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Daniel K. Kinder, Editor
Little, Medeiros, Kinder, Bulman & Whitney, P.C.
Vol. 12, No. 10
November 2007
HEALTH INSURANCE
Boy, that slope is slippery
In 2006, Rhode Island Employment Law Letter devoted scarce space to an article that discussed a U.S. Supreme Court ruling about Title VII's numerical threshold (the statute applies to employers with at least 15 employers). The Court ruled that the
numerical threshhold wasn't jurisdictional. In other words, not meeting the threshold wouldn't cause an employee's case to be dismissed automatically. Instead, it was simply an element of the case ("Supreme Court, new members tackle workplace
issues," May 2006, page 1).
We're sure many of you wondered why you were reading about an arcane legal issue, assuming that you actually read the entire article. Well, the Sixth Circuit recently showed a Michigan employer why the article was worth reading.
Could I have some COBRA, too?
Silvia Thomas, a black woman, worked for Elmwood Cemetery for more than 10 years until she was fired on January 16, 2004. About two months later, her health insurer informed her that her employer-provided health insurance had been canceled as of that
date. Because the cemetery never had more than 20 employees, it wasn't covered by COBRA.
Naturally, Thomas wasn't advised that COBRA requires employers to allow employees to continue their health coverage through the group program, provided they pay the full premium plus an administrative fee. Inevitably, she had serious health issues
and incurred substantial medical expenses. She suffered a stroke ― which she blamed on her inability to obtain medical care because she had no insurance ― and developed serious cardiac and respiratory problems.
Lacking health insurance, Thomas decided that Elmwood should be her insurer because it didn't notify her about her COBRA rights. To ensure that the cemetery agreed (and paid additional damages), she filed a lawsuit in federal district court.
To get around the minor problem that Elmwood was too small to be covered by COBRA, Thomas pointed out that she overheard conversations in which her supervisor, Chancey Miller, informed another employee that John Winn, a white male, had been allowed
to continue his group health insurance through COBRA. In legal terms, she argued that the equitable estoppel doctrine required the cemetery to provide her with COBRA coverage and that its failure to do so made it responsible for her medical bills. An
equitable estoppel claim requires proof that the employer falsely represented or concealed important information with the expectation that the employee ― to her detriment ― would rely on it.
Elmwood asked the judge to bury the suit ― but not because it was baseless. The cemetery argued that since it had fewer than the 20 employees needed to trigger COBRA, the court couldn't even consider the merits of Thomas' case because it didn't
have jurisdiction over her complaint.
Since previous court cases supported Elmwood's position, the judge agreed and buried Thomas' case after a lovely service. Reaching up from the grave, she asked the Sixth Circuit to resurrect it. The court agreed that the judge was wrong to dismiss
the case for lack of jurisdiction. It ultimately decided, however, that her suit should remain grounded.
A stake to the suit
After Thomas appealed the judge's decision to dismiss her case, the U.S. Supreme Court issued a ruling that Title VII's numerical requirement wasn't a jurisdictional issue but rather an element of an employee's discrimination case. As far as Thomas
was concerned, that was a minor miracle because it effectively reversed the cases on which the federal judge relied when he ruled that he didn't have jurisdiction over her claim because Elmwood had fewer than 20 employees.
Why? As was the case with Title VII, the doctrine of equitable estoppel can be used to prove an element of a COBRA case, but it can't be used to surmount a jurisdictional barrier. (Another important distinction is that jurisdictional defenses can be
raised at any time, whereas defenses to elements of a claim are subject to court-imposed time limits.) Given the new guidance from the Supreme Court, the Sixth Circuit overruled the judge and considered Thomas' argument that she was entitled to COBRA
benefits under the doctrine.
As we mentioned above, equitable estoppel is a judicial doctrine designed to prevent injustice by stopping a party that acted in bad faith from raising certain arguments in court. In that vein, Thomas argued that Elmwood shouldn't be allowed to deny
her COBRA claim on the basis of the numerical requirement because it had given another employee those benefits. Although the Sixth Circuit considered her argument, in the end, the case just remained dead.
In the Sixth Circuit, a party seeking to invoke the equitable estoppel doctrine must establish the following (Rhode Island courts use a similar test):
- the conduct or language must be a material (significant) misrepresentation of fact;
- the party making the representation must be aware of the true facts;
- the party intended that the party invoking the doctrine would act on the
misrepresentation;
- the party invoking the doctrine can't be aware of the true facts; and
- the party invoking the doctrine must have reasonably relied on the misrepresentation to her detriment.
In Thomas' case, she couldn't meet the
first and third elements. (The court didn't consider whether she met the other elements.)
Office rumors aren't enough. To meet the first element, Thomas had to show that someone at Elmwood told her that she was eligible for COBRA. As the court observed, no one at the cemetery even suggested that she was eligible for it. She only assumed
that she was eligible because she overheard office conversations that another employee was receiving health insurance through COBRA. Office rumors, even if true, aren't enough.
As for the third element, an overheard conversation about a third party isn't evidence that Elmwood intended for Thomas to rely on that conversation. Thus, while she succeeded in getting more attention than she would have received a few years ago,
the end result was the same ― a dead lawsuit. Thomas v. Miller, 2007 WL 1827293 (6th Cir., 2007).
Nothing is ever easy
This case is a perfect example of how arcane legal principles can make your life very annoying. Thanks to a 2006 Supreme Court ruling, cases that used to be easily disposed of are potentially much more complicated. More important, employers must be
on their guard because their actions may be used against them in more and more cases.
Copyright 2007 M. Lee Smith Publishers LLC
RHODE ISLAND EMPLOYMENT LAW LETTER does not attempt to offer solutions to specific problems, but rather to provide information about current developments in Rhode Island and federal employment law. Inquiries about specific problems should be
addressed to the labor or employment law attorney of your choice. Rhode Island does not certify lawyers as specialists in labor and employment law or other areas of concentration.
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