Court Opinion

ID: 26448
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:52:32+00
Date Added: 2024-06-11T12:30:51.357938
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                 ______________________________

                          No. 00-31320
                 ______________________________

MONTY J. DEGRUISE,

          Plaintiff-Appellant

VERSUS

SPRINT CORPORATION, ET AL,

          Defendants

SPRINT CORPORATION,

          Defendant-Appellee

          ____________________________________________

          Appeal from the United States District Court
              for the Eastern District of Louisiana
          ____________________________________________

                        January 28, 2002

Before JOLLY and PARKER, Circuit Judges, and MILLS*, District
Judge.

RICHARD MILLS, DISTRICT JUDGE:

     This case presents an issue of first impression for this

Court.

     The sole issue is whether a company meets its notification

duty under COBRA by sending a letter by “certified mail” to an

     *
       District Judge of the Central District of Illinois,
sitting by designation.

                                 1
individual’s last known address even when the company knows that

the individual did not actually receive the letter.

     The answer is yes.

     The district court is affirmed.

                               FACTS

     Sprint terminated Monty Degruise’s employment on February 4,

1998.   By letter dated February 11, 1998, Sprint mailed to

Degruise, by certified mail with return receipt requested, the

notice required by the Consolidated Omnibus Budget Reconciliation

Act (“COBRA”) amendment to the Employee Retirement Income

Security Act, 29 U.S.C. §§ 1161-1168, concerning his right to

elect continuing health care coverage.

     On February 17 and 22, the United States Postal Service

twice attempted to deliver the COBRA notice that Sprint sent to

Degruise.   Degruise was out of town on both occasions.     The

Postal Service left a notification in Degruise’s mail box that a

certified letter awaited him at the post office.

     When Degruise returned to town, he went to the post office

to retrieve his letter.   Postal workers could not locate the

letter.   They advised him to return in a couple of days and check

to see if the letter had been located.      Degruise did as the

postal workers directed, but his letter still could not be

located by the time he returned.       Degruise had no way of knowing

who sent the letter or what it contained.      The Postal Service

finally located the letter and returned it to Sprint on March 1,

                                   2
1998, with an indication that the letter had never been claimed

by Degruise.

     Soon after his employment with Sprint ended, Degruise began

a new job with a new employer.    The new employer provided

Degruise with medical coverage.    Before this coverage began,

however, Degruise started to receive treatment for a medical

condition.    When he filed coverage claims with his new employer’s

insurer, his claims were denied as a pre-existing medical

condition.

     Degruise filed suit against his new employer and Sprint

under ERISA, alleging that he had not received notice from Sprint

regarding his right to continue health care coverage under COBRA.

He claimed that he had incurred significant medical expenses for

which either his new employer or Sprint should have been

responsible.

     Sprint filed a motion for summary judgment arguing that it

met its duties under COBRA when it sent Degruise a notification

letter via certified mail.    The district court held that COBRA

requires only a “good faith” effort to comply with notification

provisions.    Degruise appealed and this Court has jurisdiction

pursuant to 28 U.S.C. § 1291.

                         STANDARD OF REVIEW

     The Court uses a de novo standard when reviewing a district

court’s decision to allow summary judgment.    See Tolson v.

                                  3
Avondale Indus., Inc., 141 F.3d 604, 608 (5th Cir. 1998).      Under

this standard a district court’s decision to enter summary

judgment will be allowed when, viewing the evidence in the light

most favorable to the nonmoving party, the record shows that no

genuine issue of material fact exists and the moving party is

entitled to judgment as a matter of law.       See Fed. R. Civ. P.

56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct.

2548, 91 L.Ed.2d 265 (1986).

                               ANALYSIS

     COBRA requires sponsors of group health plans to provide

plan participants who lose coverage because of a “qualifying

event” with the opportunity to choose to continue health care

coverage on an individual basis.       See 29 U.S.C. §§ 1162, 1163.

“Qualifying events” include the termination of a covered

employee’s employment.    See 29 U.S.C. § 1163(2).    When a

“qualifying event” occurs, the plan sponsor must provide written

notice to the plan participant within 14 days of the date it was

notified of the “qualifying event”.       See 29 U.S.C. §§ 1166(a)(1),

(a)(2), (a)(4),and (c).

     Although Congress intended for the Secretary of Labor to

issue regulations defining what adequate notice is, the Secretary

has not issued any such regulations.       See 29 U.S.C. § 1166(a).

Thus, “‘employers are required to operate in good faith

compliance with a reasonable interpretation’ of what adequate

notice entails.”   See Kidder v. H & B Marine, Inc., 734 F.Supp.

                                   4
730 n.6 (E.D. La. 1990)(quoting H.R. Rep. No. 99-453, at 653

(1985)), aff’d in part and rev’d in part, 932 F.2d 347 (5th Cir.

1991).   This does not mean, however, that employers are required

to ensure that plan participants actually receive notice.

Rather, it merely obligates employers to use means “reasonably

calculated” to reach plan participants.1

     It is undisputed that Degruise never received a notification

letter from Sprint about his rights under COBRA.   Sprint sent

Degruise a notification letter by certified mail to his home

address on February 12, 1998, but neither Degruise nor anyone on

his behalf was present to receive it.   Degruise, it turns out,

had recently gotten married and was out of town on a three-week

honeymoon.   After making two attempts to deliver the letter, the

Postal Service left a note at Degruise’s house informing him that

     1
       See Lawrence v. Jackson Mack Sales, Inc., 837 F.Supp. 771,
782 (S.D.Miss.1992), (“Methods of notification which are
reasonably calculated to reach the employee or benficiary are
considered to conform to the standard of good faith compliance
with the statute.”)), aff’d 42 F.2d 642 (5th Cir.1994); Myers v.
King’s Daughter’s Clinic, 912 F.Supp. 233, 236 (W.D.Tex.1996)
same)), aff’d 96 F.3d 1445 (5th Cir.1996); see also Bryant v.
Food Lion, Inc., 100 F.Supp.2d 346, 367 (D.S.C. 2000) (same),
aff’d 2001 WL 434566 (4th Cir. Apr. 30, 2001); Keegan v.
Bloomingdale’s, Inc., 992 F.Supp. 974, 977 (N.D.Ill. 1998)
(“[T]he issue is not whether the former employee actually
received notice; the issue is whether the plan administrator
‘caused the notice to be sent in a good faith manner reasonably
calculated’ to reach the former employee.” (quoting Jachim v.
KUTV, Inc., 783 F.Supp. 1328, 1333-34 (D.Utah 1992))); Marsaglia
v. L. Beinhauer & Sons, Co., 987 F.Supp. 425, 432 (W.D.Pa. 1997)
(“[T]he few courts that have considered the matter have
determined that a good faith effort that is reasonably calculated
to reach the employee satisfies COBRA’s notice requirement.”)).

                                 5
it had a letter for him at its office.    Degruise went to the post

office to retrieve the letter, but it could not be located.    When

the Postal Service later found the letter, it returned the letter

to Sprint marked “undelivered”.   The district court concluded

that Sprint’s attempt to contact Degruise constituted a “good

faith” notification effort under COBRA.   Degruise contends that

the district court erred.

     We disagree.

     The district court correctly found that “the law requires

only that the employer make a good faith attempt to comply with

[COBRA’s] notification provision.”    See Degruise v. Sprint Corp.,

1999 WL 486887, *2 (E.D.La.) (citing Myers, 912 F.Supp. at 236);

Truesdale v. Pacific Holding Co./Hay Adams Div., 778 F.Supp. 77,

81-82 (D.D.C.1991)).   “Good faith” can be demonstrated in a

variety of ways with respect to COBRA’s notification

requirements.   An employer can hand deliver a letter to an

individual or, more commonly, send a letter via first class mail.

See, i.e., Lawrence, 837 F.Supp. at 782 (finding that employer

acted in “good faith” by sending COBRA notification to individual

via first class mail); Dehner v. Kansas City Southern Indus.,

Inc., 713 F.Supp. 1397 (D.Kan. 1989) (employer acted in “good

faith” when it hand delivered a COBRA notification letter).

     Here, Sprint sent Degruise’s notification letter via

certified mail---a special type of first class mail whose primary

purpose is to provide evidence of an individual’s receipt of

                                  6
delivery.    See United States v. McGlory, 202 F.3d 664, 673 (3rd

Cir.2000) (citations omitted); see also United States Postal

Service, Domestic Mail Manual, Issue 54, §912.1.2 (12/2/1999) (on

the Web at http://pe.usps.gov/) (”Only mailable matter on which

postage is paid at a First-Class mail rate (including Priority

Mail) may be accepted as certified mail”)).    By using a type of

first class mail, Sprint made a “good faith” effort to notify

Degruise of his rights under COBRA.    See Lawrence, 837 F.Supp. at

782.

       Sprint later discovered Degruise’s letter went undelivered,

but this does not affect the outcome here.    The law requires

nothing more than for an employer to make a “good faith” attempt

to provide notification.    Sprint sent Degruise a notification

letter by certified mail to the address Degruise listed.    It had

no knowledge why and was not responsible for the letter going

undelivered.    Therefore, Sprint did nothing to undermine the

presumption of “good faith” established under the case law once

it attempted to notify Degruise of his COBRA benefits by

certified mail.2

                             CONCLUSION

       For these reasons, we AFFIRM the district court’s entry of

       2
        It is worth noting that this whole episode could have
been avoided had Sprint taken the added precaution of mailing
Degruise his COBRA notification by ordinary first-class mail at
the same time it sent the notification by certified mail. Sprint
was not legally required to do this, but it would have been a
good practice.

                                  7
summary judgment for Sprint.

                               8