Hammack v. Baroid Corp.

• Decision Date: 09 June 1998
• Docket Number: No. 97-40632,97-40632
• Citation: 142 F.3d 266
• Parties: Joe HAMMACK; Ann Hammack, Plaintiffs, Joe Hammack, Plaintiff-Appellant, v. BAROID CORPORATION, formerly doing business as N L Industries, Incorporated; The Pension And Employee Benefits Committee Of N L Industries, Incorporated, Defendants, Baroid Corporation, formerly doing business as N L Industries, Incorporated, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 266

142 F.3d 266

Joe HAMMACK; Ann Hammack, Plaintiffs, Joe Hammack, Plaintiff-Appellant, v. BAROID CORPORATION, formerly doing business as N L

Industries, Incorporated; The Pension And

Employee Benefits Committee Of N L

Industries, Incorporated, Defendants,

Baroid Corporation, formerly doing business as N L

Industries, Incorporated, Defendant-Appellee.

No. 97-40632.

United States Court of Appeals, Fifth Circuit.

June 9, 1998.

Oscar Freer Jones, III, Victoria, TX, for Plaintiff-Appellant.

Jack Gardiner Carnegie, Emil T. Bayko, Bayko, Gibson, Carnegie, Hagan, Schoonmaker & Meyer, Houston, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, SMITH and STEWART, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In this case arising under the Employment Retirement Income Security Act ("ERISA") of 1974, 29 U.S.C. § 1001 et seq., Joe Hammack sued Baroid Corporation, demanding coverage under the company's health plan for his wife's hospital bills. The district court concluded that the Medicare as Secondary Payer ("MSP") statute, 42 U.S.C. § 1395y(b), does not apply and awarded Hammack $124, a fraction of what he had sought. Finding no error, we affirm.

I.

When Hammack retired from his job with NL Industries in 1985, at age 55, he was under an NL Industries health plan that qualifies as a benefit plan under ERISA. ¹ The plan provided, in relevant part:

If you retire either directly from active employment or from an approved company disability plan under a company sponsored retirement plan, Option A of the medical plan will continue at no cost to you and your eligible dependents.... Once you or your spouse becomes eligible for Medicare, benefits will be calculated by reducing covered medical expenses by the amount of Medicare payments. In calculating benefits payable, it is assumed that both you and your dependents have both part A and B Medicare coverage.

At the time of Hammack's retirement, his wife, Ann, was over 65.

In 1988, Ann Hammack incurred outpatient medical bills totaling close to $1,000. Baroid paid part of these bills, another insurer paid part, and the Hammacks paid the remainder.

At some point before February 1989, Baroid notified the Hammacks that they were best advised to purchase Medicare, because the benefits under the Baroid plan would be calculated as though they had enrolled in Medicare, regardless of whether they actually had. In February 1989, the Hammacks contacted the Social Security Administration. Shortly thereafter Ann Hammack paid the required premium and enrolled in Medicare Part B but not in Part A.

Ann Hammack was hospitalized twice in 1989: once from April 6 through April 9, and once from June 9 through June 14, resulting in bills totaling $5,670.26. Medicare covered part of these expenses. Baroid covered part as well, but it calculated the benefits as though Ann Hammack were enrolled in both Part A and Part B, resulting in reduced payouts to the Hammacks.

II.

Joe and Ann Hammack sued Baroid in state court, ² and Baroid removed to federal court. Following a bench trial, the court concluded that Baroid did not abuse its discretion in determining the Hammacks' benefits. The court ordered Baroid to pay the Hammacks $124--the amount of a bill that Baroid stipulated it had wrongly failed to pay. The court submitted factual findings and conclusions of law in a seven-page order. On the final page the court stated: "FINAL JUDGMENT should issue. It is so ORDERED." The court did not, however, file a separate document noting that this was a final judgment.

Twenty months after this order was issued, Joe Hammack returned to the court and requested entry of judgment. The court granted the motion and issued a single-page, separate document reflecting the final judgment.

We address two questions. First we must decide whether we have jurisdiction--or whether Hammack, by waiting twenty months to seek a separate document noting the entry of final judgment, waived his right to appeal. The second question--assuming we have jurisdiction--is whether the district court erred in concluding that, because Hammack was a retiree, the MSP statute did not apply.

III.

Baroid charges that Hammack's lengthy delay in seeking entry of judgment constitutes waiver of his right to appeal. Under FED. R.APP. P. 4(a)(1), a civil litigant ordinarily has thirty days after "entry of the judgment or order appealed from" to file notice of appeal. This rule in turn refers us to FED. R. CIV. P. 58 and 79(a). Rule 58 contains what is known as the "separate document" rule: "Every judgment shall be set forth on a separate document. A judgment is effective only when so set forth and when entered as provided in Rule 79(a)." Rule 79(a) requires the court to record the entry of a final judgment in its civil docket.

A.

Baroid does not dispute that Hammack complied with the plain language of the rule by filing his notice of appeal within thirty days. ³ Instead, Baroid argues that, when a party that has received a final judgment waits so long before seeking a separate document, we should construe the delay as waiver of the right to appeal. Such a rule, Baroid suggests, will promote certainty and finality in litigation. This question is res nova in this circuit.

Baroid's position is not entirely lacking in legal support. In Fiore v. Washington County Community Mental Health Ctr., 960 F.2d 229 (1st Cir.1992) (en banc), the court, concerned about reviving long dormant cases years after the parties considered them over, drew an outer limit:

We believe it appropriate, absent exceptional circumstances, to infer waiver where a party fails to act within three months of the court's last order in the case.... A party wishing to pursue an appeal and awaiting the separate document of judgment from the trial court can, and should, within that period file a motion for entry of judgment.

Id. at 236. The court explained that this three-month window would ensure that a failure to appeal was a matter of "choice, not confusion." Id. at 236 n. 11. Baroid urges us to adopt Fiore's rule and apply it in this case to quash Hammack's appeal. ⁴

B.

The Supreme Court recognized waiver of the separate document requirement in Bankers Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978). There, the Court permitted waiver when the district court intended its opinion and order as the final decision in the case, when the judgment of dismissal was entered in the docket, and when neither party objected to the taking of the appeal. The Court envisioned its rule as preventing needless delay: Were the appeals court to dismiss the case for want of jurisdiction, the district court would simply issue a separate document and the appellant would once again take an appeal--"Wheels would spin for no practical purpose." Id. at 385, 98 S.Ct. at 1120. But the Court tempered its willingness to read rule 58 flexibly, explaining that the rule should not be construed to cut off the rights of appellants. "The rule should be interpreted to prevent loss of the right of appeal, not to facilitate loss." Id. at 386, 98 S.Ct. at 1121 (quoting 9 JAMES W. MOORE, ET AL., MOORE'S FEDERAL PRACTICE p 110.08, at 119-20 (2d ed.1970)).

In construing rule 58, we have been faithful to the teaching of Mallis and have avoided interpreting the rule to extinguish appeals. For example, in Baker v. Mercedes Benz of N. Am., 114 F.3d 57 (5th Cir.1997), we characterized the rule as "a safety valve preserving a litigant's right to appeal in the absence of a separate document judgment." We held that under rule 58, a litigant could not have forfeited his right to appeal absent a separate document judgment, concluding that a party's "right to appeal cannot be prejudiced by failing to file a notice of appeal when no Rule 58 separate document judgment has been entered." Id. at 60. We specifically noted that "[i]f a separate document judgment is not entered ... the time for filing an appeal does not begin to accrue until a judgment complying with the Rule 58 dictates has been entered." Id. Similarly, in Simon v. City of Clute, Tex., 825 F.2d 940 (5th Cir.1987), we all but foreclosed Baroid's argument by explaining that the separate document requirement "may be waived to allow an appeal in the absence of a separate document [as in Mallis ], but not to cause a forfeiture of the right to appeal." Id. at 942 (footnote omitted). ⁵

While we have yet squarely to consider the First Circuit's approach in Fiore, the logic of our caselaw counsels its rejection. To the extent that we have permitted waiver of the separate document requirement, it has been in situations similar to that in Mallis--where neither party objects to the taking of an appeal and strict application of the rule would prove a pointless and burdensome exercise. We have never employed the doctrine to extinguish a party's right of appeal, even when, as Baroid suggests, doing so might promote finality and certainty. ⁶

Accordingly, we reject Fiore and hold that a party's delay in seeking a separate document judgment cannot constitute waiver of his right to appeal. Under the plain language of FED. R.APP. P. 4(a)(1) and FED. R. CIV. P. 58, the thirty-day period for taking an appeal does not begin to run until the court has issued a separate document and records entry of the final judgment in its civil docket. Should a court fail to issue a separate document, a party seeking finality remains free to request one.

IV.

We now turn to the merits. Hammack argues that the provision of Baroid's plan under which a retiree's benefits are reduced by the amount of potential Medicare payments is invalid because it violates the MSP statute. He contends that the district court erred by deeming the statute inapplicable to retirees.

The district court concluded--and Hammack concedes--that Baroid's plan endows its administrator with discretionary authority to make...