McGee v. Funderburg

• Decision Date: 15 April 1994
• Docket Number: No. 93-1967,93-1967
• Citation: 17 F.3d 1122
• Parties: , 17 Employee Benefits Cas. 2447 Mogretta McGEE, Appellant, v. Pete FUNDERBURG, as trustee for Plumbers & Pipefitters Local 665 Health and Welfare Fund, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1122

17 F.3d 1122

62 USLW 2466, 17 Employee Benefits Cas. 2447

Mogretta McGEE, Appellant, v. Pete FUNDERBURG, as trustee for Plumbers & Pipefitters Local

665 Health and Welfare Fund, Appellee.

No. 93-1967.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 14, 1993.

Decided March 3, 1994.

Rehearing Denied April 15, 1994.

Counsel who presented argument on behalf of the appellant was Kenneth D. Koester of St. Louis, Missouri. James F. Koester of St. Louis, Missouri appeared on the brief.

Counsel who presented argument on behalf of the appellee was Janine M. Ames of Albuquerque, New Mexico. Jay Thomas Youngdahl of Little Rock, Arkansas appeared on the brief.

Before MAGILL, Circuit Judge, BRIGHT, Senior Circuit Judge, and BEAM, Circuit Judge.

BEAM, Circuit Judge.

Mogretta McGee appeals the district court's entry of summary judgment in favor of Pete Funderburg, as trustee for Plumbers and Pipefitters Local 665 Health and Welfare Fund (the Fund) in her action to recover continuation coverage health insurance benefits under the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1461 (ERISA) as amended by the Comprehensive Omnibus Budget Reconciliation Act of 1986, 29 U.S.C. Secs. 1161-68 (COBRA). We reverse.

I. BACKGROUND

Mogretta McGee's deceased husband, George McGee, was a member of the Plumbers and Pipefitters Union. As a benefit of membership, the Union provided him with health insurance. George McGee retired in July 1989. His retirement was a qualifying event entitling him to elect continuation health coverage under COBRA (COBRA coverage) for up to 18 months. Mr. McGee elected to continue coverage and paid his monthly premiums from July 1989 to March 1990. When George McGee was diagnosed with cancer in March 1990, and began to submit claims to the Fund for payment of medical expenses, the Fund terminated COBRA coverage.

George McGee was also a retired member of the United States military. As such, he was eligible for health care benefits under the Civilian Health and Medical Program of the Uniformed Services, 10 U.S.C. Sec. 1071. (CHAMPUS). In denying coverage, the Fund contended that George McGee's CHAMPUS coverage terminated his COBRA eligibility because he was covered by another group health plan under 29 U.S.C. Sec. 1162(2)(D)(i). ¹

George McGee continued to tender premium payments to the Fund from March 1990 until his death on June 6, 1990. The Fund refused to accept the payments. George McGee's widow, Mogretta McGee, submitted claims to the Fund for payment of bills in connection with her deceased husband's illness. The Fund refused to process the claims. Claims were also submitted to CHAMPUS, which paid 75% of covered claims, pursuant to the CHAMPUS policy. Under the Fund policy, George McGee would have been entitled to coverage of 80% of the first $5,000.00 in covered expenses and 100% thereafter. Mogretta McGee remains personally liable for $7,645.45.

Mogretta McGee filed this action to compel the Fund to pay the medical expenses under ERISA and COBRA. Both parties moved for summary judgment. The district court found that CHAMPUS is coverage "under any other group health plan" which triggers the termination of COBRA entitlement under 29 U.S.C. Sec. 1162(2)(D)(i). The court further found that preexisting coverage defeats entitlement to COBRA coverage and that there were no significant gaps in coverage between the two policies at issue here. In making those findings, the district adopted the rationale of the Eleventh Circuit in National Cos. Health Ben. Plan v. St. Joseph's Hosp., Inc., 929 F.2d 1558 (11th Cir.1991).

On appeal, Mogretta McGee argues that CHAMPUS coverage is not coverage "under any other group health plan" under section 1162. She urges us to disavow the district court's reliance on National Cos. and to follow instead the rationale of the Tenth Circuit in Oakley v. Longmont, 890 F.2d 1128 (10th Cir.1989), cert. denied, 494 U.S. 1082, 110 S.Ct. 1814, 108 L.Ed.2d 944 (1990). In Oakley, the Tenth Circuit held that coverage under a preexisting group health plan does not defeat an employer's obligation to provide COBRA coverage. Id. at 1132. Mogretta McGee further argues that even if CHAMPUS qualifies as coverage "under any other group health plan" under section 1162(2)(D)(i), there are significant gaps in coverage which mean that George McGee was not truly "covered" by the plan. She also alludes to, but does not expressly rely on, an equitable estoppel argument.

II. DISCUSSION

We review the grant of summary judgment de novo. United States ex rel. Glass v. Medtronic, Inc., 957 F.2d 605, 607 (8th Cir.1992). The question before the district court, and this court on appeal, is whether the record, when viewed in light most favorable to the non-moving party, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Id.

The parties make much of the language that defines the termination date as "[t]he date on which the qualified beneficiary first becomes, after the date of election--covered," 29 U.S.C. Sec. 1162(2)(D), arguing that the dispositive inquiry is whether the other group coverage is preexisting. Compare National Cos., 929 F.2d at 1568 (the existence of preexisting group health coverage makes a qualified beneficiary effectively ineligible for COBRA coverage) with Oakley, 890 F.2d at 1133 (COBRA coverage remains available to the covered employee despite a preexisting insurance policy). Although we find the Eleventh Circuit's position on the issue attractive, ² we do not find the point at which other coverage is obtained to be particularly important to the issue before us. Of greater significance is the definition of "cover[age] under any other group health plan" and whether that definition, for ERISA purposes, includes CHAMPUS.

"COBRA was enacted in 1986 as a legislative response to 'reports of the growing number of Americans without any health insurance coverage and the decreasing willingness of our Nation's hospitals to provide care to those who cannot afford to pay.' " Gaskell v. Harvard Co-op Soc'y, 3 F.3d 495, 498 (1st Cir.1993) (quoting H.R.Rep. No. 241, 99th Cong., 2d Sess. 44, reprinted in 1986 U.S.C.C.A.N. 42, 579, 622). "In 'an effort to provide continued access to affordable private health insurance for some of these individuals,' " without increasing the staggering budget deficits now facing the United States, COBRA compels employers that sponsor certain group health plans to provide qualified beneficiaries with the option of receiving self-paid continuation coverage for eighteen or thirty-six months after a qualifying event which would otherwise result in termination of coverage. Gaskell, 3 F.3d at 498 (emphasis added) (quoting H.R.Rep. No. 241, 99th Cong., 2d Sess. 44, reprinted in 1986 U.S.C.C.A.N. 622); 29 U.S.C. Secs. 1161(a), 1162(2)(A). The period of entitlement to continuation coverage may be shortened on the occurrence of certain events, including the employer ceasing to provide any group health plan to any employee; failure of the qualified beneficiary to pay premiums; and coverage by another group health plan or entitlement to Medicare benefits. 29 U.S.C. Sec. 1162(2)(B), (C), (D)(i) and (ii). ERISA, as amended by COBRA, is remedial legislation which should be liberally construed to effectuate Congressional intent to protect employee participants in employee benefit plans. Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1356 (8th Cir.1980); see also Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir.1984); Rettig v. Pension Ben. Guar. Corp., 744 F.2d 133, 155 n. 54 (D.C.Cir.1984).

CHAMPUS provides free medical or dental care to active members of the military, military retirees, and their dependents. 10 U.S.C. Sec. 1074. The purpose of CHAMPUS is "to create and maintain high morale in the uniformed services by providing an improved and uniform program of medical and dental care for members and certain former members of those services, and for their dependents". 10 U.S.C. Sec. 1071. It is similar to other "benefits" granted to present and former members of the armed services as an earned entitlement in gratitude for service to their country and as a means of enhancing and making more attractive service in the armed forces of the United States. See, e.g., 38 U.S.C. Sec. 3451 (educational assistance). These entitlements include veteran employment preference by federal agencies or contractors, 38 U.S.C. Sec. 4212; housing and small business loans, 38 U.S.C. Secs. 3701, et seq.; certain free medical treatment at veteran's hospitals and nursing homes, 38 U.S.C. Sec. 1710; and educational assistance, 38 U.S.C. Sec. 3451.

As noted above, the thrust of COBRA is to ensure continuing private health insurance coverage. CHAMPUS simply does not fit this mold. CHAMPUS, as a governmental program, is excluded from ERISA. 29 U.S.C. Sec. 1003(b)(1). Coverage under CHAMPUS does not involve the payment of a premium. The concept of "group insurance" implies a group pooling resources to distribute risk at lower cost. CHAMPUS does not involve risk distribution. The members of the "group"--its beneficiaries--do not contribute to the fund; the fund is supplied by the taxpayers as a benefit of and reward for military service. Furthermore, CHAMPUS does not provide benefits like private health insurance, it requires that a base hospital be used if one is nearby and its coverage is secondary. In these respects, CHAMPUS is unlike either the typical private policy of health insurance or Medicare.

Congress intended CHAMPUS and other benefits of military service to enhance, not diminish, the rights of a present or former member of the armed services. To hold that by virtue of military service, former members of the armed services are entitled to less protection than their nonveteran, nonmilitary counterparts, would not comport with Congressional intent...