ultimately with the aid of a jury to assess the witnesses' memory and credibility.
2. Stepan's Asserted Failure To Give Notice
Andre argues that given ERISA's strong policy of requiring disclosure of any change in benefits (Section 1001(b)), Stepan had to give notice before cancelling his coverage. Not only does Andre cite no cases that impose such a notice requirement under COBRA, but Stepan appears to have the better of the argument: As it points out, both the documents that Stepan provided to Andre and the COBRA statute (Section 1162(2)(C)) call for the automatic termination of benefits upon nonpayment of a required premium. Any notice requirement would seem to be at odds with that statutory language, though it might perhaps be possible to construct an argument for the opposite result.
But the issue need not be definitively resolved here. Even if notice were required Andre would still lose on that score, because his claim depends on a hopelessly tenuous theory of causation. Andre admits that he let the COBRA coverage lapse because he thought he was covered by Salem. Therefore the only reasonable inference is that any notice of cancellation from Stepan would have made not the slightest difference--Andre would simply have ignored it, because he had no interest in renewing that coverage.
At most Andre could argue that a notice of cancellation from Stepan might have prompted him to double-check with Salem to make sure that he was really covered (an argument made in passing at Andre R. Mem. 8). Presumably he would have then learned that he was not yet covered through Salem, which would have prompted him to . . . do what? Promptly complete the Enrollment Form for Salem? Most likely--in which case it would be ludicrous to hold Stepan liable. send a check to Stepan? Hardly--that would call for a fanciful scenario such as Andre's being unsure of his ability to arrange immediate commencement of coverage through Salem, and thus deciding that he would rather be safe than sorry. But that fictional plot simply takes us too far from the actual facts of the case to support liability.
Just a few words should be said here about Andre's attempt to tack an Illinois-law claim onto his case against Salem. Andre's Complaint and First Amended Complaint mentioned only federal claims. But his Mem. 13 adds that Stepan has also assertedly violated the Illinois insurance law (Ill. Rev. Stat. ch. 73, PP 969.22, 979(2)) that requires 30 days' notice prior to cancellation of group health coverage.
Many potential flaws riddle that theory: the possibility of ERISA preemption; Congress' evident intention to allow automatic COBRA termination without notice; the procedural impropriety of belatedly raising in the brief a theory not raised in the Complaint; and the failure to allege, much less properly support, the existence of supplemental jurisdiction over the claim under 28 U.S.C. § 1367.
However, It is unnecessary to delve into any of those issues. Just as the lack-of-notice theory fails under ERISA because causation is absent, any similar theory under state law must fail as well.
It is ironic and unfortunate, to be sure, that Andre's mistaken belief as to Salem also has the effect of forbidding his recovery from Stepan on the theory now under discussion. But the chain of causation here is just too fragile, linked as it is only by a series of "what ifs," to withstand the tug of analysis before it breaks apart. It cannot justify submission of the question to a jury, much less a summary judgment for Andre.
3. Tolling of 30-Day Grace Period17
Andre also argues that his hospitalization and his bereavement leave, either singly or in combination, extended the 30-day grace period during which he could have reinstated his COBRA coverage through Stepan. If such tolling were indeed in order, Andre's request for reinstatement could have been timely as a matter of law even though not made within 30 calendar days.
COBRA does not specifically allow for tolling. But Sirkin v. Phillips Colleges, Inc., 779 F. Supp. 751, 752 (D. N.J. 1991) found a common-law tolling principle inherent in the statutory scheme:
Where a person entitled to [COBRA] coverage has evidenced an intent to continue such coverage by making timely premium payments, and becomes physically or mentally incapacitated from knowing of the obligation or paying or arranging for payment of the premium, then such a person is entitled to reinstate such coverage by paying the amount due within a reasonable time after the disability ends or a representative is appointed to act for such person.
That statement seems entirely correct as a matter of law (or perhaps as a matter of equity). What poses difficulty here is rather the application of that legal principle to Andre's situation. As the ensuing discussion shows, it cannot be determined from the current record whether the tolling doctrine applies.
One possible source of tolling may be eliminated immediately: Andre's week of bereavement leave cannot toll the 30-day grace period. Andre was undoubtedly distracted and busy during that week. But Sirkin properly requires a showing of "mental incapacity": that Andre was literally unable to mail a check to Stepan, or unable even to know that a check was due. No evidence suggests that he was incapacitated in any such sense. Instead his hopes must rest on the possibility that the heart attack left him "physically . . . incapacitated from . . . paying or arranging for payment of the premium."
This case presents a slightly different situation from Sirkin, where the plaintiff had manifested a present intent to continue COBRA coverage before the disability began. But for the advent of that plaintiff's disability, she would have sent in her regular monthly payment. By contrast, Andre had no such purpose at the time of his heart attack. His intention to renew COBRA coverage did not arise until March 4, when he learned that Salem would not honor his request for coverage. In fact, Andre did not even know until then that COBRA permitted the late payment of premiums. So the heart attack did not prevent Andre from acting on a preexisting intent to continue coverage.
That lack of prior intent does not kill Andre's tolling claim, however. Insurance claimants may take advantage of the 30-day statutory grace period whether their desire for coverage arises on the first or the thirtieth day. Nothing in the statute suggests a congressional desire to limit reinstatement based on when the desire to reinstate arises. COBRA specifically forbids the employer to condition coverage upon proof of insurability (Section 1162(4))--a sure sign that employees who become so ill during the grace period that they might not qualify for insurance as an original matter may still reinstate their old coverage. Any COBRA beneficiary who simply forgets to mail a payment may reinstate coverage, as may any beneficiary who unexpectedly gets sick or who has difficulty getting enrolled as planned in a new insurance program.
Because Congress did not limit the availability of the grace period to beneficiaries who intend but fail to make a timely payment, it would subvert that same statutory purpose to impose such limits on the availability of tolling. As Sirkin, 779 F. Supp. at 752 said:
Principles of equity and common decency suggest that a person should not be deprived of desired and needed coverage when incapacitated from continuing it.
There is nothing like an unexpected illness to make a person "desire" insurance or take the steps necessary to bring coverage up to date. Certainly that sort of crisis could lead an employee to reinstate COBRA coverage if the employee were not confident of his or her insurance status with a new employer.
Yet the same sudden illness near the end of the 30-day grace period that makes a person "desire" COBRA coverage can easily render the person unable to make the necessary inquiries or payments. If that situation arises, tolling is the only way to preserve the employee's statutory right to reinstatement. Without tolling a former employee who gets really sick would be unable to obtain retroactive COBRA coverage, while an employee who is still well enough to mail in a check could obtain coverage--a topsy-turvy distinction that Congress surely did not intend to make.
Tolling is available, then. That conclusion leads to the twin questions of just how much tolling is permitted by law, and just how much is justified by the facts of this case.
As for the legal question, Sirkin, 779 F. Supp. at 758 holds that the COBRA beneficiary may reinstate coverage within "a reasonable period" after the disability lifts or a representative is appointed to act for the beneficiary. That may or may not be the best rule--a good deal may be said for a bright-line rule (at least in the physical disability situation, where no resort to a personal representative plays any part) that would require a beneficiary to act within a period equal to 30 days plus the duration of the disability.
It is not appropriate to resolve that legal issue at this point, however, because clarification of the facts may make the issue moot. Earlier in this opinion it was established that Andre's first request for reinstatement--if timely--was enough to trigger Stepan's statutory duty to reinstate him. It was also established that the date of that request is currently unclear. Suppose, though, that Andre could prove that he made the request on March 5 or 6. In that case he would need to prove but one or two days of genuine physical incapacity, a period so short that he would be entitled to the benefits of tolling under either the "reasonable period" or the duration-of-incapacity approach.
As for the factual issue, temporary hospitalization may support a finding of incapacity sufficient to justify the failure to perform a legal duty (see Diacou v. Palos State Bank, 65 Ill. 2d 304, 312, 357 N.E.2d 518, 521, 2 Ill. Dec. 351 (1976)) . But it is not enough merely to allege hospitalization, without offering proof of the specific limitations imposed by the hospitalization and the time frame of those limitations (id.) Was Andre allowed to receive visitors, make phone calls or send and receive mail? Was he sufficiently alert and vigorous that he could have taken care of his insurance problems without creating a risk of complications?
No herculean effort was required here: Apparently all Andre had to do was to call Salem and learn that he was uninsured, call Stepan and confirm that he was eligible to reinstate coverage, then mail a check (or have one delivered) to Stepan.
Still, none of the evidence submitted on the current motions makes it clear whether Andre could or could not reasonably have made the necessary effort. It is therefore impossible to grant summary judgment for either Stepan or Andre on a tolling theory.
Depending on the date of his request for reinstatement--a date as yet unproved--Andre may be able to prove that the request was timely without resort to tolling. If he were forced to resort to his lack-of-notice claim against Stepan, he would fail. But his tolling claim, if he needs it, survives. Both Andre's and Stepan's motions for summary judgment are consequently denied.
Andre is not entitled to a judgment as a matter of law against Salem or Stepan. Hence his Rule 56 motion is denied in its entirety. As to Salem there is no genuine issue of material fact, and it is entitled to a judgment against Andre as a matter of law. Salem is therefore dismissed as a defendant to this action. Stepan is not entitled to a like judgment, and its Rule 56 motion is denied.
Counsel for Andre and Stepan are directed to appear before this Court at 8:45 a.m. on July 21, 1992 for a status hearing to discuss the future course of proceedings. Counsel for Salem is directed to appear at the same time to discuss, together with counsel for Andre, the issue of finality of Salem's dismissal.
Milton I. Shadur
Senior United States District Judge
Date: July 9, 1992