Geissal v. Moore Medical Corp.

• Decision Date: 19 March 1996
• Docket Number: No. 4:94 CV 1263 DDN.,4:94 CV 1263 DDN.
• Parties: Bonnie L. GEISSAL, Plaintiff, v. MOORE MEDICAL CORP., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

927 F. Supp. 352

Bonnie L. GEISSAL,¹ Plaintiff, v. MOORE MEDICAL CORP., et al., Defendants.

No. 4:94 CV 1263 DDN.

United States District Court, E.D. Missouri, Eastern Division.

March 19, 1996.

COPYRIGHT MATERIAL OMITTED

S. Sheldon Weinhaus, Weinhaus and Dobson, St. Louis, MO, for plaintiff.

Bradley J. Washburn, Bearden and Breckenridge, St. Louis, MO, for defendants.

MEMORANDUM

NOCE, United States Magistrate Judge.

This matter is before the Court upon the plaintiff's motion for partial summary judgment (Doc. No. 20). The parties have consented to the jurisdiction to the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c).

This case involves the continuation coverage provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA), 29 U.S.C. § 1001 et seq. Plaintiff is Bonnie L. Geissal, wife and personal representative of the estate of James W. Geissal, who is now deceased. Defendants are Moore Medical Corporation, Group Benefit Plan of Moore Medical Group and Herbert Walker. On plaintiff's motion, Sedgwick Nobel Lowndes, originally named as a defendant, was dismissed without prejudice by order of the Court on November 8, 1994.

Count I alleges that defendants violated COBRA by failing to provide continuation insurance coverage once Moore terminated Geissal's employment. Count II alleges that defendants are estopped from denying coverage because at the time of Geissal's termination, defendants made misrepresentations that made him believe that he was entitled to COBRA continuation and would have insurance coverage. Plaintiff alleges that Geissal relied on these representations and continued to pay the amount required for COBRA continuation. Count III alleges waiver, in that, by accepting Geissal's payments, defendants waived any differing construction or interpretation of ERISA plan documents. Count IV, which is not the subject of the pending motion, alleges that Herbert Walker, as plan administrator, failed to provide requested plan documents as required by statute.

Plaintiff has moved for partial summary judgment on the issue of defendants' obligation to provide COBRA coverage.

The following facts are without dispute:

FACTS

1. On July 16, 1993, Moore Medical Corp. (Moore or Moore Medical) terminated James Geissal. (Geissal Affidavit, filed June 5, 1995, at ¶ 8; Defendants' Answer, filed July 28, 1994.) At the time of his termination, Geissal was 62 years old and had cancer. (Geissal Aff. at ¶¶ 2, 5.) During his employment at Moore, Geissal was a participant in a health benefits plan, the Group Benefit Plan of Moore Medical Corp., sponsored by Moore for its employees. (Geissal Aff. at ¶ 4; Complaint at ¶ 9; Answer at ¶ 9.)

2. Moore Medical Corp. is an employer and the plan sponsor, within the meaning of 29 U.S.C. § 1002(5) and (16)(B), of defendant Group Benefit Plan (Plan) of Moore Medical Corp. The plan is an employee welfare benefit plan as defined in 29 U.S.C. § 1002(1). Defendant Group Benefit Plan of Moore Medical Corp. provides for the payment and reimbursement to plan participants of various medical expenses and is a group health plan as defined in 29 U.S.C. § 1167(1). (Complaint at ¶¶ 3, 4; Answer at ¶¶ 3, 4.)

3. While Geissal was employed at Moore, his wife, Bonnie, was employed by Trans World Airlines (TWA). (Complaint at ¶ 11; Answer at ¶ 11; Geissal Aff. at ¶ 6.) By reason of Bonnie Geissal's employment at TWA, James Giessal was a covered dependent eligible for coverage under the health insurance policy issued by Aetna Life Insurance Company, which was the health provider or third-party administrator under the TWA plan provided by TWA for its employees. (Geissal Aff. at ¶ 6, 15.) Geissal's coverage through his wife's plan preceded Geissal's termination by Moore. (Complaint at ¶ 11.)

4. Upon Geissal's termination at Moore Medical, Geissal received a notice of his right under COBRA to continue health insurance coverage under Moore's benefit plan. He accepted Moore's offer and elected to continue receiving group health coverage under Moore's Plan. He began making premium payments. (Geissal Aff. at ¶ 14.) The defendant accepted the payments. Approximately six months after his termination, by letter dated January 27, 1994, defendants informed Geissal that they had determined he was not entitled to COBRA coverage because he was already covered under a group policy with Aetna. (Geissal Aff. at ¶ 15.) Geissal was told that the premiums he had already paid would be returned and that those who provided him with medical care during that period would not be paid by the Plan and their billings would be returned to those who had provided medical care to him. (Geissal Aff. at ¶ 15.)

5. Moore's plan had an annual deductible of $150. It also provided for a lifetime maximum amount of benefits. (Geissal Aff. at ¶ 5.) TWA's plan through Aetna had an annual deductible of $500 per year per person and also provided a lifetime maximum amount of benefits. (Geissal Aff. at ¶ 6.)

6. At the time Geissal was terminated, he requested and received a service letter pursuant to Missouri Rev.Stat. § 290.140. (Geissal Aff. at ¶¶ 8, 10b.) At the time he was terminated, he considered whether he should consult an attorney to investigate what rights and claims he might have against Moore because he felt he was unfairly terminated. (Geissal Aff. at ¶ 10.) Geissal decided not to do so, because his main concern was that he have full and adequate health insurance. (Geissal Aff. at ¶ 10a.) Moore representatives encouraged him to make the COBRA election, which did much to assuage his feelings about his discharge. (Geissal Aff. at ¶ 10b.) At about this time, and shortly after the issuance of the service letter, the Plan or its reinsurer were making large payments for medical care provided to Geissal prior to his termination. (Geissal Aff. at ¶ 10c.) Because he was offered the COBRA continuation coverage, Geissal did not look for another insurance carrier. (Geissal Aff. at ¶ 11.)

DISCUSSION

Plaintiff has moved for partial summary judgment on the issue of defendants' obligation to provide COBRA coverage. Plaintiff states that Counts I, II and III are related to that issue. However, plaintiff has not argued the issue of waiver, which is the basis for Count III. Plaintiff states that a finding of liability on Count I would moot Counts II and III.

This Court must grant summary judgment if, based upon the pleadings, admissions, depositions and affidavits, there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corporation v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Board of Education, Island Trees Union Free School Dist. v. Pico, 457 U.S. 853, 863, 102 S.Ct. 2799, 2806, 73 L.Ed.2d 435 (1982). The moving party must initially demonstrate the absence of an issue for trial. Celotex Corporation, 477 U.S. at 323, 106 S.Ct. at 2552-53. Any doubt as to the existence of a material fact must be resolved in favor of the party opposing the motion. Board of Education v. Pico, 457 U.S. at 863, 102 S.Ct. at 2806.

Nevertheless, once a motion is properly made and supported, the non-moving party may not rest upon the allegations in his pleadings but must instead set forth specific facts showing that there is a genuine issue of material fact for trial. Fed.R.Civ.P. 56(e); Buford v. Tremayne, 747 F.2d 445, 447 (8th Cir.1984). Summary judgment must be granted to the movant if, after adequate time for discovery, the non-moving party fails to produce any proof to establish an element essential to the party's case and upon which the party will bear the burden of proof at trial. Celotex Corporation, 477 U.S. at 322-24, 106 S.Ct. at 2552-53.

In response to the motion, defendants have raised several issues. First, defendants argue that the plaintiff lacks standing to maintain the instant lawsuit because plaintiff has no economic damages. Based upon the discovery supplied by plaintiff and Aetna, which was the group insurance carrier under the spouse's preexisting health benefit plan, defendants assert that all of plaintiff's medical bills for "covered expenses" during the relevant period were paid by Aetna. Therefore, defendants claim, plaintiff has no claim for compensatory damages or other type of damages because he has suffered no damages. The Court nevertheless concludes that plaintiff has standing to bring this lawsuit for relief other than compensatory damages. See 29 U.S.C. § 1132(a)(1).

Second, defendants argue that a necessary party needed for complete adjudication pursuant to Federal Rule of Civil Procedure 19(a) is not before the Court. Defendants argue that the real party in interest is Aetna, the health provider for the TWA plan, and TWA, Bonnie Geissal's employer. Defendants argue that the question is whether Moore or Aetna should pay for the covered medical expenses during the COBRA continuation period. Defendants argue that if the Court were to hold that Moore should have provided COBRA coverage to Geissal and that such policy was primary to Aetna's policy, then Aetna should be reimbursed by Moore for all "covered expenses" incurred by Geissal during the COBRA period. Further, the plaintiff would owe the Moore health plan $2,673.18 for 18 months of COBRA coverage. They argue that there is a possibility of a double recovery for plaintiff.

Plaintiff, in response, argues that defendants have waived the defense of failure to join a necessary party. However, because this defense can be raised as an issue at a trial on the merits, see Federal Rule of Civil Procedure 12(h)(2), the question of whether there is a genuine issue for trial with regard to this defense can appropriately be raised on a motion for summary judgment. See Kornblum v. St. Louis County, 48 F.3d 1031, 1038 (8th Cir.), opinion vacated on other grounds, 72...