply note the fact that the UFCW does not writing impose any liability on the with- drawing employer to plan’s subsidize the cost VÍI benefits; providing COBRA but neither permit recovery by it withdrawing does CONCLUSION any reserves attributable to the employer may contributions such have made repeat, I wholeheartedly To concur in . Again, to the I UFCW. do not mean to that, Judge opinion Smith’s based on suggest that the documents could not so plain language of ERISA and UFCW’s writ- provide; simply I observe that no such writ- instruments, ten plan spon- the Board is the ing exists connection with the UFCW. obligated provide sor and thus is admittedly point belabored I make is Qualified to SCP Beneficiaries un- contrary that in provi- the absence of written statutory der the UFCW until a event should sions ERISA does not allow the Board to trigger occur to termination of such cover- obligation simply evade its COBRA because age. The fact that withdrew from may the financial soundness of the sponsored the UFCW thereafter a sin- adversely required affected the Board is gle-employer group for its em- Quali- to the SCP ployees Qualified after the SCP Beneficiaries fied Beneficiaries. became entitled to receive COBRA clearly under the UFCW is not an event that VI obligations terminates the Board’s

AD HOMINEM Qualified to the SCP Bene- closing, I I perspective am constrained to ficiaries. find that the broad comment aspect position on urged by another which this decision can and should be viewed ma- undergirding for the additional provides policies, with the consistent

jority opinion, and COBRA of ERISA

reasons and rationale multiemployer plans. d’etre raison *13 America,

UNITED STATES

Plaintiff-Appellee,

v. GONZALES, Samuel

Juan

Defendant-Appellant. 93-2521

No.

Summary Calendar. Appeals, Court of

United States

Fifth Circuit.

April (court Houston, Samuelson, TX

Bryan M. defendant-appellant. appointed), for Peggy Morris Paula C. Offenhauser Finder, Ronca, Attys., Lawrence Asst. U.S. Houston, TX, Atty., plaintiff-appel- U.S. lee. GARWOOD,

Before SMITH DeMOSS, Judges. Circuit PER CURIAM:
BACKGROUND 24, 1993, January Houston Police De- On Corley partment Officer observed Juan Gon- get Infante zales and co-defendant Salvador terminal. Officer out of a cab at the bus pair visually Corley that the scanned noticed speak to one another. area but did not a blue hardside suitcase Gonzales retrieved on his from the back of the cab and carried gray bag; Infante carried black shoulder a Infante backpack. As canvas suitcase and

Case Details

Case Name: South Central United Food & Commercial Workers Unions & Employers Health & Welfare Trust v. Appletree Markets, Inc.
Court Name: Court of Appeals for the Fifth Circuit
Date Published: Apr 15, 1994
Citation: 19 F.3d 969
Docket Number: 93-02211
Court Abbreviation: 5th Cir.
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