under a 'retirement plan' or not." (Id.) Furthermore, Mansfield testified that he signed the form "canceling" his benefits only because he was told that "he had no health insurance options, be they COBRA, or retirement, or otherwise." (Id. at 6) (emphasis in original).
This is a case of first impression. This court cannot find any case that addresses whether the availability of an option to continue existing medical coverage excuses an employer from giving a retiring employee COBRA notice. Additionally, the plain language of the PHSA does not expressly contemplate this factual situation. Therefore, the court looks to the congressional intent underlying the COBRA amendments to the PHSA.
Congress' intent is clear. Congress enacted COBRA primarily "to provide continued access to affordable private health insurance for [many Americans]." H.R. Rep. No. 99-241, at 44 (1986), reprinted in 1986 U.S.C.C.A.N. 42, 622. To this end, COBRA gives employees the option of continuing their health care coverage after the occurrence of an event that would otherwise cancel their benefits. See 42 U.S.C. § 300bb-1(a). However, Congress chose to go further than merely giving employees the option of continuing their health coverage. COBRA also requires employers to give adequate and timely notice to employees of their rights to continued medical care coverage. See 42 U.S.C. § 300bb-6.
Thus, Congress not only wanted employees to have the option of continuous medical coverage; it also insisted that employees be fully informed of their options when their coverage ends.
In light of this statutory scheme and legislative intent, it follows logically that if a retiring employee automatically continues to receive the same medical coverage he or she had before retirement, no qualifying event occurs. However, if the health plan requires any action by the employee to continue this coverage, and without this action the employee's coverage would terminate, then retirement is a qualifying event and the employer must give its retiring employee COBRA notice.
For example, if an employer automatically continued an employee's medical coverage when that employee retired, no qualifying event occurred because the employer did not require the employee to take any steps to continue the health coverage. Similarly, if an employer automatically continued a retiring employee's medical coverage unless the employee signed a statement declining coverage, there is still no qualifying event because the employer did not impose an obligation on the employee to continue health benefits, rather the employer only required the employee to act to cancel continued health coverage.
In contrast, a qualifying event would take place if the employer required the retiring employee to take some affirmative step to obtain continued health care coverage. Unlike the previous two situations where the continued coverage was automatic, the employee in this example would lose health care coverage unless he or she took some action to maintain coverage. Thus, "but for the continuation coverage required under [COBRA]," 42 U.S.C. § 300bb-3, the employee in this example would lose health care coverage. Therefore, forcing a retiring employee take steps to secure available continuation health coverage triggers a qualifying event. This conclusion is consistent with the congressional purpose of not only making continued health coverage available, but also requiring employers to notify their employees of that coverage.
The PHSA does not relieve employers of their obligation to give retiring employees COBRA notice merely by making other continued coverage "available." Rather, the statute envisions retirement as a qualifying event when, "but for the continuation coverage under [COBRA]," retirement would cause the loss of health care coverage. When an employer simply makes continued coverage available, the retiring employee will lose his or her health care coverage, "but for the continuation coverage under [COBRA]," unless the retiree takes additional steps to obtain other available coverage. The PHSA was never intended to impose this additional burden on retiring employees. If we interpreted the PHSA as the Park District suggests, every employer could avoid the COBRA notice requirements by arguing that retiring employees can obtain continued health coverage from an independent provider. Such an interpretation would render the statute meaningless and this court will not give the statute such a tortured reading.
The Park District cites its employee handbook as evidence of the continuing coverage that is available to retiring employees. (See Defs.' 12(M) P 7.) The handbook states that under COBRA, "former employees and dependents may continue health insurance coverage under certain circumstances. Additionally, retirees may continue their health insurance coverage at their own expense." (Id., Ex. D, at 18) (emphasis added). The Park District's Health Plan Administrator, Josephine Rankins ("Rankins"), testified that all retirees, including Mansfield, "could " elect to continue their medical coverage indefinitely. (See Rankin's Mar. 25, 1997 Dep., Defs.' 12(M), Ex. E, at 88-89) (emphasis added).
The Park District contends that a qualifying event does not occur if retirees "may" continue their medical coverage indefinitely.
This approach does not comport with Congress' intent. The Park District offers continuous medical coverage longer in duration than required by COBRA. However, the length of coverage is not dispositive. On the contrary, employers must not only provide employees the option of continuing their coverage. Employers must also inform employees about their medical coverage options.
The Park District also argues that Mansfield voluntarily canceled health care coverage that could have otherwise continued. (See Defs.' Mot., at 2.) The Park District correctly points out that Mansfield completed and signed a form letter stating:
I, Robert Mansfield, would like to cancel my Chicago HMO with the Chicago Park District Group plan, as I will no longer need this medical insurance coverage, effective June 30, 1993. I am retiring May 31, 1993. . . . I understand that it is the Park District policy, that I cannot be reinstated into the Park District Group after 30 days.
(Defs.' 12(M), Ex. F.) Mansfield acknowledges signing this form but claims that Rankins instructed him to sign it as a part of the retirement process. (See Mansfield's Oct. 30, 1995 Dep., Pl.'s 12(N), Ex. 15, at 52.) Mansfield also testified that Rankins neither explained the form he was signing nor gave him any other information on his health care insurance options. (See id. at 52-53.)
Although Rankins does not remember meeting with Mansfield, (see Rankin's Mar. 25, 1997 Dep., Pl.'s 12(N) Ex. 17, at 30-32), she testified that it was her procedure to send continuation health care information to all employees when they retire, (see id. at 75). Rankins stated that this information allows employees to decide whether to continue their medical coverage indefinitely or take the COBRA option. (See id. at 94-95.) However, the Park District's pension documents suggest that the continuation of health benefits is not automatic. A form letter given to Mansfield with an Application for Retirement Annuity stated "if you wish to continue your hospitalization, please contact Josephine Rankins." (Defs.' 12(M), Ex. C) (emphasis added).
Based on this factual record, the court cannot conclusively determine whether Mansfield's retirement was a qualifying event. A trial must determine whether the continuation of medical benefits required an affirmative act by a Park District retiree. If so, Mansfield's retirement was a qualifying event requiring COBRA notification. In this case, the handbook said that a retiree "may" elect continuation coverage. Additionally, the pension form instructed retirees to contact the Plan administrator if they "wished" to continue coverage. Finally, Rankins testified that retirees "could" continue their medical care coverage.
These facts strongly support the conclusion that the Park District required its retiring employees to take affirmative steps to secure continued health care coverage. Mansfield will therefore have a very persuasive argument at the bench trial that his retirement constituted a qualifying event. Nevertheless, because the permissive language in the documents and Rankins' testimony is not entirely dispositive, the court is prohibited from entering summary judgment at this time. Although the court is tempted to grant Mansfield's motion for summary judgment, the record before the court does not quite satisfy the summary judgment standard.
Additionally, a trial must evaluate the evidence and determine the effect of Mansfield's health coverage cancellation form. The parties dispute the circumstances under which Mansfield signed the cancellation form and what effect that form has. If Mansfield's health coverage would have automatically continued even though he signed the cancellation form, no qualifying event occurred. However, neither party has conclusively shown whether Mansfield's medical benefits would have continued upon his retirement without some action on his part. Furthermore, the cancellation form that Mansfield signed does not prove that he would have received medical benefits if he had not signed. Because reasonable minds could differ over the issue of whether Mansfield's retirement constituted a qualifying event, the court denies both parties' motions for summary judgment.
II. OTHER ISSUES
Although the court denies both summary judgment motions, it will address the defendants' other arguments to narrow the issues for the remainder of this litigation. First, the Park District contends that even if Mansfield were entitled to a COBRA notice, it has no liability for his medical bills. (See Defs.' Mot. at 11.) Although the parties disagree over whether Mansfield had "moved" or was "residing" in Honduras, he did suffer a heart attack while he was there. (See Defs.' 12(M), PP 14-16.) The Park District argues that it has no liability to Mansfield because none of its medical plans would have provided coverage in Honduras. (See id. at 11.)
Defendants' argument is logically flawed and entirely irrelevant. The Park District's argument rests on the premise that if Mansfield had obtained health coverage, he would have been living in Honduras at the time he suffered his heart attack. The Park District cannot prove, however, that Mansfield would have gone to Honduras if he had been provided medical insurance. After all, without any medical insurance it did not matter to Mansfield where he moved. However, Mansfield may very well have elected to stay in Chicago if he had been properly notified that his medical insurance would not cover him in Honduras. Defendants cannot escape liability by speculating where an insured Mansfield would have been when he suffered his heart attack. The Park District's argument necessarily fails because it is premised on an unprovable hypothetical.
The Park District also argues that Mansfield would not have been eligible for COBRA coverage after he "moved" to Honduras. (See id. at 9.) COBRA requires employers to provide "coverage which, as of the time the coverage is being provided, is 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." 42 U.S.C. § 300bb-2(1). The Park District's existing medical coverage does not extend to Honduras. Therefore, it argues that it does not have to offer any coverage to Mansfield.
This claim is also without merit. First, as already explained, neither party can prove that Mansfield would have gone to Honduras if he had obtained health insurance. However, assuming he would have, Mansfield is still entitled to choose a medical plan even if it has no value to him. Cf. 42 U.S.C. § 300bb-1(b) (exceptions listed to COBRA coverage do not include waiver for lack of value to a beneficiary). (See generally, Pl.'s 12(N), Ex. 19, at 48.) In other words, Mansfield's future plans do not relieve the Park District of its legal obligation to provide Mansfield with appropriate notice of his health care options.
The summary judgment standard is the only reason this case is proceeding to bench trial. While the bulk of the evidence indicates that Mansfield's retirement constituted a qualifying event, some minor factual disputes exist that preclude the court from entering summary judgment in Mansfield's favor. The court denies both plaintiff's and defendants' motions for summary judgment.
The parties should discuss settlement before the next court date. The court recommends that the parties attempt to resolve this case through the Northern District of Illinois Litigation Settlement Task Force.
Ann Claire Williams,
Dated: MAR 16 1998