Morehouse v. Steak N Shake
| Decision Date | 13 September 2019 |
| Docket Number | No. 18-4186,18-4186 |
| Citation | 938 F.3d 814 |
| Parties | Rebecca MOREHOUSE; William Morehouse, Plaintiffs-Appellees, v. STEAK N SHAKE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
938 F.3d 814
Rebecca MOREHOUSE; William Morehouse, Plaintiffs-Appellees,
v.
STEAK N SHAKE, Defendant-Appellant.
No. 18-4186
United States Court of Appeals, Sixth Circuit.
Argued: May 8, 2019
Decided and Filed: September 13, 2019
ARGUED: Eric P. Mathisen, OGLETREE DEAKINS, NASH, SMOAK & STEWART, PLLC, Valparaiso, Indiana, for Appellant. Sonia T. Walker, CALIG LAW FIRM, LLC, Columbus, Ohio, for Appellees. ON BRIEF: Eric P. Mathisen, OGLETREE DEAKINS, NASH, SMOAK & STEWART, PLLC, Valparaiso, Indiana, for Appellant. Sonia T. Walker, CALIG LAW FIRM, LLC, Columbus, Ohio, for Appellees.
Before: BOGGS, BATCHELDER, and BUSH, Circuit Judges.
BOGGS, Circuit Judge.
Defendant Steak N Shake ("SNS") appeals a grant of summary judgment in favor of Plaintiffs Rebecca and William Morehouse. The Morehouses sued to recover damages stemming from SNS’s failure to send them a notification under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") after SNS put Mrs. Morehouse on workers’ compensation and allowed her to take a leave of absence. The district court agreed that SNS had not fulfilled this obligation and consequently awarded damages to the Morehouses. However, we now reverse because the terms and conditions of Mrs. Morehouse’s insurance coverage did not change upon her taking a leave of absence and therefore no "qualifying event" occurred that would have obligated SNS to send her a COBRA notification.
I
Mrs. Morehouse began working for SNS as an Assistant Manager in October 2011. After her husband lost his job and insurance coverage following his hospitalization, Mrs. Morehouse enrolled both herself and her husband in SNS’s health-benefits coverage with coverage beginning on September 1, 2012 ("the Plan").
The Plan’s terms are set forth in benefit booklets issued each September 1 for the following year. The Plan states:
You have coverage provided under the Plan because of your employment with ... the Employer. You must satisfy certain requirements to participate in the Employer’s benefit plan. These requirements may include ... Actively At Work standards as determined by the Employer or state and/or federal law and approved by the Administrator, on behalf of the Employer.
....
To be eligible to enroll as a Subscriber, an individual must:
• Be either: An employee, Member, or retiree of the Employer, and:
• Be entitled to participate in the benefit Plan arranged by the Employer;
• Have satisfied any probationary or waiting period established by the Employer and be Actively at Work[.]
According to the Plan, "Actively at Work" includes an employee who is "absent from work due to a health related absence or disability[.]" The Plan requires its participants to pay their portion of the cost for coverage in order to maintain benefits:
If you fail to pay or fail to make satisfactory arrangements to pay any amount due to the Plan ... the Employer may terminate your coverage and may also
terminate the coverage of all your Dependents, generally effective immediately upon their written notice to you.
In addition, "premium must be paid for the time period that services are rendered." Mrs. Morehouse’s plan included medical, dental, and vision insurance, and it cost her approximately $230 in biweekly payroll deductions.
On May 25, 2013, Mrs. Morehouse fell at work and injured her right knee. She returned to work the next day, but her injury was too severe to permit her to continue working. Prior to leaving, she completed and signed a Management Personnel Action Form requesting to open a workers’ compensation claim and to receive a leave of absence due to her work injury. The form did not mention "FMLA" or the "Family and Medical Leave Act."
On June 5, 2013, an SNS Benefits Specialist sent a letter to Mrs. Morehouse instructing her to complete paperwork so that SNS could process her absence under the FMLA. The letter stated that it was attaching health-care-provider forms "for your FMLA," asked Mrs. Morehouse to return the letter within 15 days "so that your FMLA is processed accurately," and noted that a "[f]ailure to return your paperwork may result in FMLA being denied." Mrs. Morehouse filled out and returned the FMLA Certification of Health Care Provider form to SNS. SNS approved Mrs. Morehouse’s leave of absence as FMLA leave (rather than any type of paid leave) for the first twelve weeks, from May 26, 2013 until August 19, 2013, but did not give her any written notice of that designation except for the June letter.
Beginning May 26, 2013, Mrs. Morehouse also began receiving workers’ compensation benefits in connection with her injury. Since Mrs. Morehouse was no longer receiving her normal salary and therefore was no longer paying premiums from her usual payroll deductions, SNS began deducting all required insurance contributions from her workers’ compensation checks instead. SNS continued to pay Mrs. Morehouse workers’ compensation until August 13, 2013.1
On September 9, 2013, Mrs. Morehouse received an email from Eric Salyers, a Benefits Coordinator at SNS. Salyers indicated that $193.18 of Mrs. Morehouse’s insurance premiums had not been paid and that Mrs. Morehouse would have to pay the premium in order to continue her insurance coverage. On September 20, 2013, SNS notified Mrs. Morehouse by letter that her FMLA leave had expired August 19, 2013, that she should contact SNS to discuss a reasonable accommodation, and that, if her employment was terminated, she would have the opportunity to continue health benefits through COBRA upon termination of her employment. Having received no payment on the premiums from Mrs. Morehouse, SNS on October 3, 2013, notified the Morehouses that their medical, dental, and vision benefits had been discontinued, effective August 14, 2013, due to the nonpayment of premiums. SNS eventually terminated Mrs. Morehouse’s employment on February 11, 2014.
On August 15, 2016, the Morehouses filed a complaint in the United States District Court for the Southern District of Ohio alleging (1) that SNS failed to notify them of their right to temporarily continue health-benefit coverage under COBRA, in violation of that statute, and (2) that SNS breached its fiduciary duty in violation of the Employee Retirement Income Security Act of 1974 ("ERISA") by failing to notify the Morehouses of their COBRA rights.
SNS moved for summary judgment, arguing that there had been no "qualifying event" leading to a loss of insurance coverage that would have entitled the Morehouses to COBRA notice. Because there was no COBRA violation, SNS argued, the Morehouses’s breach-of-fiduciary-duty claim must also fail. The Morehouses filed an opposition to SNS’s motion and also cross-moved for summary judgment, arguing that Mrs. Morehouse’s reduction in hours had been a "qualifying event" entitling the Morehouses to COBRA notice. On consideration of both motions, the district court determined, as a matter of law, that a qualifying event had indeed occurred as a result of the reduction in Mrs. Morehouse’s work hours on May 26, 2013,...
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