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CATERPILLAR, INC. v. INTERNATIONAL UNION

August 31, 1995

CATERPILLAR, INC., IN ITS FIDUCIARY CAPACITY; WAYNE M. ZIMMERMAN, AS PLAN ADMINISTRATOR; AND NORTHERN TRUST COMPANY, AS TRUSTEE, PLAINTIFFS,
v.
INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) AND ITS AFFILIATED LOCAL 145, 751, 786, 974, 1415, AND 2096, DEFENDANTS.



The opinion of the court was delivered by: Mihm, Chief Judge.

ORDER

This matter comes before the Court on Defendant International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America's ("UAW") Motion for Summary Judgment and Plaintiffs' Cross-Motion for Summary Judgment. To the extent set forth herein, the UAW's Motion for Summary Judgment is GRANTED IN PART, DENIED IN PART, AND RESERVED IN PART and the Plaintiffs' Cross-Motion for Summary Judgment is GRANTED IN PART, DENIED IN PART, AND RESERVED IN PART.

BACKGROUND

Plaintiff Wayne M. Zimmerman is the plan administrator of Caterpillar, Inc.'s ("CAT") group medical benefit plan (the "CAT Plan"). Plaintiff Northern Trust Company is the trustee of the assets of the CAT Plan. Defendant UAW is an international union which represents certain CAT employees.

On June 21, 1994, the UAW declared a nationwide strike against CAT. The parties agree that a strike is a "qualifying event" within the meaning of the Employee Retirement Income Security Act ("ERISA") of 1974. 29 U.S.C. § 1163(2). Accordingly, striking CAT employees and their dependents who were covered under the CAT Plan on the day before the strike were eligible to elect continuation coverage under the CAT Plan pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act ("COBRA") of 1985. 29 U.S.C. § 1161-69. COBRA allows employees who suffer qualifying events to continue their coverage under an employer's group health plan for certain time periods defined in 29 U.S.C. § 1162(2). Individuals electing COBRA continuation coverage must pay a premium to their employers. When an employee who elected continuation coverage becomes covered under another group health plan not containing any pre-existing exclusions, the employer may terminate the continuation coverage. 29 U.S.C. § 1162(2)(D)(i).

During the 1991-92 CAT strike, the UAW paid CAT directly for the cost of maintaining strikers under the CAT Plan. At the commencement of the current strike, the UAW decided to provide health coverage directly to some of its members and recommended that other strikers elect COBRA coverage under the CAT Plan. Local union officers and UAW benefit representatives interviewed strikers to determine which strikers had a risk of significant medical claims. Strikers identified as having a pre-existing medical conditions or a history of medical costs in excess of the COBRA premium were asked to elect COBRA. Strikers whose medical expenses were predicted to be less than the COBRA premium were covered under the UAW's self-funded program.

The UAW hired third-party administrators AMERAPLAN and NCAS to pay the medical claims for strikers who did not elect COBRA. The UAW advised the third-party administrators to provide medical benefits according to the Group Health Program outlined in the 1988-91 Collective Bargaining Agreement between CAT and the UAW. UAW Response to Plaintiffs' First Discovery Request at 3. The UAW's Strike Fund provides funds to cover the costs of medical benefits to strikers who did not elect COBRA and to pay the COBRA premiums for strikers who elected continuation coverage under the CAT Plan. Id. at 4, 12. Evidence in the record also indicates that a yet-undetermined number of strikers who elected COBRA had certain medical claims, including prescription drug bills, paid by the UAW.

DISCUSSION

In this action, Plaintiffs seek declarations that the UAW's program of providing health benefits to striking employees constitutes a group health plan within the meaning of ERISA, 29 U.S.C. § 1167(1), and that the UAW's group health plan covers all striking employees such that no striking employees are eligible for COBRA continuation coverage under the CAT Plan. Plaintiffs further seek restoration to the Northern Trust Company of the amount of benefit claims paid under the CAT Plan on behalf of striking employees who are ineligible for coverage under the Plan due to coverage under a group health plan maintained by the UAW. The Court has jurisdiction over this matter pursuant to 29 U.S.C. § 1132(a)(3)(B). See Winstead v. J.C. Penney Co., Inc., 933 F.2d 576, 579 (7th Cir. 1991).

The UAW moved for summary judgment on Plaintiffs' Second Amended Complaint, and Plaintiffs filed a Cross-Motion for Summary Judgment. Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A motion for summary judgment must demonstrate, based on the record, an absence of evidence to support the non-movant's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). "[A] party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Fed.R.Civ.P. 56(e). The record and all justifiable inferences drawn from it are viewed in the non-movant's favor. Id. at 255, 106 S.Ct. at 2513-14.

COBRA provides that an employer can terminate continuation coverage on:

  The date on which the qualified beneficiary first
  becomes, after the date of the election —
  (i) covered under any other group health plan (as
  an employee or otherwise) which does not contain
  any exclusion or limitation with regard to any
  pre-existing condition of such beneficiary.

29 U.S.C. § 1162(2)(D)(i). COBRA defines the term "group health plan" as an employee welfare benefit plan that provides medical care to participants and beneficiaries directly, through insurance, reimbursement, or otherwise. 29 U.S.C. § 1167(1). The term "employee welfare plan" means a plan, fund, or program established or maintained by an employee organization for the purpose of providing for its participants, through the purchase of insurance or otherwise, medical benefits. 29 U.S.C. § 1002(1). A plan has been established under ERISA if "a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits." Diak v. Dwyer, Costello & Knox, P.C., 33 F.3d 809, 811-12 (7th Cir. 1994) (quoting Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982)). A written plan document need not exist for a plan to be covered under ERISA. Id. at 811. The UAW's health care program for strikers not electing COBRA satisfies each of the requisite elements by providing (i) determinable medical benefits, i.e., benefits described in the 1988-91 Collective Bargaining Agreement between CAT and the UAW; (ii) to a specific category of beneficiaries, i.e., strikers and their dependents who did not elect COBRA; (iii) through ...


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