Geissal v. Moore Medical Corporation

• Decision Date: 08 June 1998
• Docket Number: 97689
• Citation: 118 S.Ct. 1869,524 U.S. 74,141 L.Ed.2d 64
• Parties: Bonnie L. GEISSAL, beneficiary and representative of the estate of James W. Geissal, deceased, Petitioner, v. MOORE MEDICAL CORPORATION et al
• Court: U.S. Supreme Court

524 U.S. 74

118 S.Ct. 1869

141 L.Ed.2d 64

Bonnie L. GEISSAL, beneficiary and representative of the estate of James W. Geissal, deceased, Petitioner,

v MOORE MEDICAL CORPORATION et al.

No. 97-689.

Supreme Court of the United States

Argued April 29, 1998.

Decided June 8, 1998.

Syllabus^*

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amended the Employee Retirement Income Security Act of 1974 (ERISA) to permit a beneficiary of an employer's group health plan to elect continuing coverage when he might otherwise lose that benefit because of a "qualifying event,'' such as the termination of employment. When respondent Moore Medical Corporation fired James Geissal, it told him that COBRA gave him the right to elect continuing coverage under Moore's health plan. He so elected, but six months later, Moore told him that he was not entitled to COBRA benefits because on his date of election he was already covered by a group plan through his wife's employer, Trans World Airlines (TWA). Geissal filed suit against respondents (collectively, Moore), claiming, inter alia, that Moore was violating COBRA by renouncing an obligation to provide continuing coverage. He died while this suit was pending, and his wife replaced him as plaintiff. The Magistrate granted partial summary judgment to Moore, concluding that an employee with coverage under another group health plan on the date he elects COBRA coverage is ineligible for COBRA coverage under 29 U.S.C. §1162(2)(D)(i), which allows an employer to cancel such coverage as of " [t]he date on which the qualified beneficiary first becomes, after the date of the election . . . covered under any other group health plan.'' The Eighth Circuit affirmed.

Held: An employer may not deny COBRA continuation coverage under its health plan to an otherwise eligible beneficiary because he is covered under another group health plan at the time he elects COBRA coverage. Pp. ____-____.

(a) Section 1162(2)(D)(i) speaks in terms of "becom[ing] covered,'' an event that is significant only if it "first'' occurs "after the date of the election.'' Because James Geissal was a beneficiary of the TWA plan before he elected COBRA coverage, he did not "first become'' covered under the TWA plan after the date of election, and Moore could not cut off his COBRA coverage under §1162(2)(D)(i)'s plain meaning. Moore's contrary reading-that, for a beneficiary covered under a pre-existing plan, the first moment of coverage on the day following the election is the moment of first being covered after the date of election-ignores the condition that the beneficiary must "first becom[e]'' covered after election, robbing the modifier "first'' of any consequence, thereby equating "first becomes . . . covered'' with "remains covered.'' Pp. ____-____.

(b) Moore argues that the plain reading should be rejected because it would permit a beneficiary to claim continuation coverage even if he has obtained entirely new group coverage between the qualifying event and the election. The statute, however, is not cast expressly in terms of preserving the status quo of the beneficiary's health care coverage as of the date of the qualifying event. In addition, there is no reason to assume that a beneficiary with pre-existing coverage receives a windfall as a result of his ability to elect COBRA coverage. Since a beneficiary must pay for whatever COBRA coverage he obtains, there is no reason to think he will make an election for coverage he does not need. Even Moore would permit a beneficiary with coverage under a group health plan to elect COBRA coverage whenever there is a "significant gap'' between the coverage offered by the employer's group health plan and that offered by the beneficiary's other group health plan. This "significant gap'' approach to §1162(2)(D)(i) is plagued with difficulties, however, beginning with the sheer absence of any statutory support for it. Furthermore, this approach requires courts to make policy judgments about the adequacy of the coverage provided by the beneficiary's other group health plan. This sort of inquiry is so far unsuitable for the courts that this Court would expect a clear mandate before inferring that Congress meant to foist it on the judiciary. Pp. ____-____.

114 F.3d 1458, vacated and remanded.

SOUTER, J., delivered the opinion for a unanimous Court.

S. Sheldon Weinhaus, St. Louis, MO, for petitioner.

James A. Feldman, for United States as amicus curiae by special leave of the Court.

Bradley J. Washington, for the respondents.

Justice SOUTER delivered the opinion of the Court.

The Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), authorizes a qualified beneficiary of an employer's group health plan to obtain continued coverage under the plan when he might otherwise lose that benefit for certain reasons, such as the termination of employment. The issue in this case is whether 29 U.S.C. §1162(2)(D)(i) allows an employer to deny COBRA continuation coverage to a qualified beneficiary who is covered under another group health plan at the time he makes his COBRA election. We hold that it does not.

I

On July 16, 1993, the respondent Moore Medical Corporation fired James Geissal, who was suffering from cancer. While employed, Geissal was covered under Moore's group health plan as well as the health plan provided by his wife's employer, Trans World Airlines (TWA), through Aetna Life Insurance Company.

According to Geissal, soon after he lost his job, Moore told him that he had a right under COBRA to elect to continue coverage under Moore's plan. Geissal so elected, and made the necessary premium payments for six months. On January 27, 1994, however, Moore informed Geissal it had been mistaken: he was not actually entitled to COBRA benefits because on the date of his election he was already covered by another group health plan, through his wife's employer.

Geissal then brought this suit against Moore, the Group Benefit Plan of Moore Medical Group, Herbert Walker (an administrator of the plan), and Sedgwick Lowndes (another administrator) (collectively, Moore). ¹ Geissal charged Moore with violating COBRA by renouncing an obligation to provide continuing health benefits coverage (Count I); he further claimed that Moore was estopped to deny him continuation coverage because it had misled him to think that he was entitled to COBRA coverage (Count II), that Moore's misrepresentation amounted to a waiver of any right to assert a reading of the plan provisions that would deprive him of continuation coverage (Count III), and, finally, that Walker had violated COBRA by failing to provide him with certain plan documents (Count IV).

After limited discovery, Geissal moved for partial summary judgment on Counts I and II of the complaint. He argued that Moore's reliance upon 29 U.S.C. §1162(2)(D)(i) as authority to deny him COBRA continuation coverage was misplaced. Although that subsection provides that an employer may cancel COBRA continuation coverage as of " [t]he date on which the qualified beneficiary first becomes, after the date of election . . . covered under any other group health plan (as an employee or otherwise),'' Geissal was first covered under the TWA plan before he elected COBRA continuation coverage, not after. In any event, Geissal maintained, Moore was estopped to deny him health benefits, because he had detrimentally relied upon its assurances that he was entitled to them. While the summary judgment motion was pending, Geissal died of cancer, and petitioner Bonnie Geissal, his wife and personal representative of his estate, replaced him as plaintiff.

The Magistrate Judge hearing the case² first rejected Moore's arguments that Geissal lacked standing and that Aetna was a necessary party under Federal Rule of Civil Procedure 19(a). The Magistrate concluded that even if Moore was correct that Geissal had no claim for compensatory damages because Aetna paid all of the medical bills, Geissal could seek statutory damages under 29 U.S.C. §1132(a)(1). ³ The Magistrate held that Aetna was not a necessary party to the suit, since complete relief could be granted between Moore and Geissal without joining Aetna, a verdict in Geissal's favor would not subject Moore to the risk of inconsistent or double obligations, and Aetna's joinder was not necessary to determine primacy as between the two plans.

The Magistrate denied summary judgment for Geissal, however, and instead sua sponte granted partial summary judgment on Counts I and II in favor of Moore, concluding that an employee with coverage under another group health plan as of the date he elects COBRA continuation coverage is ineligible for COBRA coverage under §1162(2)(D)(i), and that James Geissal presented insufficient evidence of detrimental reliance on Moore's representation that he was entitled to benefits under COBRA. The Magistrate also found that there was no significant difference between the terms of coverage under Aetna's plan and Moore's; they differed only in the amount of their respective deductibles, and there was no evidence that Aetna's plan excluded or limited coverage for James Geissal's condition.

The Magistrate then granted Geissal's unopposed motion under Federal Rule of Civil Procedure 54(b) for the entry of final judgment on Counts I and II, and so enabled Geissal to seek immediate review of the Magistrate's decision. The Court of Appeals for the Eighth Circuit affirmed, 114 F.3d 1458 (1997), and we granted certiorari, 522 U.S. ----, 118 S.Ct. 877, 139 L.Ed.2d 865 (1998), to resolve a conflict among the Circuits on whether an employer may deny COBRA continuation coverage under its health plan to an otherwise eligible beneficiary covered under another group health plan at the time he elects coverage under COBRA. ⁴

II

A

The Consolidated Omnibus Budget Reconciliation Act of 1985, Pub.L. 99-272, 100 Stat....