HIGH
COURT RULES IN DUAL BENEFITS COVERAGE CASE
Human Resource
Executive
By Joseph A. Slobodzian
Workers covered under
a spouse's health insurance, as well as that of their own company,
may still elect to continue coverage through their former employer's
plan when they are fired or furloughed, the U.S. Supreme Court
has ruled.
The court ruled unanimously
in the case of Geissal vs. Moore Medical Corp., reversing the
8thU.S. Circuit Court of Appeals. That court had ruled such dual
health coverage was not included in the Consolidated Omnibus
Budget Reconciliation Act.
In the opinion, written
by Justice David H. Souter, the high court rules that "there
is not justification for disparaging the clarity" of the
COBRA provision on this question.
The case resulted
from Moore Medical's 1993 firing of James Geissal. Who had been
with the company seven years. Geissal, who had cancer, had participated
in Moore's group health plan, but also was a beneficiary with
the health plan, but also was a beneficiary with the health plan
of his wife's employer, Trans World Airlines, which has higher
deductibles.
When he was fired
by Moore, Geissal decided to continue coverage under his former
employer's plan and paid the required premium for six months,
until Moore officials told him he was ineligible for COBRA benefits
because of his coverage under his spouse's plan. Moore returned
the six months of premiums Geissal paid and refused to pay bills
submitted by his health care providers.
Geissal filed sued,
but died before U.S. District Judge David Noce, of the Eastern
District of Missouri, dismissed his lawsuit. Geissal's widow,
Bonnie, was permitted to continue pursiung the lawsuit, but lost
when the appeal reached the 8th Circuit, which ruled that COBRA
permits an employer to cancel health coverage as soon as a beneficiary
becomes covered under another group health plan.
The issue had divided
the nation's Circuit Courts of Appeals. The 8th, 5th and 11th
Circuits said COBRA did not require the continuation of benefits
in cases like Geissal's. The 7th and the 10thCircuits reached
the opposite conclusion, holding that former employees can be
dropped under COBRA only if they enroll in a new health plan
after losing their job.
The Supreme Court
agreed with the 7th and 10th Circuits. Justice Souter noted,
"So far as this case is concerned, what is crucial is that
[COBRA] does not speak in terms of ‘coverage' that might
exist or continue; it speaks in terms of an event, the event
of ‘becoming covered.' This event is significant only if
it occurs, and ‘first' occurs, at a time ‘after the
date of the election.'
"It is undisputed
that both before and after James Geissal elected COBRA continuation
coverage he was continuation coverage he was continuously a beneficiary
of TWA's group health plan, " Justice Souter continued.
"Moore could not cut off his COBRA coverage under the plain
meaning of [the act]."
