Geissal v. Moore Medical Corp.

• Decision Date: 31 July 2003
• Docket Number: No. 02-2255.,No. 02-2256.,02-2255.,02-2256.
• Citation: 338 F.3d 926
• Parties: Bonnie L. GEISSAL, as personal representative of the ESTATE OF James W. GEISSAL, Plaintiff-Appellant/Cross Appellee, v. MOORE MEDICAL CORPORATION, et al., Defendants-Appellees/Cross Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

338 F.3d 926

Bonnie L. GEISSAL, as personal representative of the ESTATE OF James W. GEISSAL, Plaintiff-Appellant/Cross Appellee, v. MOORE MEDICAL CORPORATION, et al., Defendants-Appellees/Cross Appellants.

No. 02-2255.

No. 02-2256.

United States Court of Appeals, Eighth Circuit.

Submitted: February 10, 2003.

Filed: July 31, 2003.

Rehearing and Rehearing En Banc Denied: September 12, 2003.

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S. Sheldon Weinhaus, argued, St. Louis, MO (Marc A Greidinger, Springfield, VA, on the brief), for appellant.

Daniel J. Schwartz, argued, St. Louis, MO (Edward M. Goldenhersh, St. Louis, MO, on the brief), for appellee.

Before HANSEN,^* Chief Judge, LOKEN and SMITH, Circuit Judges.

LOKEN, Chief Judge.

After Moore Medical Corporation ("Moore") terminated employee James Geissal in 1993, he elected to purchase continuation health insurance coverage through Moore's Group Benefit Plan (the "Moore Plan"). Some months later, the Moore Plan canceled this coverage when it determined that Geissal was not entitled to continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), 29 U.S.C. §§ 1161-1169, which amended the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. Geissal sued Moore, the Moore Plan, and its administrator, alleging that he was entitled to at least eighteen months of COBRA coverage. The Supreme Court ultimately agreed and remanded the case for further proceedings.

On remand, addressing questions of remedy, the district court denied Geissal compensatory damages and statutory penalties but granted him an award of $217,369.70 in attorney's fees. Geissal's widow appeals on behalf of his estate, seeking money damages, penalties, and additional attorney's fees under 29 U.S.C. § 1132(a), (c), and (g). Moore cross-appeals, arguing that the district court erred in awarding attorney's fees because Geissal is not a prevailing party. We affirm the district court in all major respects but remand for further consideration of whether the estate should recover unreimbursed medical expenses paid by Geissal or the estate.

I. Background

Throughout Geissal's employment at Moore, Trans World Airlines ("TWA") employed his wife, Bonnie ("Mrs.Geissal"). Geissal as her spouse was covered under TWA's health insurance plan (the "TWA Plan"), which was administered by Aetna Life Insurance Company ("Aetna"). Before Moore terminated Geissal in July 1993, the Moore Plan paid for his ongoing cancer treatments. The Moore Plan is a self-funded employee welfare benefit plan governed by ERISA and COBRA. After Geissal's termination, he elected COBRA continuation coverage under the Moore Plan and made six monthly premium payments of $148.51 per month. In January 1994, the Moore Plan cancelled the COBRA coverage and refunded Geissal's premium payments because he was also covered by the TWA Plan during this period.

After the cancellation, Aetna as administrator of the TWA Plan paid nearly all claims for medical expenses incurred by Geissal between the date of his termination and January 17, 1995, when the eighteen-month COBRA continuation coverage period ended. During that period, the TWA Plan paid $86,795.25 to Geissal's health care providers and $6,528.65 to Geissal for his covered out-of-pocket expenses. During this same period, Geissal did not seek reimbursement for expenses incurred on a trip to Greece for cancer treatment, and he incurred $4,425.55 in medical expenses that the TWA Plan declined to reimburse.

Geissal commenced this lawsuit in June 1994, seeking compensatory damages for past due COBRA benefits, injunctive and equitable relief, penalties under 29 U.S.C. § 1132(c), and costs and expenses including reasonable attorney's fees. After Geissal died on June 23, 1995, Mrs. Geissal as representative of his estate was substituted as plaintiff. The district court granted summary judgment in favor of the defendants. Geissal v. Moore Medical Corp., 927 F.Supp. 352 (E.D.Mo.1996). We affirmed, construing the term "first becomes... covered under any other group health plan" in 29 U.S.C. § 1162(2)(D)(i) as including Geissal's pre-existing coverage under the TWA Plan. Geissal v. Moore Medical Corp., 114 F.3d 1458 (8th Cir.1997). The Supreme Court granted certiorari, rejected our interpretation of the statute, and remanded. Geissal v. Moore Medical Corp., 524 U.S. 74, 82, 87, 118 S.Ct. 1869, 141 L.Ed.2d 64 (1998).

On remand, the principal remedy issue was whether Geissal may recover the substantial health benefits paid on his behalf by Aetna and the TWA Plan. In rejecting this claim, the district court ruled that Geissal's estate was entitled to no monetary relief under 29 U.S.C. § 1132(a). Geissal v. Moore Medical Corp., 158 F.Supp.2d 976 (E.D.Mo.2001). The court subsequently denied Mrs. Geissal's motion for an award of statutory penalties under § 1132(c)(1)(A) but granted in part her motion for an award of attorney's fees under § 1132(g)(1). All of these rulings are challenged on appeal. We review the summary judgment rulings de novo. See Phillips-Foster v. UNUM Life Ins. Co. of Am., 302 F.3d 785, 794 (8th Cir.2002).

II. Monetary Relief

Before turning to the applicable ERISA remedial provisions, it may be helpful to outline the principal issue as to monetary relief — whether Mrs. Geissal may recover the health benefits paid to Geissal's medical providers by Aetna on behalf of the TWA Plan. The Moore Plan provides that "[b]enefits are not payable for ... services for which there is no obligation to pay." Defendants argue that Geissal and his estate have no obligation to pay the substantial medical expenses paid by Aetna under the TWA Plan. Mrs. Geissal concedes she has no obligation to reimburse the TWA Plan for paying those expenses but argues she is entitled to recover those benefit payments because the Moore Plan would have paid them but for its wrongful cancellation of Geissal's COBRA continuation coverage. Defendants respond that, assuming the TWA Plan's coverage was secondary to the Moore Plan's primary COBRA coverage, the Moore Plan's coordination of benefits provisions provide a remedy to the secondary insurer, the TWA Plan. But those provisions provide no remedy to the plan participant or beneficiary, who would receive a windfall double recovery if allowed to recover expenses already paid by a third party. Mrs. Geissal replies that the third parties in this case — which include medical providers who discounted their bills to Aetna, as well as Aetna and the TWA Plan — have failed to assert timely claims against Moore and the Moore Plan for reimbursement, so she should be entitled to recover on their behalf to prevent the self-funded Moore Plan from being unjustly enriched by its wrongful denial of COBRA coverage.

Because ERISA preempts state law remedies, the parties agree that Mrs. Geissal's right to this remedy must be found in ERISA's remedial provisions and more particularly in 29 U.S.C. § 1132(a), which provides in relevant part:

(a) ... A civil action may be brought —

(1) by a participant or beneficiary —

* * * * * *

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan....

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.

The district court concluded that Mrs. Geissal is not entitled to monetary relief under either § 1132(a)(1)(B) or § 1132(a)(3)(B). On appeal, she challenges both rulings.

A. Relief Under § 1132(a)(1)(B). The district court concluded that Mrs. Geissal and the estate may not recover plan benefits under § 1132(a)(1)(B) because Geissal, the plan beneficiary, is deceased. 158 F.Supp.2d at 982. The statute provides that "[a] civil action may be brought ... by a participant or beneficiary." But we have declined to construe this language as precluding ERISA claims after the participant or beneficiary has died. In Shea v. Esensten, 107 F.3d 625, 628 (8th Cir.), cert. denied, 522 U.S. 914, 118 S.Ct. 297, 139 L.Ed.2d 229 (1997), we held that the representative of a deceased participant's estate had standing to sue for breach of ERISA fiduciary duties. In McGee v. Funderburg, 17 F.3d 1122 (1994), we upheld a widow's claim for COBRA continuation benefits without discussing the issue. Addressing the precise question here at issue, the Third Circuit held that an action for benefits under § 1132(a)(1)(B) survives the death of the beneficiary because Congress intended ERISA to be remedial, and "[a]ctions that are remedial in nature generally survive the death of a party." Harrow v. Prudential Ins. Co. of Am., 279 F.3d 244, 248 (3d Cir.2002). We agree. Therefore, the district court erred in ruling that Geissal's estate may not recover Moore Plan benefits under § 1132(a)(1)(B).¹

(1) That brings us to the main issue, whether Mrs. Geissal may recover benefits paid by the TWA Plan. Section 1132(a)(1)(B) provides that a participant or beneficiary may recover "benefits due to him under the terms of his plan." COBRA provides that continuation coverage must be "identical to the coverage provided under the plan to similarly situated beneficiaries." 29 U.S.C. § 1162(1). The Moore Plan provides that "[b]enefits are not payable for ... services for which there is no obligation to pay." In our view, the plain language of § 1132(a)(1)(B) and the Moore Plan preclude Mrs. Geissal from recovering medical expenses paid by another health insurer. See Larocca v. Borden, Inc., 276 F.3d 22, 30-31 (1st Cir.2002).

On appeal, Mrs. Geissal argues that § 1132(a)(1)(B) allows her to recover the TWA Plan benefit payments and the...