Tuesday, August 18, 2009

Eleventh Circuit on COBRA and ERISA

In Harris v. United Automobile Insurance Group, Inc. (08-16097), the appellant/plaintiff was a former attorney for United who enrolled in COBRA following the termination of employment. Payment of his COBRA preemium was considered received on the date it was postmarked. The appellant mailed his monthly premium on the day it was due, however, it was not postmarked until the following day. United cancelled the COBRA policy based upon the failure to make the payment. The district court held that United properly cancelled the policy for failure to pay the premium.

The Eleventh Circuit stated:

On appeal, Harris asserts only that the regulations at 26 C.F.R. § 54.4980B-8 give rise to a claim for benefits under 26 U.S.C. § 1132(a)(1)(B) and that under these regulations he should have been allowed the same period of time to pay his COBRA premium as UAIG is given to fund the plan.


We conclude that this regulation does not entitle Harris to additional time beyond that provided by UAIG’s plan. The parties agree that UAIG was self-funding, meaning that medical claims were paid from the employer’s assets rather than being paid through an insurance policy. In other words, UAIG did not have a relationship such as the one described in the above regulation; it did not have an “arrangement” under the terms of which it was given a certain period of time to pay for the coverage of non-COBRA beneficiaries. The additional time frame provided in the regulation applies only to those plans that are fully-funded, i.e. that involve an agreement with an insurance company to provide benefits.

The court then noted that even though the basis for affirming the district court order's was different than the reasoning used by the district court, the court can affirm "the district court’s judgment on any ground that appears in the record, whether or not that ground was relied upon or even considered by the court below.” The court then declined to award attorneys fees.


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