USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1024
DAVID AND CAROLYN GASKELL,
Plaintiffs, Appellants,
v.
THE HARVARD COOPERATIVE SOCIETY, ET AL.,
Defendants, Appellees.
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No. 93-1102
DAVID AND CAROLYN GASKELL,
Plaintiffs, Appellees,
v.
THE HARVARD COOPERATIVE SOCIETY, ET AL.,
Defendants, Appellants.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
___________________
____________________
Before
Torruella, Oakes* and Cyr,
Circuit Judges.
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*Of the Second Circuit, sitting by designation.
Norman H. Jackman with whom Martha M. Wishart and Jackman & Roth
_________________ _________________ _______________
were on brief for plaintiffs.
Francis J. Lawler with whom Robert M. Shea and Peabody & Brown
__________________ _______________ _______________
were on brief for defendants.
____________________
August 25, 1993
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2
CYR, Circuit Judge. This case presents several impor-
CYR, Circuit Judge.
_____________
tant issues relating to group health plan "continuation coverage"
under the Employment Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. 1001 et seq., as amended by the Comprehen-
__ ____
sive Omnibus Budget Reconciliation Act of 1985 ("COBRA"), P.L.
99-272, 100 Stat. 222 (1986). The district court ruled that
plaintiff Carolyn Gaskell, wife of "covered employee" David
Gaskell, was entitled to three years' continuation coverage under
COBRA, dating from her election of continuation coverage under an
ERISA employer-sponsored group health insurance plan. The court
denied a related subrogation claim brought by the Gaskells in the
name of their current insurer. The district court rejected
plaintiffs' requests for statutory penalties, punitive damages,
and attorney fees.
I
I
BACKGROUND
BACKGROUND
__________
David Gaskell was a longtime employee of the Harvard
Cooperative Society ("Coop"), which provided Blue Cross group
medical plan coverage for its employees and their families. On
January 14, 1987, David went on full disability leave, during
which he received full salary and benefits, including Blue Cross
group plan coverage for himself and Carolyn, apparently at Coop
expense. More than a year later, on February 29, 1988, still
unable to work, David terminated his employment with the Coop,
3
retroactive to January 14, 1988.
Under COBRA, an employer that sponsors a group health
insurance plan must offer employees and "qualified beneficia-
ries," including spouses and dependent children, the opportunity
to continue their health insurance coverage, at group rates but
at their own expense, for at least eighteen months after the
occurrence of a "qualifying event" and notice to the affected
employee. See 29 U.S.C. 1161-68. A "qualifying event" in-
___
cludes a "termination . . . , or reduction of hours, of the
covered employee's employment" which, "but for the continuation
coverage under this part, would result in the loss of coverage of
a qualified beneficiary." Id. at 1163(2). In April 1988,
___
following David's resignation, the Coop sent a COBRA notice
informing him of his statutory right to continue his Blue Cross
group plan coverage for eighteen months, beginning July 1, 1988.
On April 26, 1988, David elected "continuation coverage" for
himself and Carolyn.
Within a year, the Gaskells learned that David would
become eligible for Medicare benefits beginning July 1, 1989.
Although Medicare eligibility would render David ineligible for
"continuation coverage" after July 1, 1989, see id. at 1162(2)
___ ___
(D)(ii), it also would serve as a new "qualifying event," see id.
___ ___
at 1163(4), and make Carolyn eligible for three years' "contin-
_______
uation coverage" under the Coop group plan with Blue Cross. See
___
id. at 1162(2)(A)(ii). At about the same time, however, the
___
Gaskells learned that the Coop intended to terminate its Blue
4
Cross group plan and adopt a self-funded insurance plan adminis-
tered by Benefit Plans Northeast ("BPN"), effective July 1, 1989.
As the new BPN-administered plan would not be "convertible" to
individual coverage at the end of Carolyn's continuation coverage
period, the Gaskells decided to exercise their "conversion
option" under the Coop Blue Cross group plan. Accordingly, in
June 1989, prior to the changeover in Coop plan administration,
the Gaskells asked the Coop to "convert" Carolyn's group cover-
age, effective July 1, to individual direct-pay coverage under
the Blue Cross Managed Major Medical Plan.
The coincidence of David's Medicare eligibility,
Carolyn's application for conversion to an individual policy, and
the Coop's change to a self-funded plan, engendered considerable
confusion among the parties. On August 30, 1989, Blue Cross
began returning the Gaskells' medical bills unpaid. Blue Cross
contended that its obligation to provide Carolyn with individual
direct-pay coverage had terminated on June 30, 1989, concurrently
with the expiration of its group plan arrangement with the Coop,
and that any Blue Cross coverage beyond that date would be
available only on the terms imposed on new applicants, viz., a
____
240-day waiting period and an exclusion for preexisting medical
conditions. Finding these terms unacceptable, the Gaskells
sought to continue Carolyn's coverage under the Coop group plan,
then being administered by BPN. BPN refused, asserting that the
Coop's obligation to provide "continuation coverage" had termi-
nated before the change in plan administration took place on
5
July 1, 1989. After several unsuccessful efforts to obtain
satisfactory coverage, the Gaskells brought the present action
against the Coop, BPN, James Argeros (Coop president), Leonard
Cutler (BPN president), and Blue Cross, alleging violations of
COBRA and Massachusetts law.1
On January 31, 1991, the Gaskells settled their claims
against Blue Cross, in return for, inter alia, individual cover-
_____ ____
age for Carolyn under the Blue Cross Managed Major Medical Plan
retroactive to July 1, 1989. The retroactive coverage was
subject to a twenty percent co-payment. As part of the settle-
ment, Blue Cross assigned the Gaskells its subrogation rights
against the remaining defendants. The Gaskells then amended
their complaint to add a subrogation claim against the Coop and
BPN, relating to the eighty percent of Carolyn's medical expenses
which Blue Cross had paid under the terms of Carolyn's individual
Blue Cross policy.
On May 17, 1991, acting on cross-motions for judgment
on the pleadings, the district court ruled that BPN and the Coop
were legally responsible under COBRA for providing "continuation
coverage" of Carolyn's medical expenses between July 1, 1989 and
July 1, 1991. The court rejected the Gaskells' demand for
"extra-contractual" damages, and limited compensatory damages to
the twenty percent co-payment amount not retroactively covered by
Carolyn's individual Blue Cross policy, at the same time reserv-
____________________
1The Gaskells later waived their state-law claims against
all defendants.
6
ing decision on their subrogation claim for the remaining eighty
percent of Carolyn's medical expenses. See Gaskell v. Harvard
___ _______ _______
Cooperative Soc'y, 762 F. Supp. 1539, 1543-1544 & n.8 (D. Mass.
_________________
1991). Shortly thereafter, in an unpublished order, the district
court granted summary judgment against the Gaskells on their
subrogation claim, ruling that Blue Cross "possessed no rights
pursuant to the Subscriber Certificate against [the Coop] for
reimbursement of any monies paid towards [Carolyn's] medical
bills." The individual claims against Leonard Cutler, as "plan
administrator," were dismissed on October 6, 1992. The parties
stipulated to the dismissal of the remaining count against BPN,
and final judgment was entered on December 14, 1992. This appeal
followed.
II
II
DISCUSSION
DISCUSSION
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Standards of Review
Standards of Review
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We review a grant of summary judgment de novo, employ-
__ ____
ing the same criteria incumbent upon the district court. See
___
Vanhaaren v. State Farm Mut. Auto. Ins. Co., 989 F.2d 1, 3 (1st
_________ _______________________________
Cir. 1993); High Voltage Eng'g Corp. v. Federal Ins. Co., 981
__________________________ _________________
F.2d 596, 598 (1st Cir. 1992); Pedraza v. Shell Oil Co., 942 F.2d
_______ _____________
48, 50 (1st Cir. 1991), cert. denied, 112 S.Ct. 993 (1992).
_____ ______
Summary judgment is appropriate where "the pleadings, deposi-
tions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
7
is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(c); see Vanhaaren, 989 F.2d at 3; Canal Ins. Co. v. Benner,
___ _________ _______________ ______
980 F.2d 23, 25 (1st Cir. 1992). Similarly, on plenary review of
a district court judgment on the pleadings under Rule 12(c), all
material allegations in the complaint are credited in the light
most favorable to the plaintiff, see International Paper Co. v.
___ _______________________
Jay, 928 F.2d 480, 482 (1st Cir. 1991). A dismissal on the
___
pleadings will be upheld only if "'it appears beyond doubt that
the plaintiff can prove no set of facts in support of [its]
claims which would entitle [it] to relief.'" Id. at 482-83
___
(quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
______ ______
Statutory Background
Statutory Background
____________________
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,"
H.R. Rep. No. 241, 99th Cong., 2d Sess. 44, reprinted in 1986
_________ __
U.S.C.C.A.N. 579, 622.2 In "an effort to provide continued
____________________
2Although COBRA has been amended several times, see, e.g.,
___ ____
Tax Reform Act of 1986, P.L. 99-514 (October 22, 1986), 1895-
(d); Technical and Miscellaneous Revenues Act of 1988, P.L. 100-
647 (November 10, 1988), 3011(a); and Omnibus Budget Reconcili-
ation Act of 1989 ("OBRA"), P.L. 101-239 (December 19, 1989),
6703-6710, 6801, 7862(c), 7891(d), except as otherwise indi-
cated we refer to the January, 1987 version as "COBRA."
For a fuller description of COBRA's enactment, see Thomas H.
Somers, COBRA: An Incremental Approach to National Health Insur-
_________________________________________________________
ance, 5 J. Contemp. Health L. & Probs. 141, 141-2 (1992) (noting
____
that COBRA's "continuation coverage" provisions were enacted
"without deliberation . . . , in the process amending three
distinct statutes," and "invit[ing] a fair amount of regulatory
confusion.").
8
access to affordable private health insurance for some of these
individuals," H.R. Rep. No. 241, at 44, without increasing the
"staggering budget deficits now facing the United States," see S.
___
Rep. No. 146, 99th Cong., 2nd Sess. 3, reprinted in 1986 U.S.C.-
_________ __
C.A.N. 42, 43, COBRA compels employers that sponsor certain group
health plans to provide "qualified beneficiaries" with the option
of receiving self-paid "continuation coverage," at no more than
102% of group rates, for eighteen or thirty-six months after the
occurrence of a "qualifying event" which would otherwise result
in a termination of coverage. See 29 U.S.C. 1161(a), 1162(2)-
___
(A).3
The "continuation coverage" required by COBRA must be
"identical to the coverage provided under the plan to similarly
situated beneficiaries under the plan with respect to whom a
qualifying event has not occurred," 29 U.S.C. 1162(1), and
"[i]f coverage is modified under the plan for any group of
similarly situated beneficiaries, such coverage shall also be
modified in the same manner for all individuals who are qualified
beneficiaries under the plan pursuant to [COBRA] . . . ." Id.
___
An employer which fails to provide elective "continuation cover-
age" under the terms of the statute is subject to unfavorable tax
____________________
3The period of entitlement to "continuation coverage" may be
extended or shortened, depending on the occurrence of certain
events within the preceding coverage term. See, e.g., 29 U.S.C.
___ ____
1162(2)(A)(ii) (occurrence of additional qualifying event,
within initial period of "continuation coverage," may extend term
of COBRA coverage); id. at 1162(2)(A)(v) (covered employee's
___
eligibility for "continuation coverage" terminates with Medicare
eligibility).
9
treatment, see 26 U.S.C. 4980B (1989), amending 26 U.S.C.
___ ________
162(i)(2) (1988), and to civil suit by affected "qualified
beneficiaries," see 29 U.S.C. 1132(a). A plan administrator
___
which fails to provide a "qualified beneficiary" with timely
notice of her rights under COBRA is subject to personal liability
not exceeding $100 per day. See 29 U.S.C. 1132(c)(1); see
___ ___
generally Jeffrey D. Mamorsky, Employee Benefits Law: ERISA and
_________ _________________________________
Beyond, 10.07 et seq. (2d ed. 1993) (discussing COBRA and
______ __ ____
subsequent amendments).
The Gaskells' Coverage
The Gaskells' Coverage
______________________
The Coop does not contest its obligation, under COBRA,
to provide the Gaskells with "continuation coverage," at their
election and expense, for a minimum of eighteen months after the
occurrence of a "qualifying event." See 762 F. Supp. at 1541.
___
Instead, the Coop contends that the relevant "qualifying event"
occurred on January 14, 1987, when David Gaskell first went on
full disability leave, "reducing his hours" from forty per week
to zero. See 29 U.S.C. 1163 ("reduction of hours . . . of the
___
covered employee's employment" as potential qualifying event).
On the Coop's reasoning, therefore, its eighteen-month "continua-
tion coverage" obligation expired on July 14, 1988, and the Coop
had no legal duty to continue Carolyn's coverage further based on
David's subsequent Medicare eligibility on July 1, 1989. We
agree with the Coop's reading of the statute, but find no record
evidence to support its allegation that group plan coverage
terminated as a result of David's disability leave on January 14,
10
1987. Accordingly, we must remand for further fact finding on
this issue.
Under COBRA, "the term 'qualifying event' means, with
respect to any covered employee, any . . . [termination or reduc-
tion in hours] which, but for the continuation coverage required
_____ ___ ___ ___ ____________ ________ ________
under this part, would result in the loss of coverage of a
_____ ____ ____ _____ ______ __ ___ ____ __ ________ __ _
qualified beneficiary . . . ." 29 U.S.C. 1163 (emphasis
_________ ___________
added). As the district court noted, see 762 F.Supp. at 1542,
___
this statutory language offers no explicit guidance in determin-
ing the relevant "qualifying event" where, as here, the em-
ployee's termination or reduction in hours does not coincide with
the "loss of coverage" under the employer's plan. In these
circumstances, the district court elected to view the "qualifying
event" as "the point at which [the employee] experience[d] a loss
__________ _ _ ____
of coverage as a consequence of the reduction in hours." Id. at
__ ________ ___
1543 (emphasis added). Other courts, by contrast, have measured
the eighteen-month period from the event itself, viz., the
____ ___ _____ ______ ____
employee's termination or reduction in hours, so long as that
event "eventually resulted in the loss of . . . health coverage."
__________
See, e.g., Phillips v. Riverside, Inc., 796 F. Supp. 403, 411
___ ____ ________ ________________
(E.D. Ark. 1992) (holding that employer's "gratuitous" provision
of three months' continued coverage must be credited towards
employer's eighteen-month COBRA "continuation coverage" obliga-
tion once belated notice has been given to the employee); see
_______ ___
also Hubicki v. Amtrak Nat. Passenger R. Co., 808 F.Supp. 192,
____ _______ _____________________________
197 (E.D.N.Y. 1992) (noting, without resolving, possible alterna-
11
tive readings of statute).
Since we agree with the district court that either
reading is plausible, based on the statutory language, we consult
the available legislative history. See Concrete Pipe & Prods.,
___ _______________________
Inc. v. Construction Laborers Pension Trust, 113 S.Ct. 2264, 2281
____ ___________________________________
(1993) ("we turn, as . . . in the usual case of textual ambigu-
ity, to the legislative purpose as revealed by the history of the
statute"); United States v. Alky Enterprises, Inc., 969 F.2d
_____________ _______________________
1309, 1314 (1st Cir. 1992) ("where the language of a statute is
ambiguous on its face, we should look . . . to the legislative
history in order to ascertain Congressional intent"); see gener-
___ ______
ally Stephen J. Breyer, On The Uses of Legislative History in
____ ________________________________________
Interpreting Statutes, 65 S. Cal. L. Rev. 845 (1992) (discussing
_____________________
proper use of legislative history in ascertaining congressional
intent where statute is ambiguous). COBRA's legislative history
leads us to conclude that Congress intended an employee's eigh-
teen-month period of continuation coverage to commence with the
________ ____ ___
event leading, under the terms of the plan, to loss of coverage,
_____ _______ _____ ___ _____ __ ___ ____ __ ____ __ ________
rather than upon the loss of coverage itself.
First, while the House Reports accompanying the various
versions of the statute are silent or ambiguous on the issue,4
the "continuation coverage" provisions in the House bill were
____________________
4See H.R. Rep. No. 241, 99th Cong., 2d Sess. 44, 45,
___
reprinted in 1986 U.S.C.C.A.N. 579, 622-23 (no discussion of
_________ __
issue); H.R. Rep. No. 320, 99th Cong., 2d Sess. 319-20, reprinted
_________
in 1986 U.S.C.C.A.N. 756, 970-71 (noting, without elaboration,
__
that 1163 "defines qualifying event").
12
incorporated virtually without change into the final Conference
bill,5 and the Report of the Senate Finance Committee, which
accompanied the final Conference version, is reasonably explicit.
It provides, in pertinent part, that:
Th[e] 18-month period [of continuation cover-
age] includes, and is not in addition to, any
continuation period presently permitted under
local law. Thus, for example, if the plan
presently provides that dependent coverage
ceases one month after the date of an em-
ployee's death, the bill would require that
beneficiaries be entitled to elect continu-
ation coverage for up to 18 months following
the date of death, not the 18-month period
beginning with the actual cessation of cover-
age one month after the employee's death.
See S. Rep. No. 146, 99th Cong., 2d Sess. 3, 365, reprinted at
___ _________ __
1986 U.S.C.C.A.N. 42, 324. We perceive no basis, in the legisla-
tive history, for the Gaskells' proposed distinction between
"blended" coverage and "stacked" coverage.6 Moreover, the
Senate Finance Committee Report, referring to "any continuation
___
period presently permitted," see id. (emphasis added), appears to
___ ___
undermine the basis for such a distinction.
Second, the Proposed Regulations issued by the Treasury
Department, the only administrative interpretation of the statute
____________________
5Compare Pub.L. 99-272 10001-02 with H.R. Conf. Rep. No.
_______ ____
99-543, at 162-72 (text of H.R. 3128, 10001-02 (rejected by
the House, December 19, 1985)).
6As explained in the Gaskells' appellate brief, "blending"
of coverage occurs when "the employer wishes to pay for the
employee's coverage for part or all of the COBRA period," after
giving timely notice to the employee of the occurrence of a
qualifying event. "Stacking" of coverage occurs "when the
employer provides coverage . . . for some period after termina-
tion without complying with COBRA and then gives the notice."
13
proffered to date, appear to take a similar position. See Prop.
___
Treas. Reg. 1.162-26, 52 Fed. Reg. 22,716 (proposed Apr. 6, 1987;
to be codified at 26 C.F.R. pt. 1), at Q&A-18 ("a loss of cover-
age need not occur immediately after the event, so long as the
loss of coverage will occur before the end of the maximum cover-
age period"); see also id. at Q&A-39 ("The end of the maximum
___ ____ ___
coverage period is measured from the date of the qualifying event
even if the qualifying event does not result in a loss of cover-
____ __ ___ __________ _____ ____ ___ ______ __ _ ____ __ ______
age under the plan until some later date") (emphasis added).7
___ _____ ___ ____ _____ ____ _____ ____
The Proposed Treasury Regulations have not yet been finalized,
are apparently on hold pending further revisions, see 56 Fed.
___
Reg. 53803-03 (1991), and, accordingly, are not authoritative.
___ _____________
See Oakley v. City of Longmont, 890 F.2d 1128, 1133 (10th Cir.
___ ______ _________________
1989) (Treasury Department's interpretation of COBRA not authori-
tative "[u]ntil the agency completes formal rule-making and
promulgates final regulations"), cert. denied, 494 U.S. 1082
_____ ______
(1990); see also Sirkin v. Phillips Colleges, Inc., 779 F. Supp.
___ ____ ______ _______________________
751, 755 (D. N.J. 1991) (declining to apply proposed Treasury
regulation). Nevertheless, pending promulgation of final regula-
____________________
7In enacting COBRA, Congress delegated responsibility for
the issuance of interpretive regulations to three separate
agencies: the Departments of Treasury, Labor, and Health and
Human Services. See, e.g., 26 U.S.C. 7801, 7805 (Secretary of
___ ____
Treasury authorized to "prescribe all needful rules and regula-
tions for the enforcement of this title"); 29 U.S.C. 1168
(Secretary of Labor authorized to "prescribe regulations to carry
out the [continuation coverage] provisions"). To date, only the
Treasury Department has proposed regulations under the statute.
See generally Johnson v. Reserve Life Ins. Co., 765 F. Supp.
___ _________ _______ ______________________
1478, 1480-83 (C.D. Cal. 1991) (discussing regulatory overlap in
COBRA provisions).
14
tions, the Internal Revenue Service has announced that it "will
consider compliance with the terms of these proposed regulations
to constitute good faith compliance with a reasonable interpreta-
tion of the statutory requirements." See 52 Fed. Reg. 22,716.
___
Accordingly, some courts have relied on the Proposed Regulations,
notwithstanding their interim status, to define the scope of
employers' duties under COBRA. See Branch v. G. Bernd Co., 955
___ ______ _____________
F.2d 1574, 1581 (11th Cir. 1992) (finding that proposed regula-
tions "represent the proper construction of COBRA in light of
Congress' intent"); see also Lincoln Gen. Hosp. v. Blue
___ ____ _____________________ ____
Cross/Blue Shield of Nebraska, 963 F.2d 1136, 1142 (8th Cir.
_______________________________
1992) (Proposed Regulations show "regular practice" under COBRA);
Communications Workers of America v. NYNEX Corp., 898 F.2d 887,
__________________________________ ___________
888-89 (2d Cir. 1990) (citing Proposed Regulations).8
Finally, our reading accords with the interpretation
adopted by Congress in amending COBRA through the Miscellaneous
ERISA Amendments Act of 1989. See H.R. No. 101-247, 101st Cong.,
___
1st Sess. 52 (1989), reprinted in 1989 U.S.C.C.A.N. 1906, 1944
_________ __
(under the original version of the statute, "[i]f the laid-off
employee . . . elects continuation coverage, the maximum period
of that coverage is measured from the date of the layoff, al-
________ ____ ___ ____ __ ___ ______
though the period an employer has to notify the employee that he
____________________
8Moreover, we note that the Proposed Treasury Regulations
are invoked, at various points, by both parties in their appel-
late briefs. Cf. W.R. Grace & Co. v. United States E.P.A., 959
___ _________________ _____________________
F.2d 360, 366 n.14 (1st Cir. 1992) (agency's interim, non-final
regulations do not control appeal, but may be considered upon
both parties' application "for the limited purpose of bolstering
. . . analysis").
15
or she has the right to elect continuation coverage does not
begin to run until group health coverage is lost.") (emphasis
added). Although the views of a subsequent Congress obviously
are not binding in determining the intent of an earlier legisla-
ture, see, e.g., United States v. American Heart Research Fund,
___ ____ _____________ _____________________________
No. 92-2108, slip op. at 8 (1st Cir. June 18, 1993); United
______
States v. Bay State Ambulance & Hosp. Rental Serv., Inc., 874
______ _________________________________________________
F.2d 20, 31 (1st Cir. 1989), "such views are entitled to signifi-
cant weight . . . and particularly so when the precise intent of
the enacting Congress is obscure." Seatrain Shipbuilding Corp.
___________________________
v. Shell Oil Co., 444 U.S. 572, 596 (1980) (citation omitted);
_____________
see also United States v. Ven-Fuel, Inc., 758 F.2d 741, 758 (1st
___ ____ _____________ ______________
Cir. 1985); Roosevelt Campobello Int'l Park Comm'n v. United
_________________________________________ ______
States E.P.A., 711 F.2d 431, 436-37 (1st Cir. 1983). As the
______________
accretion of evidence is compelling, we conclude that the Gas-
kells' eighteen-month "continuation coverage" period ran from the
date of the event which triggered David's loss of benefits under
the terms of the Coop's group insurance plan, and not from July
1, 1988, when the Coop ceased its voluntary provision of employ-
er-paid group plan insurance and the Gaskells' self-paid "contin-
uation coverage" commenced.9
____________________
9We acknowledge the potential harsh effects of our inter-
pretation, which effectively shifts to "qualified beneficiaries"
the responsibility to ascertain when a "qualifying event" has
occurred which would eventuate in the inexorable loss of a
contract-right to coverage under the employer's plan even if
that event precedes by days or months the actual loss of plan
______
coverage, the provision of notice by the plan administrator, and
the commencement of any unexpired "election" period. See 29
___
U.S.C. 1165(1)(A) ("election period . . . begins not later than
16
An important issue remains: whether, under the terms
of the Coop's group insurance plan, David's loss of group plan
eligibility inexorably was triggered by the commencement of his
disability leave (January 14, 1987), by his resignation
(January 14, 1988), or by some other event. It is the terms of
the plan that matter in defining the appropriate "trigger"; thus,
David's reduction in hours is not a "qualifying event" if it is
not so designated in the plan, even if it might have been desig-
_____ ____ ____
nated as such, and regardless of the fact that it may ultimately
have led to the eventual occurrence of a "qualifying event" which
___ __
was so designated. See, e.g., Jachim v. KUTV, Inc., 783 F.Supp.
___ ____ ______ __________
1328, 1332 (D. Utah 1992) (rejecting employee's claim that
"reduction in hours" was a "qualifying event," where plan provid-
ed no cessation of coverage until employee's actual termination).
The record does not contain a copy of the Blue Cross
____________________
the date on which coverage terminates"). For example, if a
"qualified beneficiary" of a plan which offers no conversion
option fails to recognize the covered employee's reduction in
hours as a "qualifying event," and no notice is provided by the
plan administrator, the qualified beneficiary may find her
continuation coverage abruptly terminated, some months later,
with little or no time to arrange for alternative insurance. The
Gaskells argue, with considerable force, that this result is
inconsistent with COBRA's general remedial purpose, see National
___ ________
Companies Health Ben. Plan v. St. Joseph's Hosp., Inc., 929 F.2d
___________________________ ________________________
1558, 1572-73 (11th Cir. 1991), to avoid sudden losses in cover-
age. However, in the ordinary case, this sequence of events will
be forestalled by the plan administrator's provision of timely
notice under 29 U.S.C. 1166(a) ("In accordance with regulations
prescribed by the Secretary . . . . (4) the administrator shall
notify . . . any qualified beneficiary with respect to [a quali-
fying] event . . . of such beneficiary's rights under this
subsection"). Penalties may be enforced against plan administra-
tors who fail to provide such notice. See id. at 1132(c)(1).
___ ___
17
group insurance plan; and, with respect to the "triggering event"
which led to cessation of plan coverage, the district court
concluded that "there [was] no evidence concerning the Coop's
policy with regard to the provision of benefits to employees on
disability leave," see 762 F.Supp. at 1541 n.4. Since we may
___
uphold the judgment on the pleadings only if "it appears beyond
doubt that the plaintiff can prove no set of facts in support of
__ ___ __ _____
[its] claims which would entitle [it] to relief," Conley v.
______
Gibson, 355 U.S. 41, 45-46 (1957) (emphasis added), and it is
______
impossible to determine from the present record whether going on
full disability leave would automatically "trigger" a cessation
of David's contractual entitlement to employer-paid group plan
insurance benefits, cf. Charles v. Des Plaines Pub. Co., Inc.,
___ _______ ____________________________
No. 91-C-01288 (N.D. Ill. June 4, 1991), U.S. Dist. LEXIS 7806,
*5 (noting employee's failure to allege facts showing entitlement
___________
to group insurance during disability leave), the district court
judgment was at least premature.10 We accordingly vacate the
judgment, and remand for further proceedings.
____________________
10For similar reasons, we decline to rule on the Gaskells'
alternate argument, that principles of equitable estoppel require
the Coop to provide "continuation coverage" under its plan for
eighteen months beyond July 1, 1988. Even assuming that the
defense of equitable estoppel is available to COBRA benefici-
aries, upon a proper showing, where the terms of a plan are
otherwise ambiguous, see National Companies Health Plan, 929 F.2d
___ ______________________________
at 1572-73, a preliminary showing of ambiguity is required;
"'estoppel may not be invoked to enlarge or extend the coverage
specified in a contract.'" See id. at 1572 n.13 (quoting Kane v.
___ ___ _______ ____
Aetna Life Ins., 893 F.2d 1283, 1285 n.3 (11th Cir.), cert.
_________________ _____
denied, 111 S.Ct. 232 (1990)). Since the Blue Cross group plan
______
contract with the Coop is not part of the record, we cannot
determine whether the ambiguity showing can be met here.
18
Since the remaining arguments raised by the Gaskells on
appeal turn on the terms of the plan contract, and the validity
of the district court's finding that "the Coop was . . . obligat-
ed [under the terms of the contract] to provide health plan
coverage to the Gaskells for a period beginning July 1, 1988,"
see 762 F. Supp. at 1543, appellate resolution of these issues
___
must await evidence of the terms of the plan contract, and
district court reconsideration of the Coop's COBRA liability, on
remand. We accordingly vacate the judgment, and remand for
further proceedings.
19
The district court judgment is vacated and the case is
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remanded for further proceedings consistent herewith.
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20