Smith v. Rogers Galvanizing Co., No. 96-5168

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Writing for the CourtBefore SEYMOUR, Chief Judge, EBEL and BRISCOE; BRISCOE
Citation128 F.3d 1380
Decision Date28 October 1997
Docket NumberNo. 96-5168
Parties21 Employee Benefits Cas. 2197, 97 CJ C.A.R. 2619 Clarence Roy SMITH; Betty Smith, Plaintiffs-Appellees, v. ROGERS GALVANIZING CO., Defendant-Appellant.

Page 1380

128 F.3d 1380
21 Employee Benefits Cas. 2197, 97 CJ C.A.R. 2619
Clarence Roy SMITH; Betty Smith, Plaintiffs-Appellees,
v.
ROGERS GALVANIZING CO., Defendant-Appellant.
No. 96-5168.
United States Court of Appeals,
Tenth Circuit.
Oct. 28, 1997.

Page 1382

Stephen L. Andrew (D. Kevin Ikenberry with him on the brief), Stephen L. Andrew & Associates, Tulsa, OK, for appellants.

Greggory T. Colpitts (Clifford R. Magee with him on the brief), of Tulsa, OK, for appellee.

Before SEYMOUR, Chief Judge, EBEL and BRISCOE, Circuit Judges.

BRISCOE, Circuit Judge.

Plaintiffs Clarence and Betty Smith filed this action against defendant Rogers Galvanizing Company, alleging defendant violated the continuation rules of the Consolidated Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C. §§ 1161-1168, by failing to give plaintiffs notice of entitlement to elect to continue their health care coverage upon Clarence Smith's termination from employment with defendant. Following a non-jury trial, the district court ruled in favor of plaintiffs, concluding defendant failed to provide plaintiffs with sufficient notice of their right to elect continuation health care coverage. The court awarded plaintiffs $40,005.16 in insurance benefits and attorney fees in the amount of $44,022.50. Defendant appeals, attacking both the judgment and the fee award. We affirm. 1

I.

Clarence Smith was a thirty-year management employee of defendant. He has been unable to work since May 18, 1992, because of emphysema. He received $150 per week under a short-term disability insurance policy provided by defendant, which expired after a period of six months. His employment was terminated effective November 1, 1992.

Clarence Smith was notified by the Social Security Administration by letter dated November 3, 1992, that he had been determined to be disabled and was entitled to retirement, survivors, and disability insurance benefits under Title XVI in the amount of $944.40 per month beginning in November 1992. The Social Security Administration determined he became disabled on May 22, 1992.

On or about October 28, 1992, defendant's human resources manager, Robert Krewett, visited plaintiffs' home for the purpose of personally notifying Clarence Smith that his employment would be terminated effective November 1, 1992. The president of the company had asked Krewett to personally contact Clarence Smith regarding his termination and COBRA rights because Clarence Smith had been a valued employee of the company for over thirty years. During the visit, Krewett explained that, under COBRA, Clarence Smith's termination was a qualifying event entitling plaintiffs to elect to continue health insurance coverage under the plan offered by defendant. Krewett also advised plaintiffs that the cost of continuation coverage would be between $550 and $600 per month. Krewett did not send a confirmation letter regarding plaintiffs' rights under COBRA. During the visit, Clarence Smith asked Krewett if defendant could arrange to pay his health insurance premiums until he was eligible for Medicare coverage (which would not occur until November 1, 1994). Krewett stated he would check into the matter, but he did not again contact plaintiffs until June 1993 when he advised plaintiffs their failure to elect COBRA continuation coverage within sixty days following the November 1, 1992, termination date effectively terminated their COBRA rights.

Defendant intentionally paid plaintiffs' monthly health insurance premiums of $557.94 for November and December 1992. Defendant also paid their January premium because of an internal error. Although defendant

Page 1383

stopped paying the monthly premium thereafter, the insurance company failed to delete plaintiffs from coverage because of a failure of communication, and the insurance company continued to pay plaintiffs' incurred medical bills through May 31, 1993. As a result of these combined errors, plaintiffs believed defendant had acceded to their request to pay their monthly premiums until Clarence Smith qualified for Medicare coverage. Effective May 31, 1993, defendant terminated the insurance plan offered to its employees and switched to a self-funded medical group plan. Clarence Smith was hospitalized on June 8, 1993, and learned he was not eligible for coverage.

Plaintiffs brought this action against defendant seeking continuation medical insurance coverage and ensuing benefits under COBRA. The district court concluded defendant failed to provide plaintiffs "with a proper qualifying event notification as required under COBRA." Aplt.App. at 35. As plaintiffs were not given proper notice, the court concluded Clarence Smith had until November 1, 1994, when he became eligible for Medicare benefits, to elect continuation coverage, and Betty Smith's period of time to elect was extended beyond that. See 29 U.S.C. § 1162(2)(A)(v) and (2)(D). The court further concluded plaintiffs were entitled to collect from defendant the amount of any medical bills incurred during the continuation coverage period, less premiums and applicable deductibles.

At a subsequent hearing to resolve the issue of damages, the parties apparently agreed defendant would determine the amount of benefits due plaintiffs under the self-funded insurance plan. 2 Judgment was entered in favor of plaintiffs on June 20, 1996, in the amount of $40,005.16, plus attorney fees of $44,022.50.

II.

Sufficiency of notice

The district court concluded the oral notice given to plaintiffs by Krewett did not satisfy the notice provisions of COBRA. Defendant argues the information was provided in good faith and was more than adequate to allow plaintiffs to make an informed decision about whether to participate in COBRA continuation coverage. We review the district court's findings of fact for clear error and its conclusions of law de novo. Steiner Corp. Retirement Plan v. Johnson & Higgins, 31 F.3d 935, 939 (10th Cir.1994), cert. denied 513 U.S. 1081, 115 S.Ct. 732, 130 L.Ed.2d 635 (1995).

COBRA requires that employers allow former employees the opportunity to continue health care coverage under the employer's plan (at their own expense, not to exceed 102 percent of the employer's cost) if a qualifying event occurs. 29 U.S.C. § 1161. When a qualifying event occurs (such as termination of employment, see 29 U.S.C. § 1163(2)), the employer is required to notify the plan administrator within thirty days of the date of the qualifying event. 29 U.S.C. § 1166(a)(2). The administrator is then required to notify "any qualified beneficiary" of the qualifying event. 29 U.S.C. § 1166(a)(4). In an action for benefits under COBRA, the administrator bears the burden of proving adequate COBRA notice was given. See Stanton v. Larry Fowler Trucking, Inc., 52 F.3d 723, 728-29 (8th Cir.1995).

Here, defendant was both the sponsor and the administrator of the insurance plan. Accordingly, it was defendant's duty under COBRA to notify plaintiffs, both of whom were qualified beneficiaries, that Clarence Smith's employment termination was a...

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48 practice notes
  • Cisneros v. Wilson, No. 98-2215
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 11, 2000
    ...an issue in the district court and in the opening brief to this court would waive the argument. See Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1385-86 (10th Cir. 1997) ("Generally, we will not consider an issue that was not raised and resolved in the trial court."), on rehearing, 148 F......
  • Daneshvar v. Graphic Technology, Inc., No. 97-2304-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • September 18, 1998
    ...health care coverage under the employer's plan at the former employee's expense. 29 U.S.C. § 1161; Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997). Qualifying events include termination of employment for any reason other than gross misconduct. 29 U.S.C. § 1163. When a q......
  • Daneshvar v. Graphic Technology, Inc., No. 97-2304-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • December 23, 1998
    ...health care coverage under the employer's plan at the former employee's expense. 29 U.S.C. § 1161; Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997), reh'g on other grounds, 148 F.3d 1196 (10th Cir.1998). Qualifying events include termination of employment for any reason ......
  • Corrigan v. Local 6, Bakery, Confectionary & Tobacco Workers, Civil Action No. 14–1073.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • March 4, 2015
    ...claims.While COBRA “contains no specific requirements as to the manner in which notice must be given,” Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997), federal courts have held that it is sufficient for a plan administrator to make a good faith effort to comply with the......
  • Request a trial to view additional results
48 cases
  • Cisneros v. Wilson, No. 98-2215
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 11, 2000
    ...an issue in the district court and in the opening brief to this court would waive the argument. See Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1385-86 (10th Cir. 1997) ("Generally, we will not consider an issue that was not raised and resolved in the trial court."), on rehearing, 148 F......
  • Daneshvar v. Graphic Technology, Inc., No. 97-2304-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • September 18, 1998
    ...health care coverage under the employer's plan at the former employee's expense. 29 U.S.C. § 1161; Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997). Qualifying events include termination of employment for any reason other than gross misconduct. 29 U.S.C. § 1163. When a q......
  • Daneshvar v. Graphic Technology, Inc., No. 97-2304-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • December 23, 1998
    ...health care coverage under the employer's plan at the former employee's expense. 29 U.S.C. § 1161; Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997), reh'g on other grounds, 148 F.3d 1196 (10th Cir.1998). Qualifying events include termination of employment for any reason ......
  • Corrigan v. Local 6, Bakery, Confectionary & Tobacco Workers, Civil Action No. 14–1073.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • March 4, 2015
    ...claims.While COBRA “contains no specific requirements as to the manner in which notice must be given,” Smith v. Rogers Galvanizing Co., 128 F.3d 1380, 1383 (10th Cir.1997), federal courts have held that it is sufficient for a plan administrator to make a good faith effort to comply with the......
  • Request a trial to view additional results

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