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Hall v. Glenn O. Hawbaker

November 8, 2006

NICHOLE S. HALL, PLAINTIFF,
v.
GLENN O. HAWBAKER, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: John E. Jones III United States District Judge

ORDER

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS

Pending before the Court are the Motion of Capital Administrative Services, Inc., to Dismiss Counts I, II, and IV of the Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Motion to Dismiss Counts I, II, and IV") (doc. 50), filed on September 29, 2006, and the Motion of Glenn O. Hawbaker, Inc., and the Glenn O. Hawbaker, Inc., Employee Benefit Plan to Dismiss Counts II, IV, and V of the Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Motion to Dismiss Counts II, IV, and V") (doc. 56), filed on October 9, 2006. For the reasons that follow, the Motions will be granted in part and denied in part.

PROCEDURAL HISTORY

On May 31, 2006, Plaintiff Nichole S. Hall ("Plaintiff" or "Ms. Hall") filed a Complaint arising under the provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., in the United States District Court for the Middle District of Pennsylvania, with Glenn O. Hawbaker, Inc., and Capital Blue Cross t/d/b/a NCAS Pennsylvania as named Defendants. (Rec. Doc. 1-1). Prior to the filing of any Answer(s) or Motion(s) by Defendants, on June 22, 2006, Plaintiff filed an Amended Complaint, also arising under the provisions of ERISA, 29 U.S.C. § 1001 et seq., and naming Glenn O. Hawbaker, Inc., and Capital Blue Cross t/d/b/a NCAS Pennsylvania as Defendants. (Rec. Doc. 5-1). On June 23, 2006, Plaintiff filed a Motion for Preliminary Injunction requesting reinstatement of her health insurance. (Rec. Doc. 6).

Both Defendants then filed Motions to Dismiss portions of the Amended Complaint (docs. 16, 25), prompting Plaintiff, on September 21, 2006, to file a Motion to Amend Pleadings (doc. 41-1). By Order dated September 21, 2006 (doc. 43), this Court granted Plaintiff's Motion to Amend, and on same date, Plaintiff filed her Second Amended Complaint (doc. 42). The Second Amended Complaint also arises under the provisions of ERISA, 29 U.S.C. § 1001 et seq. However, it names as Defendants Glenn O. Hawbaker, Inc., Capital Administrative Services, Inc., t/d/b/a NCAS Pennsylvania, and the Glenn O. Hawbaker, Inc., Employee Benefit Plan.

On September 29, 2006, Capital Administrative Services, Inc. ("NCAS"), filed a Motion to Dismiss Counts I, II, and IV of the Second Amended Complaint (doc. 50), and on October 9, 2006, Glenn O. Hawbaker, Inc. ("GOH"), and the Glenn O. Hawbaker, Inc., Employee Benefit Plan ("Plan") filed a Motion to Dismiss Counts II, IV, and V of the Second Amended Complaint (doc. 56). Both of the instant Motions to Dismiss have been briefed by the parties. The Motions to Dismiss are therefore ripe for disposition.

FACTUAL BACKGROUND

In her Second Amended Complaint, Plaintiff seeks various forms of relief. (Rec. Doc. 42). However, the principal forms of relief sought are a declaratory judgment that the divorce decree entered on or about September 9, 2005 was the qualifying event entitling her to elect "COBRA" coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act, the reinstatement of her dependent health insurance coverage through GOH until September 9, 2005, the opportunity to make any and all insurance payments required were Plaintiff entitled to elect COBRA coverage after September 9, 2005, and Defendants' payment of any and all medical bills that Plaintiff incurred from June 15, 2005 to the present. The aforementioned health insurance, available as part of the Plan, is a self-funded employee benefit plan for employees and beneficiaries of GOH. (Rec. Doc. 42, ¶ 4).

Plaintiff alleges that NCAS was a named fiduciary and the claims administrator for the Plan. (Rec. Doc. 42, ¶ 8). Plaintiff alleges that GOH was the sponsor of the Plan, the plan administrator, and a named fiduciary.(Rec. Doc. 42, ¶ 7). However, Plantiff alleges that GOH is also the "defacto [sic] decision maker on granting or denying continued health insurance coverage" to Plaintiff. (Rec. Doc. 42, ¶ 9).

On November 7, 1993, Plaintiff and Michael Hall ("Mr. Hall") married. (Rec. Doc. 42, ¶ 10). At all times relevant to the instant dispute, Mr. Hall was employed by GOH. (Rec. Doc. 42, ¶ 6). As an employee of GOH, Mr. Hall was entitled to employee benefits, including health insurance, from the Plan. (Rec. Doc. 42, ¶ 6). Although Plaintiff does not specifically aver when she first obtained health insurance under the Plan, Plaintiff had health insurance through GOH for some period of time prior to the events leading to this dispute. (Rec. Doc. 42, ¶ 14).

While Plaintiff was insured under the Plan, she was the victim of recurrent thyroid cancer. (Rec. Doc. 42, ¶ 14). During her coverage under the Plan, Ms. Hall had two surgeries and multiple tests related to her cancer, allegedly costing the Plan tens of thousands of dollars. (Rec. Doc. 42, ¶ 15).

In 2004, Mr. Hall filed for divorce from Plaintiff in New York. (Rec. Doc. 42, ¶11). On January 6, 2005, Mr. Hall and Plaintiff signed a Separation Agreement relating to equitable distribution of their marital property. (Rec. Doc. 44-1, Ex. B). The Separation Agreement*fn1 provided that the parties would "agree to remain separated . . . for a period of six (6) months after the execution of the Agreement, or June 1, 2005, so that the Wife can continue to obtain medical insurance for that period of time from the [H]usband." (Rec. Doc. 44-1 at 15).

On or about June 15, 2005, Mr. Hall completed an NCAS Termination Notification Form in which he described his marital status as "Single" and indicated that health insurance coverage for his "Ex Wife" should be terminated because of "Divorce or Legal Separation." (Rec. Doc. 44-2, Ex. C). Mr. Hall also denoted June 15, 2005 as the date of the qualifying event and the date on which coverage should terminate. (Rec. Doc. 44-2, Ex. C).

As a result of Mr. Hall's completion of the NCAS Termination Notification Form, on or about June 21, 2005, NCAS sent the required COBRA Qualifying Event Notification ("Notification") to Ms. Hall. (Rec. Doc. 44-2, Ex. D). The Notification indicated that Ms. Hall's coverage under the Plan terminated June 15, 2005. (Rec. Doc. 44-2, Ex. D at 1).

Plaintiff alleges that the Notification informed her that she had forty-five (45) days in which to elect to continue health insurance benefits or have them terminated. (Rec. Doc. 42, ¶ 25). However, the Notification actually says that "[t]o continue coverage, you must complete and submit the application that is enclosed with this letter to NCAS within 60 days from either the date of this letter or your coverage term date (whichever is later)." (Rec. Doc. 44-2, Ex. D at 1). The Notification then itemized the premiums for the types of coverage available, including a total of $350.22 for individual medical and dental coverage, and further advised: "[y]our completed application should include a premium payment in order to activate coverage that terminated on the termination date listed above." (Rec. Doc. 44-2, Ex. D at 1).

Plaintiff alleges that she then contacted NCAS, which advised her to send a monthly premium of $350.22. (Rec. Doc. 42, ¶ 26). Accordingly, on or about July 29, 2005, NCAS received a Continued Group Health Coverage Application ("COBRA Application"), selecting continued individual medical and dental insurance, and containing a $350.22 COBRA payment, from Ms. Hall. (Rec. Doc. 44-2, Ex. E). On her COBRA Application, Ms. Hall designated her marital status as "Sep[a]rated." (Rec. Doc. 44-2, Ex. E).

On August 16, 2005, Plaintiff received notice that she had to pay $537.01 by next month's closing date to bring her account current. On or about September 7, 2005, NCAS received the $537.01 payment requested. (Rec. Doc. 42, ¶¶ 29-30). If the qualifying event occurred on June 15, 2005, the $537.01 payment brought Plaintiff's account current through August 31, 2005. (Rec. Doc. 42, ¶ 30).

However, Plaintiff alleges that the qualifying event did not take place until September of 2005. On September 7, 2005, a decree of divorce was issued in New York, which incorporated the Separation Agreement signed in January and filed in September. (Rec. Doc. 44-1, Ex. A). The divorce decree was entered on September 9, 2005. (Rec. Doc. 42, ¶ 19).

Plaintiff alleges that on or about early September of 2005, Plaintiff's fiancé, Paul Morris ("Mr. Morris"), had a telephone conversation with NCAS about the status of Ms. Hall's payments. (Rec. Doc. 42, ¶ 58). Plaintiff alleges that NCAS advised Mr. Morris that Ms. Hall's payments were current. (Rec. Doc. 42, ¶ 58). Indeed, Plaintiff alleges that NCAS failed to inform Mr. Morris that Ms. Hall's September payment had been due on August 15, 2005, and that Defendants considered her September payment in arrears. (Rec. Doc. 42, ¶ 58). Further, Plaintiff alleges that "the defendant"*fn2 knew that Plaintiff's account was in arrears and that Plaintiff did not know it when "the defendant" failed to disclose that information to Mr. Morris in early September. (Rec. Doc. 42, ¶¶ 68-69).

However, on September 15, 2005, NCAS sent Plaintiff written notice that her premiums were in arrears as of August 29, 2005, in the amount of $350.22. (Rec. Doc. 42, ¶ 59). The September 15, 2005 notice also allegedly advised Plaintiff that her "continuation of coverage may be cancelled as of next month's closing date if this balance is not paid," thus indicating to Plaintiff that if payment was not received by October's closing date, insurance may be cancelled. (Rec. Doc. 42, ¶¶ 59, 62).

Plaintiff also alleges that, contrary to the Plan's COBRA Administration Service Rider, the September 15, 2005 notice failed to indicate that if payment was not made by October 1, 2005, NCAS intended to cancel her COBRA insurance retroactive to August 31, 2005, the last date through which payments were timely. (Rec. Doc. 42, ¶¶ 60-61). Plaintiff alleges that the Plan documents contain a COBRA Administration Service Rider, which provides that if a participant is late with payment, "NCAS shall notify the COBRA continuant in writing. If NCAS does not receive a full premium payment within thirty days from the date of the notice, NCAS shall cancel the COBRA continuant retroactive to the first day of the period for which timely payment has not been made . . . ." (Rec. Doc. 42, ¶ 61).

Plaintiff alleges that Mr. Morris mailed her September payment, in the amount of $350.22, on or about September 26, 2005. (Rec. Doc. 42, ¶ 33). Plaintiff also alleges that Mr. Morris mailed the payment for October, also in the amount of $350.22, on or about October 1, 2005. (Rec. Doc. 42, ¶ 34).

However, on or about October 12, 2005, Plaintiff received a Certificate of Health Insurance Creditable Coverage for the period of June 15, 2005 through August 31, 2005. (Rec. Doc. 42, ¶ 35). Further, on October 12, 2005, Plaintiff also received notice that her insurance was being cancelled for non-payment and was notified that she could contact the NCAS COBRA department via telephone in regards to the termination. (Rec. Doc. 42, ¶ 36). Plaintiff also alleges that on October 13, 2005, she received a second, written notification from NCAS about the termination. (Rec. Doc. 42, ¶ 37).

Plaintiff avers that she made repeated telephone calls to NCAS about her termination, and that she was advised that GOH would determine whether to reinstate her insurance. (Rec. Doc. 42, ¶ 38). However, Plaintiff alleges that when she contacted GOH, she was informed that NCAS would determine whether to reinstate her insurance. (Rec. Doc. 42, ¶ 40). Plaintiff also alleges that an attorney working on her behalf left messages with NCAS's customer service department, but received no return calls as of October 27, 2005. (Rec. Doc. 42, ¶ 40).

Thus, on or about October 27, 2005, Plaintiff, through her attorney, advised NCAS that she had made the September and October premium payments via checks dated September 26, 2005, and October 1, 2005, respectively. (Rec. Doc. 42, ¶ 41). Plaintiff also alleges that her attorney advised NCAS that Plaintiff had not received "any notice that the September payment was in arrears"*fn3 and requested that her benefits be reinstated. (Rec. Doc. 42, ¶ 41).

Although Plaintiff fails to allege when her thyroid cancer recurred, Plaintiff is currently fighting cancer. (Rec. Doc. 42, ¶ 16). "[S]ignificant testing and expense is necessary for her further treatment." (Rec. Doc. 42, ¶ 16).

Accordingly, Plaintiff's efforts to have her insurance reinstated continued. (See Rec. Doc. 44-2, Exs. H-J). On or about February 6, 2006, Plaintiff again contacted NCAS, through her attorney, to advise NCAS that Plaintiff had sent the September and October premiums, was continuing to send monthly premiums, had not received notice that she was in arrears, and requested reinstatement of her insurance benefits. (Rec. Doc. 42, ¶ 42). The February 6, 2006 letter also requested a written explanation as to the continued denial of Plaintiff's insurance coverage and copies of all documents relating to the denial. (Rec. Doc. 42, ¶ 43). A similar letter was sent on February 16, 2006. (Rec. Doc. 42, ¶ 45). The February 16, 2006 letter also advised NCAS that the qualifying event had not occurred in June of 2005, but rather when the parties were divorced on September 9, 2005, and argued that Plaintiff should have been covered by Mr. Hall's insurance until that date. (Rec. Doc. 44-2, Ex. J).

On or about February 27, 2006, NCAS advised Plaintiff that her written appeal had been forwarded to GOH and that a detailed response would be forthcoming from the group's broker of record. (Rec. Doc. 42, ΒΆ 46). On or about March 8, 2006, a memorandum from GOH was received by Plaintiff, indicating the qualifying event for termination as divorce or legal separation, ...


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