Compliance July 19, 2005

Employee's Right to Benefits Case Dismissed

July 19, 2005 (PLANSPONSOR.com) - A court dismissed the case for a Verizon PA Inc. employee who was terminated on the same day the company announced a benefit plan that would pay him $66,000 and increase his pension benefits.
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James Tobler claims his employer purposely fired him on November 19, 2001 to interfere with his right to the benefit, a violation of ERISA.   According to the court opinion, four days earlier Tobler was arrested for purchasing cocaine while in a company vehicle.   When he reported to work, he was told he was terminated due to the drug incident.   That same day, the opinion said, Verizon announced an Enhanced Income Security Plan (EISP) that would increase pension benefits by 5%, pay employees a termination allowance of $2,200 times their years of service up to 30, and pay a relocation/re-education stipend for employees who remained in employment until December 29, 2001 and then retired.

Tobler did not receive notification of the new benefit plan due to his termination on that day, although his union did negotiate his 5% pension increase later, according to the opinion.   He argues that he was not officially terminated until October 17, 2002 when a labor arbitrator upheld Verizon’s decision to fire him, so he was eligible for the plan and should have received notification.   In his opinion, US District Judge Jacob Hart for the US District Court for the Eastern District of Pennsylvania, noted that even if that were true, he would not be eligible for benefits since he did not remain in employment until December 29 of that year.

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Hart granted Verizon’s motion to dismiss the case saying Tobler did not provide any evidence that the company terminated him with the intent to deny him benefits under the EISP.

The opinion in Tobler v. Verizon PA Inc., E.D. Pa., No. 04-5708, 7/13/05 can be read  here .

Compliance July 18, 2005

Protective Orders Not a Qualifying Event Under COBRA

July 18, 2005 (PLANSPONSOR.com) - A protective order against a health plan participant's estranged husband was not the same as a legal separation agreement and therefore was not a qualifying event for continued coverage under COBRA, an appeals court has ruled.
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District Judge Bobby Baldock of the US Court of Appeals for the Tenth Circuit upheld a lower court ruling for Zeda Simpson that a protective order against her estranged husband was not the same as a legal separation agreement and therefore did not trigger the plan administrator’s obligation to notify the covered beneficiary of the right to continued coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Simpson was covered under her husband’s health plan with employer T.D. Williamson Inc (TDW), according to a BNA report.   In July of 2000, she filed for divorce and a court issued protective orders for Simpson’s husband to stay away from her and the marital residence.   Simpson sent a letter to TDW asking them to not disclose medical information about her to her husband.   TDW considered this letter notice of a qualifying event as a result of legal separation and notified Simpson of her right to continued health insurance coverage under COBRA.   Simpson elected coverage, but neither the company nor Simpson paid the premiums for the coverage.  

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In June 2002, the employer notified Simpson that her health coverage was being cancelled due to non-payment of premiums.   In July of that year, Simpson notified T.D. Williamson that a final divorce decree had been issued and she wished to elect COBRA coverage.   The employer told her she could not be reinstated because her rights had expired.   Simpson filed a case with the US District Court for the Northern District of Oklahoma.   The court ruled in favor of Simpson and ordered TDW to provide her health coverage and reimbursement for uninsured medical expenses and attorney’s fees.

TDW appealed the ruling.   Since COBRA does not define “legal separation” and there were no appeals court precedents, Baldock relied on an immigration case in which the legal separation was defined as a judicial alteration of the marriage. In his opinion, cited by BNA, Baldock, said that “a decree of legal separation directs the parties to live apart and defines the parties legal rights and obligations in regard to custody, support, property division and/or maintenance” without dissolving the marriage bond.   He found that no legal separation occurred and agreed with the District Court in favor of Simpson.

The full text of the opinion can be found  here .

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