Williams v. New Castle County, 91-3899
| Decision Date | 24 July 1992 |
| Docket Number | No. 91-3899,91-3899 |
| Citation | 970 F.2d 1260 |
| Parties | , 15 Employee Benefits Cas. 2002 Jeffrey WILLIAMS, Appellant, v. NEW CASTLE COUNTY, New Castle County Government, Dennis Greenhouse, Rita Justice, State of Delaware Department of Insurance, David N. Levinson, Blue Cross & Blue Shield of Delaware, Inc., State of Delaware. |
| Court | U.S. Court of Appeals — Third Circuit |
Sylvia E. Hall, Kathleen M. Smith (argued), John J. Sullivan, Jr., Daniel J. Collins, Law Offices of Sylvia E. Hall, Pennsville, N.J., for appellant.
Julie M.S. Seitz (argued), Christopher F. Baum, Asst. County Attys., New Castle County Law Dept., Wilmington, Del., for appellee.
Before GREENBERG and NYGAARD, Circuit Judges, and POLLAK, District Judge *
Appellant, Jeffrey Williams, appeals from an order of the district court of November 14, 1991, granting appellee New Castle County's motion for summary judgment. The core of Williams' complaint concerned the county's alleged failure to comply with the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), Pub.L. No. 99-272, 100 Stat. 82 (1986), which requires both governmental and private employers to notify group health plan beneficiaries who have lost coverage in certain circumstances of their limited right to elect continued coverage. Williams had been covered under his former wife's health benefits plan provided by New Castle County, her employer. He contends that, after they were divorced, he was removed from coverage without notification of the cancellation or of his rights under COBRA. Thereafter, Williams suffered a heart attack and, when the insurer refused to cover his hospital bills, he initiated this action.
The district court found that Williams' only federal allegations were under the COBRA amendments to the Employee Retirement Income Security Act ("ERISA"), and it held that ERISA specifically exempts government plans, such as the county's, from its requirements. The court therefore granted summary judgment with respect to the ERISA claims, and declined to exercise its jurisdiction over Williams' pendent state law claims. Because we find that Williams also asserted claims under COBRA's amendments to the Public Health Service Act ("PHSA"), we will reverse the order of November 14, 1991, and remand for further proceedings.
Williams was married to Katherine Williams while she was employed by the government of New Castle County. During the marriage, Williams was covered as a beneficiary under the health benefits insurance coverage with Blue Cross and Blue Shield of Delaware which Katherine Williams received through her employment with the county. The Williamses resided at 33 Dawes Drive, Newark, Delaware, until they separated in 1987, when Katherine Williams moved out of that premises. She has since remarried. Williams claims that he has maintained his permanent residence at 33 Dawes Drive from 1977 until the present.
The Williamses were divorced on June 13, 1988. Katherine Williams consequently requested that the county remove Williams from her health benefits coverage. On July 11, 1988, the county allegedly sent a letter to Williams by regular mail to his parents' address, at 8 Azalea Road, Meadowood, Newark, Delaware, informing him to notify it within 60 days if he wanted to continue his health benefits coverage retroactively to July 1, 1988. At Williams' option, the coverage could have been continued for up to 36 months. 1 The county contends that the letter was sent to Williams' parents' address at Katherine Williams' direction, as she believed that Williams was no longer going to reside at the former marital home. Williams contends that he never received the notification letter. It is undisputed that Williams failed to accept the option, and the coverage therefore lapsed as of June 30, 1988.
In September 1988, Williams suffered the heart attack which caused him to incur $33,000 in medical expenses, none of which has been paid. Williams submitted the bills to Blue Cross and Blue Shield of Delaware for payment through the county's health benefits plan, but they were returned unpaid because the coverage had lapsed. Williams contends that this was the first time that he was made aware that his coverage had been terminated.
During the following year, Williams and his parents made numerous telephone calls to various federal and state agencies, including the original defendants in this case, seeking an explanation as to why the coverage had lapsed and why he had not received notice of this. Williams claims to have had little cooperation or assistance. However, the Delaware Department of Insurance advised Williams that, although it did not have jurisdiction to reinstate his insurance coverage, Williams might have a private cause of action against the county under COBRA's amendments to ERISA.
On July 2, 1990, Williams brought suit in the United States District Court for the District of Delaware against the county, the State of Delaware, Dennis Greenhouse, Rita Justice, the Delaware Department of Insurance, David N. Levinson, and Blue Cross and Blue Shield of Delaware. The individual defendants were county and state officials. Williams has voluntarily dismissed this action against all the defendants other than the county. The complaint alleged that jurisdiction was founded upon COBRA, ERISA, 42 U.S.C. § 1985, 28 U.S.C. §§ 1331 and 1343(a)(1), and significantly, for our purposes, upon "42 U.S.C., Section 300bb-7," a section of the COBRA amendments to the PHSA. Although the complaint listed eight separate causes of action, Williams eventually dismissed count three, alleging conspiracy, and count eight, alleging intentional infliction of emotional distress.
The first count alleged that the county had failed to give proper notification of the impending cancellation of Williams' insurance coverage and his eligibility to elect continued coverage, in violation of "rights guaranteed to Plaintiff under the Consolidated Omnibus Budget Reconciliation Act of 1986 as codified in Title 29 U.S.C. Sections 1161 to 1168." These code sections are found within ERISA. On this count, Williams requested that the court enter a declaratory judgment that the county's conduct was violative "of the Consolidated Omnibus Budget Reconciliation Act of 1986." Williams also sought an injunction against "any and all practices [by the county] shown to be in violation of applicable law," compensation for all insurance benefits he would have received but for the county's conduct, punitive damages, and costs and attorney's fees pursuant to 29 U.S.C. § 1132(g), another ERISA section. In the second count, Williams claimed that the county breached its fiduciary duty by violating the standard of care set out in ERISA, 29 U.S.C. § 1104.
The fourth and fifth counts contained state law claims. The fourth alleged that the county made false representations of the effective status of his insurance coverage on which Williams relied to his detriment. The fifth asserted that the county negligently and willfully prevented Williams from obtaining timely insurance coverage renewal with the intent to ruin Williams' credit rating.
The sixth count contained a general claim that the county failed to perform its duties under municipal, state, and federal law. In particular, Williams alleged that:
Accordingly, when [the county, its] agents, representatives and employees conspired and denied Plaintiff health insurance coverage, [it] violated the public policy of the State of Delaware and the Statutes of the United States specifically Title XXII Section 2201A.
This count additionally alleged that the county "had a duty to ensure proper enforcement of all COBRA statutes." The seventh count dealt with an alleged violation of the Delaware Uniform Commercial Code.
After a pretrial conference in September 1991, the county requested and was granted leave to file a motion for summary judgment. The county argued that ERISA did not apply to governmental plans and that Williams was not entitled to relief. In response, Williams filed a brief which clarified his legal position by maintaining that his COBRA claims had always encompassed a claim under COBRA's amendments to the PHSA.
Although Williams made an elaborate argument in his brief in the district court that COBRA's ERISA amendments could apply to his government health plan, alternatively he argued that COBRA also mandates that states and political subdivisions such as the county must follow the notification procedures outlined in COBRA's amendments to the PHSA, 42 U.S.C. § 300bb-1, et seq. He asserted that 42 U.S.C. § 300bb-7, a PHSA section, entitled him to bring an action for appropriate equitable relief. However, in light of the fact that the COBRA amendments to the PHSA, which cover government health benefits plans, do not specify the nature of the equitable relief available, and because COBRA's amendments to ERISA regarding private employers are essentially identical to the PHSA amendments, Williams argued that he could bring an ERISA action for breach of fiduciary duty and recover attorneys fees as allowed by ERISA. In addition, Williams contended that there was a genuine issue of material fact precluding summary judgment because of a dispute regarding delivery of the county's notification letter.
In granting the county's motion, the district court preliminarily concluded that "[Williams'] only possible federal claims against New Castle County are predicated on the ERISA notification requirements." It then determined that, because Section 1003(b)(1) of ERISA, 29 U.S.C. § 1003(b)(1), exempts government plans from ERISA's benefit plan requirements, no cause of action existed against the county. The court then declined to exercise its jurisdiction over Williams' state law claims, dismissing them as "independent and unrelated to the dismissed federal claim."
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