IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 94-40263
LLOYD SWITZER,
Plaintiff-Appellee,
versus
WAL-MART STORES, INC.,
Defendant-Appellant.
Appeal from the United States District Court For the Eastern District of Texas
(May 12, 1995)
Before WISDOM, WIENER and PARKER, Circuit Judges.
WIENER, Circuit Judge.
In this ERISA1 case Defendant-Appellant Wal-Mart Stores, Inc.
(Wal-Mart), in its capacity as plan administrator of the Wal-Mart
Stores, Inc. Health Benefit Plan (the Wal-Mart Plan), appeals from
an adverse ruling of the district court ordering it to reconsider
Plaintiff-Appellee Lloyd Switzer's claimed medical expenses. The
district court, after acknowledging that a lapse in Switzer's
health insurance coverage precluded him from obtaining a legal
1 Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. remedy, nevertheless concluded that Wal-Mart was "arbitrary and
capricious" in denying Switzer's claims and proceeded to fashion a
so-called equitable remedy to achieve the result that the court
found proper under the circumstances. Concluding that the court
clearly erred in factual determinations upon which this case turns
and erred as a matter of law in holding that Wal-Mart's denial of
Switzer's claims was "arbitrary and capricious," we are constrained
to reverse its ruling, vacate its judgment, and render a take-
nothing judgment against Switzer.
I
FACTS AND PROCEEDINGS
Switzer went to work for Wal-Mart in 1988, where he became a
participant in the Wal-Mart Plan. His participation, and thus his
health insurance coverage, ceased automatically when he quit his
job with Wal-Mart in September 1990. Switzer elected to take out
a COBRA2 continuation policy of health insurance under the Wal-Mart
Plan, doing all that was necessary to obtain such coverage and
thereafter to maintain it--from the inception through the calendar
month ending August 31, 1991-- by timely remitting the full amount
of each monthly premium payment by personal check.3
During the few months after Switzer left his Wal-Mart job,
Wal-Mart made several administrative errors in connection with
2 Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161-68. 3 Switzer's first COBRA payment, made on December 27, 1990, covered a period from September 8, 1990 through January 31, 1991. All of his subsequent payments, however, were made on a monthly basis.
2 winding up his coverage under the Wal-Mart Plan, improperly
deducting insurance premiums from Switzer's accrued vacation pay.
Wal-Mart reversed those incorrect deductions by the end of January
1991, however, and the errors have no direct bearing on Switzer's
ensuing health insurance difficulties, except to the extent that
they figured into the district court's determination that Switzer
was justified in believing that Wal-Mart had a propensity for
making such mistakes in administering its insurance plan.
Effective June 21, 1991, Switzer was rehired by Wal-Mart. As
his prior employment termination in September 1990 constituted a
true break in service and not a leave of absence, his return in
June 1991 was tantamount to new employment and he was deemed a "new
hire" under the Wal-Mart Plan. He was therefore subject to a 90-
day waiting period before his re-enrollment in the Wal-Mart Plan
could become effective. Switzer was aware of the delay in coverage
under the Wal-Mart Plan resulting from that waiting period and of
his need to maintain his COBRA coverage by making timely monthly
premium payments until his regular coverage under the Wal-Mart Plan
recommenced.
In addition to having received a summary plan description
(SPD) detailing COBRA in ordinary, conversational language, Switzer
was given, and had in his possession at all pertinent times, a
monthly coupon book for his COBRA policy. The coupon for the month
of September 1991 specified that a premium payment of $82.46 was
due and payable on August 28, 1991. It also reflected that Switzer
was entitled to a grace period of 30 days, and that the August 28th
3 payment would be past due on September 27, 1991SQthe last day of
the grace period. The coupon contained the following statement:
"IF PAYMENT IS NOT RECEIVED IN OUR OFFICE ON OR BEFORE PAST DUE DATE, COVERAGE WILL BE CANCELLED ON DATE LAST PAID."
Switzer never remitted the August 28, 1991, payment, in whole or in
part; he also did not remit any other payment thereafter. The last
monthly payment that he made on his COBRA coverage was the one that
was due late in July. Switzer paid it by check on July 26th,
maintaining his COBRA coverage in full force and effect only
through August 31, 1991.4
Calculated on the basis of his re-employment date of June 21,
1991, Switzer's 90-day waiting period for coverage under the Wal-
Mart Plan expired approximately three-fourths of the way through
the period of his September COBRA coverage, before Switzer's COBRA
coverage lapsed automatically on September 27th--effective
retroactively to August 31st--due to non-payment. Apparently
concluding that the premium for that fractional period was subject
to proration, the district court found that Switzer's final
September COBRA payment should have been approximately $60 for that
partial month, not the full $82.46 reflected on the coupon.5
4 The record reflects that Switzer had his wife handle these insurance matters, albeit in consultation with him, and that she had experience with insurance policies, having worked in the insurance business for some 15 years and even having owned her own agency at one time. 5 Wal-Mart contends that it questioned whether Switzer had a right to prorate the payment and indicated its position to the district court. We find that resolution of the proration issue is not required for purposes of this appeal.
4 On October 4, 1991, Wal-Mart deducted a medical insurance
premium from Switzer's regular monthly paycheckSQthe first
deduction following Switzer's re-employment at Wal-Mart. The
deduction covered Switzer's initial, partial period of renewed
coverage under the Wal-Mart Plan, from his initial eligibility date
of September 21, 1991 through October 4, 1991, the beginning of his
first full month of coverage.
Also under date of October 4, Wal-Mart sent Switzer a
computer-generated letter, which he received shortly thereafter.
The letter informed him that his COBRA coverage would be canceled
retroactively, effective to August 31, 1991, if he did not remit,
by October 16, 1991, the $82.46 premium paymentSQan amount equal to
a full month's COBRA premiumSQthat had been due on August 28, 1991
and had become past due on September 27, 1991. In addition to
stating that cancellation of his COBRA coverage would be effective
retroactively to August 31, 1991, the letter advised that canceled
coverage could not be resumed.6
Despite the obviously important nature of that information,
Switzer elected to make no payment whatsoever. He also elected not
to contact anyone at Wal-Mart about the October 4th letter or about
the COBRA payment to which the letter referred. Rather, he took it
upon himself, with the counsel of his wife only, to conclude
(erroneously) that, inasmuch as his final COBRA period was a
6 We note that by October 4, 1991, Switzer's COBRA coverage had already lapsed (effective retroactively to August 31, 1991) by virtue of his failure to pay his August 28th premium by September 27th, the last day of the 30-day grace period.
5 partial month and the figure mentioned in the letter was equal to
a full month's premium, the delinquent payment referred to in the
letter must have been covered by Wal-Mart's October 4th payroll
deduction. Switzer came to this incorrect conclusion without
inquiring about his misinterpretation, despite the fact (as found
by the district court) that he was consciously interested in
maintaining uninterrupted health insurance coverage.
Switzer had a known heart condition which constituted a pre-
existing condition under the Wal-Mart Plan. That plan provided
that all pre-existing conditions were excluded from coverage until
the plan participant had been continuously covered for twelve
consecutive months. Thus, to avoid any lapse in coverage
triggering the Wal-Mart Plan's one-year exclusion for his pre-
existing heart condition by creating a "new" starting date for his
coverage under that plan, Switzer had to maintain his COBRA
coverage in effect until September 21, 1991, ninety days after his
re-employment at Wal-Mart on June 21, 1991. Quite simply, if
Switzer maintained continuous coverage from one plan to the other,
the heart condition would have been covered continuously through a
combination of the two plans; but if the COBRA coverage lapsed
before his Wal-Mart Plan coverage began, the Wal-Mart Plan's one-
year exclusion of pre-existing conditions from coverage would
exclude Switzer's heart condition from coverage between August 31,
1991 (the end of COBRA coverage) and September 21, 1992 (the end of
the Wal-Mart Plan's one-year exclusion period).
On February 20, 1992SQduring the exclusion period for pre-
6 existing conditions under the Wal-Mart PlanSQSwitzer suffered a
heart attack. His medical bills exceeded $50,000. As Plan
Administrator, Wal-Mart considered but denied Switzer's claims for
medical costs and expenses. Wal-Mart denied his claims based on
the lapse, effective retroactively to August 31, 1991, of Switzer's
COBRA coverage resulting from his non-payment of the September 1991
COBRA premium, and the Wal-Mart Plan's one-year exclusion of pre-
existing conditions from coverage.
After exhausting his administrative remedies to no avail,
Switzer filed suit in state court seeking reimbursement of medical
expenses from the Wal-Mart Plan. Based on ERISA's preemption, Wal-
Mart removed the suit to the federal district court, which
conducted a bench trial.
The district court found that Wal-Mart, by voluntarily
assuming a duty to inform Switzer of his impending lapse of COBRA
coverage in a manner that the court believed to be ineffective and
confusing, had breached its fiduciary duty to Switzer to provide
him with clear and accurate information. In its ruling, the
district court acknowledged that Wal-Mart had no duty to inform
Switzer of the impending lapse in his COBRA health insurance
coverage. Nonetheless, the court took the position that if a plan
administrator decides, in the absence of a duty to do so, to notify
a plan participant of an impending loss of coverage, it must make
certain, by clearly communicating to the participant, that the
participant abandoning coverage does so knowingly and
intentionally.
7 In holding that Wal-Mart's communication to Switzer was not
adequate, the court referred specifically to Wal-Mart's letter of
October 4, 1991, which stated that Switzer needed to pay $82.46
rather than a prorated amount estimated to be approximately $60.
In light of Wal-Mart's past errors in administering Switzer's
coverage, the court reasoned, Switzer was entitled to a more
thorough explanation from Wal-Mart, summarizing his payments and
advising him expressly of the need to avoid the impending three-
week gap in coverage. The district court believed that the notice
from Wal-Mart to Switzer did not make sufficiently clear that the
delinquent COBRA payment was unrelated to the premium that Wal-Mart
had deducted from Switzer's paycheck on October 4, 1991, for his
coverage under that plan commencing September 21, 1991. The court
also concluded that Wal-Mart's letter should have clarified the
meaning of the October 16th payment deadline for Switzer's
delinquent COBRA payment and that deadline's relationship to the
original September 27th past due date.
Recognizing the unavailability of a legal remedy to achieve
the result it deemed appropriate under the circumstances, the
district court crafted an "equitable" remedy: It ordered Wal-Mart
to accept a late payment from Switzer, thereby retroactively curing
his failure to pay the final COBRA premium and eliminating the gap
between his COBRA and Wal-Mart Plan coverages, and ordered Wal-Mart
to reconsider Switzer's claims for medical expenses that resulted
from his heart problems. Wal-Mart timely filed a notice of appeal,
and this review ensued.
8 III
ANALYSIS
A. Standard of Review
We review a judgment on the merits of a nonjury civil case
applying the usual standards of review.7 Thus, we review
conclusions of law de novo and findings of fact for clear error.8
If the district court's account of the evidence is plausible in
light of the record viewed in its entirety, we may not reverse even
if we are convinced that, had we been sitting as the trier of fact,
we would have weighed the evidence differently.9 Nevertheless, a
trial court's finding is "clearly erroneous" when, although there
is evidence to support the finding, the reviewing court is left
with a definite and firm conviction that a mistake has been made.10
Although we generally review de novo the denial of benefits
under an ERISA health plan,11 when the plan administrator is vested
with discretionary authority to construe the terms of the plan and
determine eligibility for benefitsSQas was Wal-MartSQthe decisions
of the plan administrator can only be reversed if found to be
7 See Crisis Transp. Co.v.M/V Erlangen Express, 794 F.2d 185, 187 n.5 (5th Cir. 1986). 8 See id. 9 See First United Fin. Corp. v. Specialty Oil Co., 5 F.3d 944, 947 (5th Cir. 1993) (citing Anderson v.City of Bessemer City, 470 U.S. 564, 574 (1985)). 10 See Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985); United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948). 11 See Firestone Tire and Rubber Co. v. Bruch, 109 S. Ct. 948, 956-57 (1989).
9 arbitrary and capricious.12 We review de novo the district court's
conclusion that the plan administrator's determinations were
arbitrary and capricious.13
B. Wal-Mart's Letter to Switzer
As a starting point, we agree with the district court that
Wal-Mart as plan administrator was not legally or contractually
bound to inform Switzer that he was late in remitting his final
COBRA premium. And we do not necessarily disagree with the
implication that if and when a plan administrator thus elects to
act as a Good Samaritan andSQwithout prior inquiry from the
participantSQgratuitously communicate with a plan participant about
such a matter, the administrator must do so in a manner calculated
to avoid confusion and misunderstanding, whether by omission or
commission. It is at this point, however, that we part company
with the district court.
First, the district court suggests that for ERISA purposes the
instant situation was other than routine. That is clearly
erroneous: Wal-Mart is not exactly your typical Mom and Pop
operation; we speculate that among its tens of thousands of
employees, many miss such payments every monthSQsome intentionally
and others inadvertently. Only by computer can the myriad employee
benefit matters of such a giant employer be monitored. Thus by
definition, Wal-Mart could not possibly give personalized attention
12 See id.; Vasseur v. Halliburton Co., 950 F.2d 1002, 1006 (5th Cir. 1992). 13 See Bolling v. Eli Lilly & Co., 990 F.2d 1028, 1029 (8th Cir. 1993).
10 to each and every employee. To conclude that Wal-Mart should have
known, in the absence of an inquiry from Switzer, that he did not
want his COBRA coverage to lapse before his coverage under the Wal-
Mart Plan recommenced is to ignore the realities of the situation.
Wal-Mart's form letter to Switzer regarding his delinquent
COBRA premium payment was not sent in response to an inquiry from
Switzer; he never bothered to initiate one. In addition, no one
has questioned the accuracy of the dates or time limits set forth
in that letter. Consequently, the district court's reliance on
Electro-Mechanical Corp. v. Ogan,14 and Anweiler v. American Elec.
Power Serv. Corp.,15 to impose a higher duty of promptness and
adequacy on Wal-Mart in connection with that communication to
Switzer is misplaced. Electro-Mechanical Corp. makes clear that,
absent a specific participant-initiated inquiry, a plan
administrator does not have any fiduciary duty to determine whether
confusion about a plan term or condition exists.16 It is only after
the plan administrator does receive an inquiry that it has a
fiduciary obligation to respond promptly and adequately in a way
that is not misleading.17
14 9 F.3d 445, 451-52 (6th Cir. 1993) (holding that plan administrator did not breach its fiduciary duties where it had adequately explained plan contents, and employee had failed to inquire about plan term that he misinterpreted on his own). 15 3 F.3d 986, 991-92 (7th Cir. 1993) (holding that fiduciaries breached their duties by not giving beneficiary full and complete information). 16 See Electro-Mechanical Corp., 9 F.3d at 452. 17 See id. at 451.
11 Regardless of the level of the plan administrator's duty,
however, the court's finding that Wal-Mart's communication did not
provide sufficiently clear and accurate information to Switzer
concerning the status of his COBRA coverage is clearly erroneous.
Remember, Switzer knew and understood that his coverage under the
Wal-Mart Plan would not clutch in until September 21, 1991, 90 days
after he rejoined Wal-Mart as an employee. Additionally, he still
had in his possession the premium coupon book (and presumably the
SPD) for his COBRA coverage, had used those coupons during the
period of his unemployment and for the first two months following
his re-employment, and had in hand the particular premium coupon
for the payment in question. That coupon clearly and unambiguously
reflected the billing period that it covered (September 1-30,
1991), the date by which the premium was due (August 28, 1991), the
date on which that payment would be past due (September 27, 1991),
and the fact that if such payment were not received by Wal-Mart on
or before the past due date, Switzer's COBRA coverage would be
canceled automatically as of August 31, 1991SQthe last date for
which he had made premium payments and a date of which Switzer was
quite clearly aware.
With that in mind we also find significant that which the
record reflects did not occur: Despite Switzer's conceded
knowledge that he had to keep his COBRA coverage in effect at least
through September 21, 1991 and that his prior premium payments kept
his coverage alive only through August 31, 1991, Switzer made a
conscious decision not to remit the payment reflected on the coupon
12 as being due on August 28; he did not pay on that date, or on the
specified past due date of September 27, or on any date in between.
Significantly, Switzer's decision not to pay the premium that was
due on August 28 could not have been affected by Wal-Mart's October
4th notice; it came far too late for that!
Switzer likewise made a conscious decision not to initiate any
inquiries to Wal-Mart indicating his concern or confusionSQhe did
not inquire about whether he had to make a payment, about whether
the payment could be prorated for a lesser amount, or about
anything else regarding his coverage. So, in light of all of his
knowledge and his interest in avoiding a gap in coverage, Switzer
overtly considered his options and elected to take no action, make
no inquiries, and allow the past due date to come and go, knowingly
disregarding the premium coupon's statement that "coverage will be
cancelled on date last paid."18
In fact, when Wal-Mart sent its October 4, 1991 form letter to
Switzer, his COBRA coverage had already lapsed! It was a pure act
of grace, then, for Wal-Mart to allow life to be breathed into
Switzer's moribund COBRA policy, thereby avoiding a gap between
that coverage and Switzer's Wal-Mart Plan coverage, by extending
from September 27th to October 16th the time in which Switzer could
18 Even though Switzer contends that he also misinterpreted the statement on the premium coupon, "Grace period for this bill is 30 days," as meaning it would run from either the past due date of September 27th or the billing period expiration of September 30th, it is clear that Switzer took it upon himself to make that interpretation and, as with the other matters, initiated no inquiries to the plan administrator or anyone else to clear up his own confusion.
13 still remit the premium that had been due on August 28th and had
become delinquent on September 27th. The district court did not
acknowledge the difference between a voluntary notice of impending
COBRA coverage lapse sent at a time before the lapse occurs, and
the instant situation in which Wal-Mart's gratuitous October 4th
notice was sent after the time for premium payment had passed.
Switzer's COBRA policy had presumably terminated ipso facto before
Wal-Mart sent its letter in effect offering a re-opening of the
expired grace period. The full content of the October 4th letter
bears reproduction here:
DEAR LLOYD SWITZER,
THIS NOTICE IS TO INFORM YOU THAT YOUR CONTINUATION COVERAGE COBRA WILL BE CANCELLED IF FULL PAYMENT IN THE AMOUNT OF $82.46 IS NOT RECEIVED IN OUR OFFICE POSTMARKED ON OR BEFORE 10/16/91.
THIS CANCELLATION WILL BE EFFECTIVE AT 12:00 MIDNIGHT ON THE LAST DAY THROUGH WHICH COVERAGE HAS BEEN PAID, 08/31/91. CANCELLED COVERAGE CANNOT BE RESUMED. NO OTHER NOTICE OF DISQUALIFICATION WILL BE SENT.
SINCERELY,
WAL-MART CONTINUATION COVERAGE
We find that Wal-Mart's communication to Switzer was clear and
unambiguous. The only conceivably questionable item in the entire
communication is the amount of the premium, $82.46, and even that
corresponds, to the penny, with the premium amount set forth on
Switzer's premium coupon. That figure can be deemed ambiguous or
misleading only if one adverts to the de minimis premium difference
produced by the putative (and, by Wal-Mart, questioned) right to
14 proration. Besides, the law does not require a perfect
communication, only one that is sufficiently clear and complete to
avoid the labels of inadequate, ambiguous, confusing or misleading.
That lawyers or judges might improve on the notice or nitpick it
here or there does not necessarily subject it to such pejorative
appellations. It need not be "the best" as long as it is
reasonably clear and understandable. Wal-Mart's October 4th letter
is at least that.
Despite Switzer's receipt of that letter and its obviously
crucial importance to himSQimportance which, the district court
found, Switzer appreciated and was concerned aboutSQhe neither
remitted the payment of $82.46 or any lesser amount nor contacted
Wal-Mart to inquire about any perceived discrepancies between the
full amount of the monthly premium and his estimate of an
approximate prorated amount. Switzer never inquired about the
extended but different period within which he now could remit the
payment, about any possible nexus between the letter's warning and
the insurance deduction from his first paycheck (we can but wonder
why his belief that he was entitled to proration of his last COBRA
premium apparently did not provoke a similar thought process
regarding proration of the September 21-October 4 fractional month
for which Wal-Mart made a payroll deduction for insurance under its
plan), or about anything else that would help him determine the
status of his health insurance coverage under both COBRA and the
Wal-Mart Plan within the extended grace period.
The district court found that Switzer and his wife
15 "conscientiously attempted to maintain uninterrupted health
coverage." We cannot square that finding with Switzer's rather
cavalier "do nothing" behavior during the period of several months
between the time he remitted the penultimate COBRA premium on July
26, 1991 and the expiration of his extended grace period on October
16, 1991SQa time span during which his 90-day waiting period under
the Wal-Mart Plan expired, his premium coupon for his ultimate
COBRA premium went unused, and the past due date of September 27th
for that premium (on which date the 30-day grace period expired)
came and went. The tragic truth is that this portrays a terribly
regrettable example of one who snatches defeat from the jaws of
victory; the tragedy, however, cannot be laid at Wal-Mart's feet in
this instance.
C. Wal-Mart's Denial of Switzer's Claims
The district court acknowledged the highly deferential
"arbitrary and capricious" standard under which it was compelled to
review the Plan Administrator's decision to deny benefits to
Switzer. We review that court's determination de novo. Given the
court's express recognition that there was a lapse in coverage and
that the lapse was the direct result of Switzer's conscious
decision not to pay the final COBRA premium, we find
incomprehensible its conclusion that the plan administrator's
denial of benefits was "arbitrary and capricious." The district
court justified that holding, however, by concluding that Wal-Mart
"attempted" to notify Switzer about the unpaid September premium
but that Wal-Mart "failed to get its message across." We must
16 again respectfully disagree.
Switzer received Wal-Mart's mailing, written in clear and
unambiguous terms. Unfortunately, he made a conscious, deliberate
decision to ignore it or at least to refrain from acting on it.
His doing that cannot be said to prove that Wal-Mart "failed to get
the message across." We discern nothing inSQor omitted fromSQWal-
Mart's October 4th letter that could put into play a chain of
events justifying that the end result, i.e., the plan
administrator's denial of benefits, should be labeled "arbitrary
and capricious."
To force Wal-MartSQor, more correctly, the other participants
whose premium burdens would ultimately increase if the Wal-Mart
Plan were to pay an unwarranted claimSQto accept Switzer's never-
tendered 1991 COBRA premium now, and thereby resuscitate Switzer's
coverage and Wal-Mart Plan's financial responsibility for his
medical claims, would truly be to confirm the adage, "No good deed
goes unpunished." Not only did Wal-Mart act as a prudent fiduciary
by furnishing, gratis, an extra notice and an extra couple of weeks
within which to remit that all-important, final COBRA premium, it
did so in a factually faultless manner. Its October 4th letter to
Switzer was adequate and "written in a manner calculated to be
understood by the average plan participant."19 When competent
majors such as Switzer knowingly and intentionally elect to actSQor
not to actSQin a particular way in response to reasonable stimuli,
19 29 U.S.C. § 1022(A)(1) (outlining requirements for plan descriptions).
17 they alone must accept responsibility for their own acts or
abstentions. We cannot forever seekSQand findSQa deep pocket to
ameliorate the regrettable results of a plaintiff's own unfortunate
mistake.
The district court was clearly erroneous in its factual
determination that Wal-Mart's actions, particularly its notice of
October 4, 1991, were inadequate, misleading, confusing, or
otherwise deficient in any manner. That error of fact caused the
district court to err reversibly in holdingSQon the basis of such
findingsSQthat Wal-Mart as the plan administrator was arbitrary and
capricious in rejecting Switzer's claims for medical expenses
arising from or connected with his pre-existing heart condition and
subsequent heart attack. Section 1104(a)(1)(D) of ERISA20 is a
mandate to plan administrators to act "in accordance with the
documents and instruments governing the plan"21SQhere,the Wal-Mart
Plan description, the SPD, and possibly the premium coupon too.
Given the universally acknowledged fact that under these relevant
documents and instruments, Switzer's failure to pay the September
COBRA premium caused his coverage to lapse as of August 31, 1991,
triggering the one-year exclusion of his heart condition from
coverage under the Wal-Mart Plan, Wal-Mart would have breached its
duty as plan administrator if it had paid Switzer's claim! That
truly would have been arbitrary and capricious.
20 29 U.S.C. § 1104(a)(1)(D) (describing fiduciary duties).
21 Id.
18 D. Remedy
As we find that the factual underpinnings of the district
court's decision are clearly erroneous and conclude in our de novo
review that Wal-Mart was not arbitrary and capricious in denying
Switzer's claim, we need not (and therefore do not) analyze in
depth the propriety of the "equitable" remedy that the court
fashioned out of the whole cloth. We are nevertheless constrained
to observeSQadmittedly in obiter dicta SQthat the district court's
reliance on equity in the absence of an available legal remedy may
well have constituted impermissible overreaching. For its license
to craft an equitable remedy, the court relied on ERISA sections
502(a)(3)(A) and (B).22 Such reliance was almost certainly
misplaced. Traditional equitable remedies statutorily authorized
under ERISA are even more narrowly drawn than are those authorized
under the bankruptcy statute, of which we have repeatedly noted
that "the statute does not . . . constitute a roving commission to
do equity."23 Although the court couched its equitable remedy in
terms of traditional injunctive or declaratory relief, in truth if
its innovative remedy were to be implemented it would surely create
substantive rights that Switzer did not have under the Wal-Mart
Plan or under ERISA. Principal among the unauthorized rights that
would thus be created would be the right to have his long-dead
COBRA coverage resurrected, Lazarus-like, by court-ordered
22 29 U.S.C. § 1132(a)(3)(A),(B). 23 In re Sadkin, 36 F.3d 473, 478 (5th Cir. 1994); In re Oxford Management, Inc., 4 F.3d 1329, 1334 (5th Cir. 1993); United States v. Sutton, 786 F.2d 1305, 1308 (5th Cir. 1986).
19 acceptance and retroactive application of the final COBRA premium
payment that Switzer had deliberately elected not to pay when it
was due. That he was laboring under a misconception regarding the
effect of his non-paymentSQa self-induced misconception, not one
caused by any fault of Wal-MartSQcannot change the result and grant
him a remedy where none may validly exist.
III
CONCLUSION
The district court clearly erred in finding that the plan
administrator's gratuitous notice to Switzer of October 4, 1991,
was not adequate to warn him that he risked a lapse in his COBRA
coverage if he did not pay the final premium by the extended grace
period date of October 16th, particularly when that notice was sent
a week after Switzer's COBRA coverage had already lapsed and should
have been canceled automatically. In consequence of that clear
error, the district court erred as a matter of law when it
determined that Wal-Mart as plan administrator was arbitrary and
capricious in denying benefits to Switzer. We must, therefore,
reverse the rulings of the district court; vacate its orders that
Switzer tender the appropriate COBRA premium to Wal-Mart and that
Wal-Mart as plan administrator accept that premium and reconsider
its denial of Switzer's claims for payment of his medical bills;
and render a take-nothing judgment in Switzer's lawsuit against
Wal-Mart Stores, Inc.
REVERSED, VACATED and RENDERED.