UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 95-60202
Summary Calendar
JOHN M. KING, SR., ET AL.,
Plaintiffs-Appellants,
versus
PROVIDENT LIFE AND ACCIDENT INSURANCE
COMPANY, A TENNESSEE CORPORATION,
Defendant-Appellee,
and
ALCO MANAGEMENT, INC., A TENNESSEE
CORPORATION; MOTEL RESTAURANT, INC.,
A TENNESSEE CORPORATION,
Defendants.
Appeal from the United States District Court
for the Southern District of Mississippi
(92-CV-124)
September 21, 1995
Before REYNALDO G. GARZA, KING, EMILIO M. GARZA, Circuit Judges.
PER CURIAM:*
BACKGROUND
*
Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
John M. King and his family members1 bring this appeal
regarding the adequacy of a conversion health insurance policy
under ERISA, COBRA and Tennessee law.2 King argues that appellee
Provident Life and Accident (Provident) failed to provide him
adequate notice of the change in conversion health benefits,
depriving him of an opportunity to obtain coverage, and is thus
obliged to provide him a conversion policy with benefits equal to
those under his group policy as an employee. Mr. King was stricken
with Lou Gehrig's disease in the summer of 1987 shortly after
obtaining group coverage through appellee Provident in March of
that year. His employer Motel Restaurant, Inc. terminated him on
August 6, 1987 when he was no longer able to perform his work
functions. Mr. King has required extensive and expensive care
since the onset of his disease. Home health care and alternative
treatments were provided under his group coverage as part of this
care.
King elected upon termination to continue medical coverage for
himself and his family for an additional eighteen months under the
1
Plaintiffs-Appellants will be collectively referred to as
King.
2
Employment Retirement Income Security Act, 29 U.S.C. §§
1001-1461. COBRA, the Consolidated Omnibus Budget Reconciliation
Act of 1985, 29 U.S.C. §§ 1161-1168, is an amendment to ERISA which
requires employers to provide continuation of group coverage for a
specified duration to employees no longer eligible for group
coverage and to provide notice of change in benefits when a former
employee is no longer eligible for the continued coverage. A
"conversion plan" is a health insurance plan offered to replace
continued coverage. 29 U.S.C. § 1162 (5).
2
group plan pursuant to COBRA.3 Another provision in his group plan
supplied Mr. King with another twelve (12) months of group
coverage. The conflict we address covers the period after this
last twelve months. Mr. King was eligible only for Provident's
conversion plan. This plan provided hospital and surgical benefits
solely with limited number of days for hospital stays. Home health
care and alternative treatment were not available under the
conversion plan.
Unhappy with this choice, Mr. King declined to apply for
coverage and instead brought suit in state court seeking an order
that Provident provide a conversion plan with benefits equal to
those under the original plan (especially home health care). This
action was removed to federal court where the district judge held
on summary judgment that King's various state-based claims were
preempted by ERISA or were without merit.
One issue survived for this second action: whether King had an
adequate opportunity to convert from his group plan to a conversion
plan.4 In a lengthy opinion, the district court held again for
Provident on summary judgment, this time on the grounds that there
was no basis to require Provident to offer a policy with terms
3
See 29 U.S.C § 1162(2)(A)(ii).
4
The district court in the first action stated that this
issue was not properly raised and that the plaintiffs "retain[ed]
their right to file another lawsuit on the claim of inadequate
opportunity." We reversed when the court in the second action
found that res judicata precluded this second action; because of
the quoted language above, King maintained his right to bring the
inadequate opportunity claim. See King v. Provident, 23 F.3d 926,
928-929 (5th Cir. 1994).
3
equal to those of the group plan. Additionally, the court held
that King had waived his opportunity to obtain the conversion plan
offered by failing to apply for it within thirty (30) days. This
appeal followed.
ANALYSIS
We review grants of summary judgment de novo by evaluating the
district court's decision using the same standards that guided the
district court.5 We will uphold the judgment only as long as there
was no genuine issue of material fact raised by the non-movant and
the movant was entitled to judgment as a matter of law.6 Neither
party to this appeal contends that issues of material fact remain
to be decided. King argues that inadequate notice under COBRA of
the change in benefits deprived him of an opportunity to obtain
coverage and that the conversion policy excluded a preexisting
condition in violation of Tennessee law. In rendering summary
judgment for Provident, the district court held that Provident
provided adequate notice of the benefits under the conversion plan
and that King waived his opportunity to obtain coverage under the
conversion plan. We agree with the district court and affirm its
grant of summary judgment for Provident.
The district court found that Provident provided adequate
notice under ERISA and COBRA of the change in benefits under the
5
Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.
1988).
6
Fed.R.Civ.P. 56(c). Celotex Corp. v. Catrett, 477 U.S. 317,
323-324 (1986).
4
conversion plan.7 King's group plan provided that an insured "may
apply for a conversion plan providing hospital and surgical
benefits" (emphasis supplied). The group plan also stated that
"the amount of coverage [in the conversion plan] provided will be
subject to and determined by the laws of the state [Tennessee]
where the Plan is issued"8 and that "coverage provided will not be
identical to the coverage provided under this plan." Nowhere in
the group plan did Provident state that it would provide perpetual
coverage at the group plan level. Rather, Provident stated that
its conversion plan would offer hospital and surgical benefits, as
was the case.9
King argues that the provisions noted above were not specific
enough to provide notice of the benefits under the conversion plan.
According to the Kings, Provident waited until the outset of King's
7
COBRA, 29 U.S.C. § 1166(a), requires that notification to
covered persons and their spouses of their right to continuing
benefits and thereafter their right to convert their group coverage
to individual coverage must take place on two occasions -- when
group coverage begins and after the onset of a qualifying event
such as termination of employment. King does not contend that the
notices were not given, only that they were inadequate.
8
Tennessee law provides three variations of conversion plans
that an insurer may offer to those whose group plans are to
terminate. See Tenn. Code Ann. § 56-7-2318 (a) (1994) (formerly
codified at Tenn. Code Ann. § 56-7-1507). None of the three
alternatives requires more than hospital and surgical benefits.
Under Tenn. Code Ann. § 56-7-2318 (b) and (d), an insurer may
provide benefits exceeding those in the alternatives; however,
Provident chose not to.
9
This court sympathizes with King's unhappiness with the
conversion plan not providing home health care. However, we can
only speak to what the law commands, not how our sympathy dictates.
Neither ERISA, COBRA nor Tennessee law requires a conversion plan
equal to an employee's original group plan.
5
illness to set the parameters of his conversion coverage, thereby
avoiding continuing responsibility for home care coverage. By not
delineating conversion coverage, Provident made a mere promise to
provide such coverage. Thus, King believes he is entitled to
coverage like that he enjoyed under his group plan. For this
proposition, King relies on our holding in Baker v. Washington
Nat'l Insurance Corp., 823 F.2d 156, at 158 (5th Cir. 1987), in
which this Court upheld a district court finding that, absent any
restriction or explanation as to the nature of the coverage to be
provided by a conversion policy, the right of conversion had to be
construed as the right to continue the basic group coverage in
another type of policy.10
However, this Court in Baker suggested ways that an insurer
could provide notice of the change in benefits and avoid the result
reached in that decision, including the following: stating in its
insurance contracts the specific level of coverage the conversion
policy will provide, attaching a copy of conversion policy to the
group policy or referring to a form of conversion policy on file
with the employer or state insurance authority. Id. at 159.
Provident provided sufficient notice of its conversion policy terms
that it need not provide benefits equal to those under the group
plan.
As the district court in the case sub judice noted in its
Memorandum Opinion and as is shown in the record, the conversion
10
The insurer in Baker promised a conversion policy without
describing its terms in any way. Id. at 157.
6
policy expressly limited itself to hospital and surgical benefits.
The policy made reference to the Tennessee statute which outlined
the minimum coverage that was to be provided in a conversion policy
(essentially hospital and surgical benefits). Unlike the insurer
in Baker, Provident made no bald promise of conversion. Mr. King's
original group policy specifically stated that the conversion
policy would provide hospital and surgical benefits and that the
conversion policy would provide a different level of coverage than
the group plan. The district court properly held that King
received sufficient notice of conversion benefits under COBRA and
that he is not entitled under Baker to group plan benefits.
This Court also agrees with the district court that King
waived his right to Provident's conversion policy by failing to
apply for such coverage within the thirty-one (31) days after
benefits under the group plan terminated. Aware of his conversion
rights, King rejected the individual policy offered by Provident
and chose instead to file the first lawsuit. A finding of waiver
was appropriate in these circumstances.
Lastly, appellant argues at length that the conversion policy
violates a Tennessee statute requiring that "the converted policy
. . . not exclude a preexisting condition not excluded by the group
policy." Tenn. Code § 56-7-2317 (1994). We find no evidence in the
record that Provident intended to deny to coverage for King's
disease. On the contrary, an explanation form provided to King on
the conversion plan stated that,
"Unlike most other types of health insurance plans, this
insurance is provided without regard to conditions of
7
health and provides coverage even for pre-existing
conditions (if such conditions were covered under the
former group policy) for which the insured may be under
treatment at its effective date."11
Appellant is dissatisfied with the diminished benefits under the
conversion plan for his admittedly grave affliction but couches his
dispute as one over coverage for preexisting conditions. As noted
above, Provident specifically offered to maintain coverage for
preexisting conditions. King's argument is unfounded.
Because Provident satisfied its duty of notice under COBRA and
offered a conversion policy in compliance with Tennessee minimum
standards, it was entitled to judgment as a matter of law.
AFFIRMED.
11
See Exhibit B-5 attached to Plaintiff's Cross-Motion for
Summary Judgment. R. at 341.
8