IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
______________________
No. 99-60568
______________________
EDDIE M. BIGELOW,
Plaintiff-Appellant,
versus
UNITED HEALTHCARE OF MISSISSIPPI, INC.,
f/k/a COMPLETE HEALTH OF MISSISSIPPI, INC.,
MUNICIPAL CORPORATION OF PASS CHRISTIAN,
Defendants-Appellees.
_______________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
_______________________________________________
June 8, 2000
Before WIENER, BENAVIDES, and PARKER, Circuit Judges.
WIENER, Circuit Judge:
This case arises from an insurance coverage dispute between an
employer and a former employee. Plaintiff-Appellant Eddie Bigelow
appeals the district court’s grant of judgment as a matter of law
in favor of Defendants-Appellees United Healthcare of Mississippi,
Inc. (“United Healthcare”) and the Municipal Corporation of Pass
Christian (“Pass Christian” or “the City”). Bigelow argues on
appeal, as she did in the district court, that she is entitled to
equitable relief under the Employee Retirement Income Security Act
1
of 1974 (“ERISA”)1 as amended by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA).2 Concluding that Bigelow
would not be entitled to equitable relief under that statute and is
not entitled to such relief under its close analog, the Public
Health Services Act (“PHSA”),3 we affirm the judgment of the
district court.
I
Facts and Proceedings
This case was pleaded as arising under ERISA and COBRA and was
ultimately submitted to the district court on stipulated facts.
Pass Christian had hired Bigelow as a full-time employee in 1990.
At that time, Pass Christian maintained a medical benefits plan for
its employees, which was underwritten by Anthem Life Insurance
1
29 U.S.C. § 1001 et seq.
2
29 U.S.C. § 1161 et seq.
3
42 U.S.C. § 300bb-1 et seq. As will be discussed more fully
in the analysis section of this opinion, Bigelow clearly is not
entitled to relief under ERISA and COBRA as those statutes are
wholly inapplicable to government-sponsored health plans. Rather,
Bigelow should have sought relief under the PHSA, which parallels
COBRA in its requirement that health plans sponsored by
governmental employers provide qualified employees with
continuation health insurance coverage. Nevertheless, Bigelow’s
“wrong pew” complaint induced both the defendants and the district
court to treat the case solely as an ERISA and COBRA case, with the
result that all pleadings and papers that have been submitted to
this court, up to and including the parties’ appellate briefs, have
incorrectly focused on ERISA and COBRA. Consequently, although we
ultimately conclude that Bigelow’s complaint should be treated as
though it purports to state a claim under the PHSA, our recounting
of the facts and proceedings of the case will, true to the case’s
history, revolve around ERISA and COBRA.
2
Company of America (“Anthem”). Bigelow joined the plan when she
was hired by the City.
COBRA requires “group health plans” that are covered by ERISA
to notify participating employees of their COBRA rights at the time
they commence employment.4 Bigelow received the required notice
from Anthem in the form of a booklet. The booklet unequivocally
stated that continuation coverage extends for only 18 months after
termination. Bigelow did not receive any such notice directly from
the City.
On March 30, 1994, Bigelow resigned from her position with the
City. Ken Saucier, the City employee who handled the filing of
Bigelow’s retirement forms, asked her whether she wished to elect
continuation coverage. Answering that she did, she filled out and
filed the appropriate forms.
COBRA also requires that when enumerated “qualifying events”
such as termination of employment occur, the “administrator” of a
group health plan must again provide the affected employee with
notice of his COBRA rights.5 The parties are not in agreement
whether, as a matter of law, Bigelow should be deemed to have
received effective notice from Saucier. The two election forms
that were signed by Bigelow do not themselves contain any mention
of the 18 month limit on continuation coverage. One of the forms,
4
29 U.S.C. § 1166(a)(1).
5
29 U.S.C. § 1166(a)(4)(A).
3
however —— the “COBRA Election Form for Continuation of Coverage”
—— instructs that “before making your decision regarding
continuation coverage, [you should] read the continuation of
coverage model statement which explains the law.” Bigelow
testified that she never received the model statement from Saucier.
Regrettably, Saucier died prior to the beginning of this
litigation, and only he could have testified on the City’s behalf.
Under the terms of the City’s plan, Bigelow was entitled to
receive continuation coverage for 18 months. Thus, Bigelow’s
continuation coverage was scheduled to last through the end of
September 1995.
The City pays a lump sum to the insurer on a monthly basis,
covering premiums for all employees participating for that month.
The City is then reimbursed by each employee for the amount of his
individual premium. On September 29, 1995 —— coincidentally one
day before expiration of the period of 18 months following the
commencement of her continuation coverage —— Bigelow was notified
by the City that it was switching insurers effective October 1 and
that she needed to fill out coverage forms for the new insurance
company, United Healthcare of Mississippi, Inc. (“UHM”).6 That
afternoon, Bigelow went to the Pass Christian City Hall and
completed the new coverage forms. The next day —— September 30,
6
At all times relevant to the instant case, UHM’s name was
“Complete Health Care of Mississippi, Inc.” For simplicity’s sake,
we refer to the company throughout this opinion by its present
name, “UHM.”
4
1995 —— was the last day that Anthem served as the City’s insurance
carrier. It was also the last day that Bigelow was legally
entitled to continuation coverage under COBRA (or PHSA) and under
the express terms of the City’s group health plan. The parties
have stipulated, however, that Bigelow in fact was inexplicably
provided health coverage under UHM’s policy for the month of
October, the 19th month following termination of her employment with
the City.
When UHM became the City’s group health plan insurer on
October 1, 1995, Bigelow was in arrears on her premium payments for
July, August and September. On October 6, Bigelow made a large
payment to the City covering her premium arrearages for July,
August, and September as well as her present and future premiums
for October, November, and part of December 1995. Bigelow had been
in arrears on her payments for some months, yet the City had kept
her coverage in effect by continuing to include the amount of her
monthly premiums in the monthly lump sum payments it made to the
insurance company. Although the City should not have paid
Bigelow’s premiums for October and November of 1995 because she was
no longer eligible for continuation coverage, it nevertheless did
so, presumably through inattention.
In mid-October of 1995, UHM sent Bigelow a pamphlet containing
its summary plan description. The pamphlet contained information
about COBRA, including the fact that continuation coverage expires
18 months after termination of employment. Bigelow concedes that
5
she did not read the pamphlet in any detail.
On October 31, 1995, Bigelow experienced medical problems
while her doctor was out of town. The terms of the City’s health
plan required her to seek clearance from UHM before being treated
by an alternate physician. UHM gave her clearance to see the
alternate doctor on an emergency basis, but did not advise Bigelow
that —— according to UHM’s computer system —— her healthcare
coverage was scheduled to expire the next day.7
Bigelow first became aware that her insurance coverage had
been canceled when she went to a drug store on November 14, 1995 to
pick up several prescriptions. She was advised by the pharmacist
that UHM was refusing her insurance card. She paid for the
prescriptions out of her own pocket then called UHM to inquire
about the problem with her insurance coverage. The UHM employee
with whom she spoke confirmed that her coverage had been canceled,
but was unable to tell her when or why. Bigelow next called Pass
Christian’s City Hall and was told by the City’s comptroller that
she did not know why Bigelow’s insurance coverage had been
canceled. Another City employee told Bigelow that the City had
paid her premium for November and that she should still be covered.
That same evening, Bigelow was admitted to the hospital.
Because UHM continued to deny coverage, she was admitted as a
7
As mentioned previously, Bigelow’s continuation coverage
should have expired at the end of September 1995; however, the
parties stipulated that she was accorded full benefits through
October 1995.
6
private pay patient. Over the next two weeks she underwent a
number of medical procedures, including open heart surgery,
incurring medical expenses totaling $218,237.18.
Late in November, the City realized that the reason Bigelow’s
coverage was being denied was because her continuation coverage had
expired. The City tendered Bigelow a refund for her October and
November premiums, but she refused to accept it, stating that she
preferred to take the matter up with UHM. As Bigelow’s December
premium had not yet been paid to UHM, the City refunded her partial
payment for December. In its accounting statement sent to UHM for
December of 1995, the City gave itself a credit for the premiums
that it had paid on Bigelow’s behalf for October and November,
explaining that she had been “canceled” during those months and
that the premiums had been paid in error. UHM claims that this was
the first time that it learned of Bigelow’s coverage cancellation.
That declaration cannot be accurate, however, as UHM had been
denying her coverage for some weeks —— at least since the pharmacy
incident on November 14 —— on the grounds that her coverage was
canceled.
In May of 1996, Bigelow filed a complaint against UHM in the
United States District Court for the Southern District of
Mississippi. The complaint stated causes of action based on (1)
state law theories of equitable estoppel and implied contract and
(2) ERISA, as amended by COBRA. The district court ruled that
7
Bigelow’s state law claims were preempted by ERISA,8 and dismissed
her ERISA claims on the ground that she had failed to exhaust her
administrative remedies with UHM.
Bigelow exhausted her administrative remedies in 1997, then
filed a new complaint against UHM in district court, naming Pass
Christian as an additional defendant. All parties agreed to
present the case to the district court for disposition on the basis
of stipulated facts and memorandum briefs. Bigelow simultaneously
filed a motion for summary judgment, which, although technically
premature, was accepted by the court.
The court ruled in favor of the City and UHM. It concluded
that any failure on the City’s part to provide Bigelow with COBRA
notice at the time her employment terminated was harmless because
she in fact elected and received all the continuation coverage that
she was entitled to under COBRA and the express terms of the group
health plan. The court ruled that UHM, which started providing
coverage after the expiration of Bigelow’s 18 month continuation
term, never had a duty to notify Bigelow of her continuation
rights, and accordingly dismissed UHM from the suit. This appeal
followed.
II
Analysis
Bigelow’s argument in the district court and before this court
8
We are not aware of any preemption provision in the PHSA
like the express, total preemption provision of ERISA.
8
as well has concentrated on the alleged failure of the defendants
to comply with their statutory duties under the COBRA provisions of
ERISA. Pass Christian is a local governmental entity, however, and
neither ERISA nor its COBRA provisions apply to government-
sponsored health plans.9 The rules for the provision of
continuation coverage under government-sponsored health plans are
instead established by the PHSA.10 Thus, Bigelow’s case is not
technically well pled. Nevertheless, in light of (1) the liberal
pleading rules applicable in federal court and (2) the striking
similarity between COBRA and the relevant provisions of the PHSA,
we shall consider the merits of the case as though Bigelow had pled
a right to continuation coverage under the PHSA rather than under
ERISA.11
9
29 U.S.C. § 1003(b)(1).
10
42 U.S.C. § 300bb-3.
11
“The reference to a statute as being the basic ground upon
which an action is brought, even if completely incorrect, is no
ground for the dismissal of an action where there is a statute in
existence which would warrant a valid cause of action for which
relief could be granted upon the facts as pleaded.” United States
v. Provident National Bank, 259 F.Supp. 373, 376 (E.D. Pa. 1966),
citing Missouri, Kansas & Texas Pailway Co. v. Wulf, 226 U.S. 570
(1913). See also United States v. Bruce, 353 F.2d 474, (5th Cir.
1965) (“[T]he Federal rules [] require only a short and plain
statement of the claim, that will give the defendant fair notice of
what the plaintiff’s claim is and the ground upon which it rests”)
(quotation omitted); Ryan v. Illinois Dept. of Children and Family
Services, 185 F.3d 751, 764 (7th Cir. 1999); Labram v. Havel, 43
F.3d 918, 920 (4th Cir. 1995); Shannon v. Shannon, 965 F.2d 542, 552
(7th Cir. 1992).
We do not imply that federal courts have an affirmative
obligation to search through the code books in an attempt to
determine whether a plaintiff’s pleadings state a valid claim under
9
The gravamen of Bigelow’s complaint is that: (1) The
defendants did not, as required by statute,12 furnish her notice of
her rights under the PHSA; (2) the inadequacy of the defendants’
PHSA notice induced her wrongly to believe that her health
insurance coverage under the City’s plan would continue
indefinitely, for as long as she continued to pay her premiums; (3)
if she had been made aware by proper notice that her coverage under
the City’s plan would expire 18 months after the termination of her
employment, she would have procured an alternate or successor
source of health insurance; and (4) the defendants should be
equitably estopped from refusing to pay the costs of the medical
expenses that she incurred beginning in November of 1995.
The PHSA provides that “[a]ny individual who is aggrieved by
the failure of a State, political subdivision, or agency or
instrumentality thereof, to comply with the requirements of this
title... may bring an action for appropriate equitable relief.”13
Any entitlement that Bigelow may have to equitable relief hinges in
any existing statute. Rather, we merely hold that when, as here,
a plaintiff pleads a right to recovery under one of two virtually
identical statutes, and it is later discovered that only the
statute that was not pled is applicable to the plaintiff’s claims,
a court need not dismiss the case and require the re-litigation of
the very same issues pursuant to the very same language but headed
by a different title, but rather may take judicial notice of the
existence of the applicable statute and treat the case as though it
had been litigated pursuant to that statute from the outset.
12
42 U.S.C. § 300bb-6.
13
42 U.S.C. § 300bb-7.
10
the first instance on proof of the defendants’ breach of the duty
to “comply with the requirements of [the PHSA].” The relevant PHSA
duty requires governmental employers to provide each employee with
notice of his PHSA rights (1) at the time that he joins a
government-sponsored group health plan and (2) at the time his
employment is terminated.14
The district court was clearly correct in ruling that UHM did
not fail to comply with these statutory duties because UHM was not
Pass Christian’s insurance carrier at the time that Bigelow was
hired or at the time that she resigned. UHM therefore never had
any duties under the PHSA with respect to Bigelow and was properly
dismissed as a defendant in this case.
On the other hand, as Bigelow’s employer Pass Christian failed
to provide her with adequate notice of her PHSA rights at the time
her employment terminated. Bigelow gave a sworn statement that she
did not receive a copy of the continuation of coverage model
statement from Ken Saucier at the time she signed her election
forms. Because, as noted above, Saucier died before this matter
was litigated, the City was unable to offer any evidence
contradicting Bigelow’s statement. Like the trial court, we
therefore must accept Bigelow’s version as true.
Even when we do so, however, we are convinced to affirm the
district court’s judgment that Bigelow is not entitled to equitable
14
42 U.S.C. § 300bb-6.
11
relief under the PHSA. First, inasmuch as Bigelow was instructed
by the City’s continuation of coverage election form to request a
copy of the “continuation of coverage model statement” before
electing to accept coverage, the results flowing from her failure
to do so must be laid at her feet. Had she heeded the instruction
and obtained the statement, she would have been apprized of the
fact that her continuation coverage would expire 18 months after
her employment terminated. Second, the “model coverage statement”
that Bigelow actually received from UHM in the middle of October,
a full month prior to her hospitalization, was more than sufficient
to put her on notice that her continuation coverage would expire ——
actually had expired —— 18 months after her employment terminated.
Thus, Bigelow’s failure to obtain an alternate or successor source
of health insurance coverage prior to November of 1995 is not so
much attributable to the inadequacy of notice provided by the City
as to her own failure adequately to read and heed the documents
that were furnished to her.15 Under such circumstances, she does
not seek equity with respect to the issue of notice with entirely
clean hands and therefore is not entitled to equitable relief under
the PHSA.
Our holding today is only that Bigelow is not entitled to
equitable relief under federal law on grounds of the defendants’
alleged failure to notify her of her rights under the PHSA. We are
15
Compare Switzer v. Wal-Mart Stores, Inc., 52 F.3d 1294 (5th
Cir. 1995).
12
not required to decide and therefore do not decide whether Bigelow
might be —— or might have been —— able to state a valid claim
against the City and UHM under state law because of her detrimental
reliance on their acceptance of her premium payment on October 6.
Although the district court ruled that Bigelow’s state law claims
are preempted by ERISA, that law is inapplicable to the instant
case. We decline to address for the first time on appeal whether
Bigelow’s state law claims are preempted by the PHSA. This matter
was not addressed by Bigelow or the City in the district court or
in their respective appellate briefs, but rather was raised by this
court sua sponte when we realized that Bigelow had relied from the
outset on ERISA, a statute entirely inapplicable to government
plans; and that the defendants had relied on ERISA preemption and
had convinced the district court to rule accordingly in disposing
of Bigelow’s state claims.
The judgment of the district court with respect to Bigelow’s
federal claims for equitable relief is, in all respects,
AFFIRMED.
13