Opinion ID: 694348
Heading Depth: 2
Heading Rank: 1

Heading: ERISA/COBRA Claims

Text: 10 Fowler Trucking argues that the district court erred in determining that it bore the burden of proving Stanton received the notice required by 29 U.S.C. Sec. 1166. The district court noted that this involves an issue of first impression. We review the district court's legal conclusions de novo and affirm. 1 11 COBRA requires that employers give former employees the opportunity to continue their health insurance under the employer's plan if a qualifying event occurs. 29 U.S.C. Sec. 1161 (1988). COBRA also requires the insurance plan to provide employees notice of their rights under COBRA on two separate occasions. The first notice must be given when coverage commences under the plan, in this case after the initial ninety-day period of employment. 29 U.S.C. Sec. 1166(a)(1). The second notice must be given to the employee by the plan administrator after a qualifying event occurs. 29 U.S.C. Sec. 1166(a)(4). The parties agree that a qualifying event occurred on July 2, 1990, and that Stanton was entitled to notice of his COBRA rights. The only issue before us is whether Stanton or Fowler Trucking, the plan's administrator, has the burden of proving that the second COBRA notice was given. 12 The district court held that 29 U.S.C. Sec. 1059 (1985) shifted the burden of proof to Fowler Trucking when a fact issue concerning Stanton's rights to benefits arose. Section 1059 requires employers to maintain records sufficient to determine the benefits due or which may become due to [its] employees. Stanton's COBRA right to continue his health care coverage and notice thereof are benefits due him. Accordingly, in its role as employer, Fowler Trucking has a statutory duty to maintain records to determine if notice was given pursuant to Sec. 1166. However, Stanton's claim is based upon Fowler Trucking's actions in its role as an administrator of the plan: Under Sec. 1166(a)(4), the administrator, not the employer, has a duty to provide COBRA notice to the employee. Section 1059 2 only requires the employer, not the administrator, to keep records. However, 29 U.S.C. Sec. 1027 (1988) 3 imposes a recordkeeping requirement on administrators. Accordingly, as an administrator, Fowler Trucking is required under Sec. 1027 to maintain records evidencing the notice given pursuant to Sec. 1166(a)(4). 4 13 In a related context, the Sixth, Ninth and Eleventh Circuits hold that an employer's failure to comply with its statutory duty to maintain adequate records shifts the burden to the employer to prove the number of hours worked. Michigan Laborers' Health Care Fund v. Grimaldi Concrete, Inc., 30 F.3d 692, 696 (6th Cir.1994); Brick Masons Pension Trust v. Industrial Fence & Supply, Inc., 839 F.2d 1333, 1338-39 (9th Cir.1988); Combs v. King, 764 F.2d 818, 827 (11th Cir.1985). The issue in these cases was whether the employers made sufficient contributions to pension or welfare benefit plans governed by ERISA; the contributions were dependant upon hours worked on specific jobs or by specific employees (e.g., union members). These cases note that Sec. 1059 requires the employer to keep records of its employees' hours worked, that employees maintaining these records themselves is unlikely, and that the policy underlying ERISA supports shifting the burden of proof. These cases rely on Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), a Supreme Court case involving the Fair Labor Standards Act that shifted the burden of proof of hours worked by employees to the employer. 14 Similarly, the policy behind COBRA supports shifting the burden of proof to the administrator. COBRA was enacted, at least in part, to address a concern with reports of the growing number of Americans without any health insurance coverage and the decreasing willingness of our Nation's hospitals to provide care to those who cannot afford to pay. H.R.Rep. No. 241, 99th Cong., 2d Sess., pt. 1, at 44 (1986), reprinted in 1986 U.S.C.C.A.N. 42, 622. The employer bears the major responsibility for complying with the requirements of COBRA. Kidder v. H & B Marine, Inc., 734 F.Supp. 724, 730 (E.D.La.1990), aff'd in part, rev'd in part, 932 F.2d 347 (5th Cir.1991). ERISA's general policy of increasing the information and data available to plan participants also supports burden-shifting. See Combs, 764 F.2d at 822. Furthermore, the administrator is in a better position to prove the COBRA notice was given. It is only fitting to place the burden of proving notice was given on the party required to give the notice, the administrator. To hold otherwise would place the employee in the untenable position of proving a negative and would reward shoddy recordkeeping practices by the administrator and the employer. Records maintained by Fowler Trucking are probably the only evidence available to prove whether it in fact complied with the notice requirement. 15 Furthermore, the district court cases addressing this issue proceed under the assumption that the administrator bears the burden of proving the second COBRA notice was given. All of these cases involve an employer, acting as plan administrator, mailing the second COBRA notice to the former employee. In these cases, the district court requires the employer to establish that the notice was in fact mailed to the last known address of the employee to raise the presumption of receipt. In Martin v. Marriott Corp., 15 E.B.C. 1217, 1992 WL 84902 (D.D.C.1992), the court denied summary judgment to Marriott because it mailed Martin's second COBRA notice to an old address after she provided the company with a recent address. The court noted that Marriott did not produce any documentation establishing that this notice was sent, thereby failing to establish the presumption that a letter properly addressed and mailed was received. Id. at 1221 n. 3, 1992 WL 84902  3. In Truesdale v. Pacific Holding Co., the district court found that the employer complied with Sec. 1166 when it sent a COBRA notice to an incomplete address because the employee failed to inform the employer of the proper address. 778 F.Supp. 77, 81 (D.D.C.1991). In Jachim v. KUTV Inc., the district court determined that the employer's uncontradicted testimony that it mailed the COBRA notice to Jachim's current address established compliance with the COBRA requirements. 783 F.Supp. 1328, 1333-34 (D.Utah 1992). In Phillips v. Riverside, Inc., the court determined that the employer did not prove it sent the second COBRA notice because it could not produce a properly addressed COBRA notice, it did not document when the COBRA notice was sent to Phillips, there was no testimony that anyone actually deposited Phillips' COBRA notice in the mail, nor was any evidence of the employer's customary mailing practices introduced. 796 F.Supp. 403, 407 (E.D.Ark.1992). 16 Accordingly, we agree with the district court that Stanton's testimony that he never received the notice required by Sec. 1166(a)(4) shifted the burden to Fowler Trucking to prove that it complied with Sec. 1166. 5 Fowler Trucking had a statutory duty to maintain records sufficient to show it complied with the requirements of Sec. 1166(a)(4). Fowler Trucking argues that this essentially requires them to guarantee receipt of the COBRA notice. We disagree; we simply affirm the district court's decision that when the evidence is in equipoise, the issue is resolved against the party with the burden of proof on that issue. This case is unlike the cases involving the mailing of a properly addressed second COBRA notice, because those cases involve a presumption of receipt that is not applicable here. 17 Fowler Trucking also argues that the district court erred when it determined that the evidence on the issue of notice was in equipoise, thereby resolving the issue against Fowler Trucking. We must analyze the evidence in the light most favorable to the prevailing party and must not engage in a weighing or evaluation of the evidence or consider questions of credibility. White v. Pence, 961 F.2d 776, 779 (8th Cir.1992). At trial, Stanton testified he never received notice from Fowler Trucking concerning his rights to continue his health insurance; Ms. Fowler testified that she personally handed Stanton this notice. The district court determined that the evidence on this issue was in equipoise and resolved it against the party bearing the burden of proof. We are bound by the district court's assessment of the witnesses' credibility and its determination of weight of their testimony. Accordingly, since evidence was presented at trial that Stanton never received the required notice, the district court properly denied the motion for j.n.o.v. 18 Fowler Trucking argues that it met its burden of recordkeeping in this case. At trial, it produced an undated card signed by Stanton that it claims shows he received the second COBRA notice. However, under the unique circumstances of this particular case, Fowler Trucking was required to provide Stanton with COBRA notices on four separate occasions. An undated card bearing Stanton's signature is not probative that it complied with the COBRA notice requirement at issue.