Opinion ID: 78447
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: United Automobile Insurance Group, Inc. (UAIG) employed Harris as in-house counsel. After UAIG terminated his employment on May 11, 2007, Harris elected to maintain continuing health insurance coverage through COBRA. According to Harris's Second Amended Complaint (the complaint), UAIG is a sponsor and administrator for a self-insured, self-funded health benefit plan for medical claims. Ceridian, the other named defendant, is a COBRA plan administrator employed by UAIG to processes [ sic ] COBRA premium payments for UAIG's former employees, who opt to enroll in COBRA. Sometime in late May 2007, Harris received a letter from Ceridian notifying him of his right to COBRA coverage, but he never received the Summary Plan Description as required under 29 U.S.C. §§ 1022 and 1024(b). According to the benefits plan, Although subsequent payments are due by the first day of the month, you will be given a grace period of 30 days after the first day of the coverage period to make each monthly payment. Your COBRA continuation coverage will be provided. . . as long as payment is made before the end of the grace period for that payment . . . If you fail to make a payment before the end of the grace period for that coverage period, you will lose all rights to COBRA continuation coverage under the Plan. The notice and information sheet attached to the election for COBRA benefits explained, [t]o be considered a timely payment, your premium payment must be . . . postmarked by the U.S. Postal Service on or before the grace period expiration date and received by Ceridian. The notice further provided, [l]ate payments cannot be accepted and will be returned, resulting in cancellation of your coverage with no possibility for reinstatement. Note 3: . . . If you wait until the end of the grace period to pay, you risk not having sufficient time to correct errors, which may or may not be within your control (such as . . . late/missed pickups by the U.S. Postal Service). In such cases, your coverage will be cancelled with no possibility of reinstatement. Harris made each monthly premium payment in a timely manner until January 2008. Harris received the monthly invoice for that period, stating that the payment was due January 11, with a thirty-day grace period; thus, payment had to made by February 11. Harris asserts that his wife placed the payment in the mailbox on February 11, 2008, but the envelope containing the payment was not post-marked until February 12. According to the complaint, Harris's wife either inadvertently [placed the check in the mailbox] after the mail carrier had made his rounds. Or the envelope was picked up that day and post-marked a day later  February 12, 2008  a real possibility in some areas of South Carolina  like where Mrs. HARRIS lives  because the postal service often employs part-time mail carriers, who use their own vehicles to deliver the mail, and the mail could have gotten delayed, misplaced or even left in the carrier's car overnight, before making its way to the post office the next day to be postmarked. Because the envelope was not received within the time period for payment and was postmarked one day after the end of the grace period, Ceridian terminated Harris's COBRA coverage. Harris attempted to resolve this with UAIG and Ceridian, but they refused to reinstate his coverage. Harris filed the instant complaint, alleging three counts: In count I, Harris alleged that he was entitled to recover benefits from UAIG under 29 U.S.C. § 1132(a)(1)(B) and requested reinstatement of benefits, as well as damages, fees, and expenses. According to Harris, UAIG had the discretion to consider his entitlement to benefits, but refused to do so. In count II, Harris claimed breach of contract against both defendants for the failure to supply the Summary Plan Description as required and for terminating his benefits. In count III, Harris alleged violations of 26 C.F.R. § 54.4980B-8, A-5. This regulation provides that a payment is considered timely if submitted within 30 days after the first day of the period of coverage or any longer period of time provided under the terms of the plan. 26 C.F.R. § 54.4980B-8, A-5. Additionally, if the employer and an insurance company have an arrangement whereby the employer has a longer period of time to pay for coverage for non-COBRA beneficiaries, then the employee  or former employee, rather  shall be allowed the same period of time to make his premium payments. Id. According to Harris, UAIG, as a self-funded plan sponsor and administrator, pays claims when they come due or funds a claims' account at intervals that exceed the time limit for payment imposed on Harris, and thus violates the above regulation. Because UAIG has more time than 30 days  in fact no set time at all  to pay claims or fund the account, Harris should be entitled to the same time period in which to pay his premiums. The defendants moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The district court granted the motion to dismiss. Addressing Harris's claim for recovery of benefits under 29 U.S.C. § 1132(a)(1)(B) in count I, the court found that Harris had no right to recover benefits under the plan because UAIG was within its rights to cancel his insurance after failing to receive a timely premium payment. The court also found that Harris's allegation that UAIG committed a procedural violation by not providing the Summary Plan Description did not entitle Harris to relief because Harris was not prejudiced by this alleged violation. With respect to the state law breach of contract claim in count II, the court found Harris's claim against Ceridian could not proceed because Ceridian did not owe any fiduciary obligations to Harris. Harris had already conceded that his state-law claims against UAIG were preempted by ERISA law. Finally, the court found that there was no merit to the allegations in count III, seeking damages for violations of 26 C.F.R. § 54.4980B-8, because the regulation did not create substantive rights. Accordingly, the court dismissed Harris's complaint. The court then informed Harris that any third amended complaint must be filed by September 10, 2008 and could not re-raise issues already dismissed. The court warned that the failure to comply would result in dismissal with prejudice. Harris did not file a third amended complaint, and the court granted the defendants' subsequent motion to dismiss with prejudice. Harris timely appealed.