Opinion ID: 2005355
Heading Depth: 1
Heading Rank: 4

Heading: Continuation of UNI Plan as Primary Coverage.

Text: Harrington argues that, notwithstanding the terms of UNI's health plan, he had an enforceable agreement with UNI that its plan would continue as his primary coverage. He bases this argument on the statement in the employee manual that a staff member may continue such [group health] coverages following retirement. Harrington claims his election to continue in UNI's health plan created a binding contract that the UNI health care plan would continue to provide primary coverage for his medical expenses. See Heartland Express, Inc. v. Terry, 631 N.W.2d 260, 270 (Iowa 2001) (noting an acceptance of an offer constitutes a contract). We agree with the trial court that the offer made in the employee manual allowed a retired employee to continue coverage under the UNI plan subject to the terms and conditions of the contract setting forth that coverage. As we have discussed, the contract obligated UNI to pay professional expenses only to the extent they were not covered by Medicare Part B, even if the retiree had not elected to enroll in Medicare Part B. Consequently, the district court correctly concluded UNI did not break its promise to continue Harrington's health care coverage under the UNI plan upon his retirement. Harrington also argues the continuation of his UNI insurance as primary coverage is required by Iowa Code chapter 509A. Chapter 509A addresses group insurance for public employees. Harrington relies specifically on the statutory definition of employee, which by its own terms does not include . . . retired employees. Iowa Code § 509A.7. This definitional provision includes the following statement: However, this section does not prevent a retired employee sixty-five years of age or older from voluntarily continuing in force, at the employee's own expense, an existing contract. Id. This provision does not advance Harrington's position because it imposes no duty on an employer to continue an existing contract for retired employees. Section 509A.7 simply clarifies that the statutewhich addresses only the rights of active employeesshould not be construed to preclude the continuation of coverage for retired employees sixty-five years of age or older, a matter not addressed in chapter 509A. In a related argument, Harrington contends section 509A.7 should be interpreted consistently with section 509A.13, a statute addressing the rights of employees who retire before the age of sixty-five. The latter statute provides: If a governing body . . . has procured for its employees . . . health . . . insurance . . ., the governing body . . . shall allow its employees who retired before attaining sixty-five years of age to continue participation in the group plan or under the group contract at the employee's own expense until the employee attains sixty-five years of age. Id. § 509A.13 (emphasis added). The attorney general has issued an opinion that interprets the statutory language to continue to mean that participation in the group plan will `remain unchanged.' Op. Iowa Att'y Gen. No. 02-5-2 (May 14, 2002) 2002 WL 1617558 (citation omitted). [6] Harrington argues the provision in section 509A.7 allowing a retired employee sixty-five years of age or older to voluntarily continu[e] in force an existing contract of insurance should be similarly interpreted to mean the contract would continue to provide coverage that is substantially the same as the coverage provided prior to retirement. But as we have already pointed out, section 509A.7 imposes no duty on an employer to continue coverage for retired employees, much less substantially the same coverage. Nor do we think the attorney general's opinion interpreting section 509A.13 is persuasive with respect to the meaning of UNI's statement in its employee manual that employees could continue health coverage upon retirement. As we have previously stated, the promise to continue coverage offered no more than the coverage provided by the plan, which at all times excluded liability for medical expenses covered by Medicare. See Koenigs v. Mitchell County Bd. of Supervisors, 659 N.W.2d 589, 594 (Iowa 2003) (stating a contractual term is interpreted in the context of the agreement as a whole). It would make no sense for UNI to promise in its employee manual coverage that was not provided by its health care plan. We will not place such a nonsensical meaning on the offer made in the employee manual. See Modern Piping, Inc. v. Blackhawk Automatic Sprinklers, Inc., 581 N.W.2d 616, 625 (Iowa 1998) (interpreting contractual obligation to indemnify consistently with contractual duty to maintain insurance), overruled in part on other grounds by Wesley Ret. Servs., Inc. v. Hansen Lind Meyer, Inc., 594 N.W.2d 22, 29 (Iowa 1999). Our conclusion is not altered by a provision in the benefits certificate cited by Harrington, which provides: Continuation of Group Coverage. Iowa Code Sections 509A.7 and 509A.13 may apply to you if you are an employee of the State, a school district in Iowa, or any other entity supported by public funds. This law entitles you to continue participation in this health care plan when you retire. (Emphasis added.) As we have already pointed out, the Code provisions mentioned in this provision do not apply to Harrington because he retired after the age of sixty-five. More importantly, this paragraph in the benefits certificate should, if possible, be construed consistently with other provisions found in this document. We have previously discussed the other provisions of the contract that indicate Medicare-eligible retired employees receive only supplementary coverage under the UNI plan. The continuation-of-group-coverage provision, which does not apply to this category of insureds, requires no different result. Harrington's final argument again focuses on a provision in the 2003 benefits certificate. In the coverage eligibility section, employees are advised that retired employees over the age of sixty-five whose coverage under the plan terminates due to their eligibility for Medicare may be eligible to convert to a Medicare supplement plan. Harrington argues this conversion provision would be rendered superfluous under UNI's interpretation of the plan because UNI claims the coverage automatically converts to secondary coverage once a retiree becomes eligible for Medicare. We think the 2003 benefits certificate is simply stating in another manner what was evident in the 1991 contract: UNI will not pay for services for which the retired employee could obtain coverage under Medicare. While the 1991 contract did not refer to coverage becoming supplementary at that point, that is precisely what would happen once the exclusion was triggered. Therefore, we think the 2003 benefits certificate merely confirms the trial court's interpretation of the 1991 contract.