UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 04-1579

CHARLES V. PEERY, MD,

Plaintiff - Appellant,

versus

CAROLINA CARE PLAN INCORPORATED; UNITED

HEALTHCARE INSURANCE COMPANY,

Defendants - Appellees.

Appeal from the United States District Court for the District of

South Carolina, at Charleston. David C. Norton, District Judge.

(CA-03-457-2-18)

Argued: March 16, 2005 Decided: July 20, 2005

Before WIDENER and SHEDD, Circuit Judges, and HAMILTON, Senior

Circuit Judge.

Affirmed by unpublished opinion. Judge Shedd wrote the opinion, in

which Judge Widener and Senior Judge Hamilton joined.

ARGUED: Douglas Herring Westbrook, Charleston, South Carolina, for

Appellant. Michael Jay Zaretsky, CHORPENNING, GOOD, CARLET &

GARRISON, Clifton, New Jersey; Noah M. Hicks, II, WILLOUGHBY &

HOEFER, P.A., Columbia, South Carolina, for Appellees. ON BRIEF:

Mitchell M. Willoughby, WILLOUGHBY & HOEFER, P.A., Columbia, South

Carolina, for Appellee Carolina Care Plan, Inc. Michael W. DeWitt,

CHORPENNING, GOOD & PANDORA CO., L.P.A., Columbus, Ohio; Angus H.

Macaulay, Jr., NEXSEN, PRUET, JACOBS & POLLARD, L.L.C., Columbia,

South Carolina, for Appellee United Healthcare Insurance Co.
2

Unpublished opinions are not binding precedent in this circuit.

See Local Rule 36(c).
3

SHEDD, Circuit Judge:

Dr. Charles V. Peery brought suit against Carolina Care Plan,

Inc. (“Carolina Care”) and United Healthcare Insurance Co. (“United

Healthcare”) to recover health insurance benefits pursuant to a

plan governed by the Employee Retirement Income Security Act of

1974, 29 U.S.C. § 1001, et seq. (“ERISA”). The district court

granted summary judgment in favor of Carolina Care and United

Healthcare, concluding that the ERISA plan effectively terminated

before Peery’s claim for benefits arose. For the following

reasons, we affirm.

I.

A.

Peery is the sole shareholder of Charles V. Peery, M.D., P.A.

(the “Peery Group”), an employer and sponsor of an employee

benefits plan (the “Plan”) governed by ERISA. The Plan provided

that in exchange for the Peery Group’s timely payment of premiums,

Carolina Care would provide health maintenance organization

benefits and United Healthcare would provide out-of-network

benefits to plan participants. According to the Plan, the Peery

Group was required to make its premium payments “in advance on a

monthly basis,” with each payment due on the first day of the

month. J.A. 19. A grace period of thirty-one days was available

for any payment, during which time the Plan would continue in
4

force. In no event, however, could this grace period extend beyond

the date on which the Plan terminated. The Plan provided for

automatic termination in the event of non-payment of premiums:

3.5 Grace Period. . . . This Policy shall automatically

terminate retroactive to the last paid date of Coverage,

if the grace period expires and any Policy Charge remains

unpaid . . . .

. . . 

5.1 Conditions for Termination of This Entire Policy.

This Policy and all Coverage under this Policy shall

automatically terminate on the earliest of the dates

specified below:

(a) Retroactive to the last paid date of Coverage,

if any Policy Charge remains unpaid. 

J.A. 20.

The Peery Group frequently failed to make timely premium

payments. During the two-year period from August 1997 to September

1999, Carolina Care and United Healthcare threatened to terminate

the Plan sixteen different times. The Plan was terminated once in

1998, but Carolina Care eventually reinstated its coverage. 

When the Peery Group failed to make timely payment for

coverage in October 1999, Carolina Care invoked the Plan’s

automatic termination provisions and informed the Peery Group that

the Plan would be terminated effective September 30, 1999 -- the

last paid date of coverage -- if payment were not made immediately.

The Peery Group did not respond to this demand, and on November 30,

1999, Carolina Care notified the Peery Group that the Plan was

terminated as of September 30, 1999.
1

The Plan provided that Carolina Care “may, in certain

circumstances for purposes of overall cost savings or efficiency

and in its sole discretion, Cover services which would otherwise

not be Covered. The fact that [Carolina Care] does so in any

particular case shall not in any way be deemed to require it to do

so in other similar cases.” J.A. 45.

5

During October and November 1999, Carolina Care continued to

pay claims of Peery Group employees for services that required upfront payment and for services performed while the Plan was still

in force. Carolina Care also paid other claims pursuant to a

provision in the Plan authorizing Carolina Care to pay claims that

it was not required to pay without incurring any obligation to pay

similar claims in the future.1

In February 2000, Peery suffered a stroke that required

extensive medical care. Mrs. Peery called Kelly Norman, Carolina

Care’s account service supervisor, to give notice of Peery’s

condition. According to Mrs. Peery, Norman assured her that

Carolina Care would reinstate coverage upon payment of the past-due

premiums. Mrs. Peery remitted a payment of $3,899.34 to Carolina

Care -- representing the amount of premiums past due plus one

additional month’s premium. Mrs. Peery also completed an

automatic-bank-draft form and returned it to Carolina Care along

with a voided check. On February 18, 2000, Carolina Care notified

Peery that it was declining to reinstate the Plan based on the

Peery Group’s payment history and that the Plan remained terminated
6

as of September 30, 1999. Carolina Care later returned Mrs.

Peery’s check. 

B.

Peery filed this lawsuit in February 2003, seeking recovery of

benefits under the Plan. Peery subsequently amended his complaint

to assert that Carolina Care violated S.C. Code Ann. § 38-71-760

(2000) (“§ 760") by failing to give adequate notice of termination

of coverage. Section 760 provides, in pertinent part, as follows:

(a) This section applies to a group accident, group

health, or group accident and health insurance or health

maintenance organization policy or certificate that is

delivered, issued for delivery, or renewed in this State

which provides hospital, surgical, or major medical

expense insurance, or any combination of these coverages,

on an expense incurred basis. . . . 

(b) If a policy or contract subject to this article

provides for automatic discontinuance of the policy or

contract after a premium or subscription charge has

remained unpaid through the grace period allowed for the

payment, the carrier is liable for valid claims for

covered losses incurred prior to the end of the grace

period.

(c) If the actions of the carrier after the end of the

grace period indicate that it considers the policy or

contract as continuing in force beyond the end of the

grace period such as by continuing to recognize claims

subsequently incurred, the carrier is liable for valid

claims for losses beginning on or before the effective

date of the written notice of discontinuance to the

policyholder or other entity responsible for making

payments or submitting subscription charges to the

carrier. . . . 

(d) In addition to the notice required under Section 38-

71-870 or Section 38-71-675, any notice of discontinuance

by the carrier shall include a request to the group
7

policyholder or other entity involved to notify

certificate holders covered under the policy or

subscriber contract of the date when the group policy or

contract will discontinue and advise that, unless

otherwise provided in the policy or contract, the carrier

is not liable for claims for losses incurred after such

date. The notice shall also advise, when the plan

involves certificate holder contributions, that, if the

policyholder or other entity continues to collect

contributions for the coverage beyond the date of

discontinuance, the policyholder or other entity may be

held solely liable for the benefits for which the

contributions are collected.

(e) The carrier shall prepare and furnish to the

policyholder or other entity at the same time an

appropriate sample notice form to be distributed to the

certificate holders concerned indicating the effective

date of the discontinuance and urge the certificate

holders to refer to their certificates or contracts in

order to determine what rights are available to them as

a result of the discontinuance.

. . . . 

C. 

Carolina Care argued that ERISA preempts § 760 and the state

statute is not saved by 29 U.S.C. § 1144(b)(2)(A). Relying upon

Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S. 329

(2003), Carolina Care argued that the relevant provisions of § 760

do not “substantially affect the risk pooling arrangement between

the insurer and insured” and so are not saved from preemption under

§ 1144(b)(2)(A). Id. at 342. According to Carolina Care, it did

not violate the statute’s notice provisions in any event because

those provisions do not apply where a plan terminates automatically

for nonpayment. 
8

Peery argued that § 760 does affect the risk pooling

arrangement between Carolina Care and its insureds and so is saved

from preemption. According to Peery, § 760 required Carolina Care

to provide coverage despite the Peery Group’s nonpayment of

premiums because Carolina Care’s conduct suggested that it

considered the Plan to remain in effect beyond the grace period.

Since Carolina Care never provided a written notice of termination

that complied with the specific requirements of § 760, Carolina

Care was required to provide coverage for Peery’s claim. 

Both parties moved for summary judgment. The district court

held a hearing on the motions and later entered an order granting

summary judgment to the defendants. Rather than decide the ERISA

preemption issue, the district court decided the merits of Peery’s

claims under both ERISA and § 760. Assuming that § 760 was

preempted by ERISA, as the defendants argued, the district court

concluded that the Plan had terminated under the automatic

termination provisions, such that Peery was not entitled to

benefits. Assuming that § 760 was not preempted by ERISA, as Peery

argued, the district court concluded that Carolina Care was not

required to provide the notice described in the statute and the

Plan terminated when the relevant grace period expired. This

appeal followed. 
9

II.

We review de novo the district court’s order granting summary

judgment to the defendants. See Bailey v. Blue Cross & Blue

Shield, 67 F.3d 53, 56 (4th Cir. 1995). Summary judgment is

appropriate when there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Fed. R.

Civ. P. 56(c).

Peery argues on appeal that the district court erred in

assuming that § 760 is preempted by ERISA and by ruling that

Carolina Care complied with the statute even if it was not

preempted by ERISA. We need not decide whether ERISA preempts

§ 760; rather, we assume, as Peery argues, that § 760 is not

preempted. Further, although the defendants contend that § 760

does not apply to Carolina Care because it is not the type of

insurer sought to be covered by the statute, we assume that the

statute applies in this case. It is undisputed that Carolina Care

did not provide the particularized notice of termination described

in § 760. Therefore, the dispositive question is whether Carolina

Care was required to provide such notice at all.

A. 

Carolina Care purported to terminate coverage under the Plan

pursuant to the Plan’s automatic termination provisions. In two

different provisions, the Plan stated that it would “automatically
2We have held that an insurer need not “make some affirmative

acknowledgment” of automatic termination such as occurred in this

case. See Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58

(4th Cir. 1992). 

10

terminate” if the grace period expired and the Peery Group had not

made the scheduled premium payment. Section 760 allows such an

automatic termination, stating that “[i]f a policy or contract

subject to this article provides for automatic discontinuance of

the policy or contract after a premium or subscription charge has

remained unpaid through the grace period allowed for the payment,

the carrier is liable for valid claims for covered losses incurred

prior to the end of the grace period.” S.C. Code Ann. § 38-71-

760(b). Likewise, the relevant administrative regulation

specifically provides that “[n]o written notice of termination

shall be required to be given for termination due to nonpayment of

premium.” S.C. Code Ann. Regs. 69-22.IV.B.4 (2004).2 

Peery does not dispute the fact that the grace period for the

October 1999 premium payment expired without payment by the Peery

Group. Pursuant to the terms of the Plan, coverage automatically

terminated retroactive to the last paid date of coverage, i.e.,

September 30, 1999. Neither the Plan nor the statute explicitly

required it, but Carolina Care gave the Peery Group written notice

of the termination of coverage. Carolina Care’s decision to

provide such notice did not subject Carolina Care to the particular

requirements of the statute. Because Peery’s claim arose after
11

coverage had terminated, Carolina Care was not required to pay

benefits. 

B.

Peery contends, however, that Carolina Care’s conduct

indicated that it deemed the Plan to continue in force beyond the

end of the grace period and thus was required to provide written

notice of termination that complied with specific notice

requirements. “If the actions of the carrier after the end of the

grace period indicate that it considers the policy or contract as

continuing in force beyond the end of the grace period such as by

continuing to recognize claims subsequently incurred, the carrier

is liable for valid claims for losses beginning on or before the

effective date of the written notice of discontinuance.” S.C. Code

Ann. § 38-71-760(c). Such written notice of discontinuance must

comply with the particular requirements described in § 760(d) and

(e). 

The November 30, 1999, letter stated in the plainest terms

that Carolina Care deemed the Plan terminated as of September 30,

1999:

The grace period for receiving premium payment for the

month(s) of OCTOBER 1999 has expired. As of today’s

date, we have not received the premium due.

Your contract with [Carolina Care] has therefore been

terminated. This termination is due to non-payment, in

accordance with South Carolina Department of Insurance
Rule 69-22. All health care benefits with [Carolina

Care] are cancelled effective September 30, 1999.

J.A. 231. This letter is sufficient to indicate Carolina Care’s

understanding that the Plan had been terminated. Carolina Care’s

continued payment of certain claims did not indicate a contrary

position, since the Plan itself provided that Carolina Care could

provide benefits gratuitously without undertaking any obligation to

provide other benefits in similar circumstances. The fact that

Carolina Care paid benefits for claims arising before the

termination date and claims for services requiring up-front payment

does not indicate that Carolina Care considered the Plan still in

force. Because Carolina Care’s actions did not in any way indicate

that it considered the Plan to continue after the date of automatic

termination, § 760(c) is not applicable in this case and did not

require Carolina Care to provide the particularized notice required

by § 760(d) and (e).

III.

Even if Peery is correct that § 760 is saved from ERISA

preemption, and even if he is correct that the statute applies to

the defendants, the district court correctly ruled that the

defendants did not violate that statute but followed the terms of

the Plan. Because we conclude that the defendants are entitled to

judgment as a matter of law, the order of the district court is 

 AFFIRMED.

12