Townsend v. Brown Corp. of Ionia, Inc., Docket No. 153510

• Decision Date: 18 July 1994
• Docket Number: Docket No. 153510
• Citation: 521 N.W.2d 16,206 Mich.App. 257
• Parties: Pamela TOWNSEND, Plaintiff-Appellant, v. BROWN CORPORATION OF IONIA, INC., a Michigan corporation, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 16

521 N.W.2d 16

206 Mich.App. 257

Pamela TOWNSEND, Plaintiff-Appellant, v. BROWN CORPORATION OF IONIA, INC., a Michigan corporation,

Defendant-Appellee.

Docket No. 153510.

Court of Appeals of Michigan.

Submitted April 19, 1994, at Grand Rapids.

Decided July 18, 1994, at 9:20 a.m.

Released for Publication Sept. 8, 1994.

Alan F. Giles, Farmington Hills, for plaintiff.

Varnum, Riddering, Schmidt & Howlett by William E. Rohn, Grand Rapids, for defendant.

Before CORRIGAN, P.J., and RICHARD ALLEN GRIFFIN and M.W. DRAKE ^*, JJ.

CORRIGAN, Presiding Judge.

In this action under the Employee Retirement Income Security Act (ERISA), 29 § U.S.C. 1001 et seq., as amended by the Comprehensive Omnibus Budget Reconciliation Act of 1986, 29 U.S.C. § 1161 et seq. (COBRA), plaintiff appeals as of right the judgment of no cause of action. We affirm.

Within fourteen days after plaintiff's husband ceased employment with defendant, defendant sent the required notice of COBRA rights to the couple's last known address, in compliance with 29 U.S.C. § 1166(a)(4). Because plaintiff and her husband had moved and had provided no forwarding address, they did not receive the first notice and a later follow-up notice. Plaintiff subsequently suffered a heart attack and incurred substantial medical expenses. She learned about her COBRA rights from an insurance agent and contacted defendant by telephone, seeking immediate delivery of the forms necessary to elect continuation coverage. Plaintiff informed defendant that she sought immediate payment of her medical bills. The necessary forms were sent out, accompanied by a note that plaintiff should forward her application and premium payment as soon as possible. Neither party disputed that plaintiff then made a timely application for continuation coverage. However, defendant denied that the required premium payment accompanied the completed forms. Plaintiff testified that she had mailed a check in payment of the premium, but also acknowledged that her check was never cashed. Thereafter, plaintiff was given opportunities to pay the premium, but never did so. The court found as a matter of fact that plaintiff had failed to include the premium payment with her election and never had made the necessary payment to continue coverage.

In her complaint, plaintiff alleged that defendant improperly denied her application and premium payment for continuation coverage to which she was entitled pursuant to 29 U.S.C. §§ 1162, 1165. She sought reinstatement of health insurance benefits, costs and attorney fees, reimbursement of medical bills less premium amounts, and penalty damages of $100 a day for noncompliance with COBRA provisions. She made no claim of equitable estoppel, nor did she assert that defendant violated the disclosure and notice provisions of the COBRA.

Section 502 of the ERISA, codified at 29 U.S.C. § 1132, expressly prescribes the remedies available to plan beneficiaries and designates which courts have jurisdiction over such claims. Plaintiff's complaint falls within the provisions of 29 U.S.C. § 1132(a)(1)(B) insofar as it seeks recovery of benefits under the terms of an ERISA plan. Because state and federal courts have concurrent jurisdiction over actions pursuant to subsection (a)(1)(B), the circuit court properly exercised jurisdiction over plaintiff's complaint. 29 U.S.C. § 1132(e)(1); McMartin v. Central States, Southeast & Southwest Areas Pension Fund, 159 Mich.App. 1, 4, 406 N.W.2d 219 (1987); Bradwell v. Silk Greenhouse, Inc., 828 F.Supp. 940, 944 (M.D.Fla.1993). Plaintiff's additional claims of violation of fiduciary duties and equitable estoppel are the exclusive province of the federal courts.

Plaintiff first claims that the circuit court erroneously determined that defendant had no duty to notify plaintiff of the forty-five day grace period within which a beneficiary may make premium payments after having elected continuation health coverage. We disagree. During trial, plaintiff expanded her theories to allege that defendant specifically violated its notification duties under the COBRA amendments of the ERISA, 29 U.S.C. § 1161 et seq., by failing to advise her that she had forty-five days within which to make the required premium payments. The circuit court rejected this argument. On appeal, plaintiff also contends that defendant violated its notification obligations under the COBRA. State courts lack subject-matter jurisdiction over this claim of breach of fiduciary duty. 29 U.S.C. § 1132(e)(1) grants exclusive jurisdiction over all ERISA claims, except those brought under 29 U.S.C. § 1132(a)(1)(B), to federal district courts. McMartin, supra; Gorman v. Life Ins. Co. of North America, 811 S.W.2d 542, 547 (Tex.1991); Summers v. United States Tobacco Co., 214 Ill.App.3d 878, 883, 158 Ill.Dec. 412, 574 N.E.2d 206 (1991). Plaintiff does not identify the statutory basis (nor, indeed, case authority) for her claim that defendant violated the notice provisions of the COBRA. However, her claim that defendant breached its fiduciary duties plainly falls within the purview of 29 U.S.C. § 1132(a)(1)(A) and is subject to the exclusive jurisdiction of the federal district courts.

Subsections (a)(1)(A) and (c)(1) of 29 U.S.C. § 1132 provide a cause of action for violations of the reporting and disclosure provisions of the COBRA set forth in 29 U.S.C. § 1166(a)(1) and (a)(4), which require that (1) an ERISA health plan include written notice of a covered employee's rights under the COBRA at the time coverage commences, and (2) in the case of a qualifying event, ¹ any qualified beneficiary receive the same written notice of the COBRA rights. Moreover, the ERISA provides no remedy for a violation of 29 U.S.C. § 1166(a)(1) and (a)(4) other than that expressly provided in 29 U.S.C. § 1132(c)(1). Lewandowski v. Occidental Chemical Corp., 986 F.2d 1006, 1009-1010 (CA6, 1993). Plaintiff's allegation that defendant failed to disclose or to notify plaintiff of her rights under the COBRA falls squarely within subsection (a)(1)(A). Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1166-1167 (CA3, 1990); Gresham v. Massachusetts Mutual Life Ins. Co., 248 N.J.Super. 64, 590 A.2d 241 (1991). Both the circuit court and this Court are without jurisdiction to entertain plaintiff's claim that defendant violated the notice provisions of the COBRA.

Assuming that state courts enjoy any subject-matter jurisdiction, we would conclude that the circuit court properly rejected this argument. An administrator of an ERISA plan must provide qualified beneficiaries with adequate notice of their rights under the COBRA. 29 U.S.C. § 1166(a)(4); Lincoln General Hosp. v. Blue Cross/Blue Shield of Nebraska, 963 F.2d 1136, 1139-1140 (CA8, 1992); Meadows v. Cagle's, Inc., 954 F.2d 686, 690-691 (CA11, 1992). An administrator fulfills its obligations under 29 U.S.C. § 1166 when it provides the qualified beneficiary with enough information to make an intelligent decision regarding election of continuation coverage. Lincoln General Hosp., supra at 1140.

Defendant provided plaintiff with adequate information to decide to elect continuation coverage. Defendant sent notice of plaintiff's COBRA rights to her husband's last known address pursuant to 29 U.S.C. § 1166(a)(4). Plaintiff applied for coverage within the sixty-day period. Plaintiff contends that the COBRA also required defendant to notify her of the forty-five-day grace period for the payment of premiums. Plaintiff, however, fails to show why such information was necessary for her to make an intelligent decision to elect coverage when she had already indicated a desire for immediate coverage. Before the expiration of the grace period, plaintiff was aware of her right to make the premium payment, but did not make the required payment. Long after the forty-five-day period expired, defendant offered to accept payment, but again plaintiff declined to pay the premium. Defendant adequately preserved plaintiff's right to elect and receive continuation coverage under the COBRA.

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