                  IN THE UNITED STATES COURT OF APPEALS

                           FOR THE FIFTH CIRCUIT

                               _______________

                                 No. 93-2211
                               _______________


                             In the Matter of:
                     APPLETREE MARKETS, INC., et al.,

                                                       Debtors.


                      SOUTH CENTRAL UNITED FOOD &
                     COMMERCIAL WORKERS UNIONS AND
               EMPLOYERS HEALTH & WELFARE TRUST, et al.,

                                                       Appellants,


                                    VERSUS

                         APPLETREE MARKETS, INC.,

                                                       Appellee.


                         _________________________

             Appeal from the United States District Court
                  for the Southern District of Texas
                       _________________________
                            (April 15, 1994)


Before VAN GRAAFEILAND*, SMITH, and WIENER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:


     There is only one issue in this case:           When an employer with-

draws from a multi-employer health insurance plan and establishes

a new health plan for its remaining employees, who must continue to

provide the health insurance mandated by COBRA to the qualifying


     *
         Circuit Judge of the Second Circuit, sitting by designation.
employees of the withdrawing employer?              The district court held

that the multi-employer plan remains responsible for the COBRA-

qualified employees.        Finding this conclusion consistent with the

plain language of the statute and coherent policy goals, we affirm.



                                         I.

      This matter involves an issue of first impression concerning

coverage under the Consolidated Omnibus Reconciliation Act of 1985

("COBRA"), 29 U.S.C. § 1161 et seq. ("COBRA").1                  The issue was

submitted to the district court on cross-motions for summary

judgment on an uncontroverted record.              Accordingly the facts set

forth below are undisputed.

      Defendant-appellee AppleTree Markets, Inc. ("AppleTree"), a

supermarket chain, is an employer that, pursuant to a collective

bargaining agreement, provided health benefits to its employees

through plaintiff, a multi-employer health plan known as South

Central United Food & Commercial Workers Unions and Employers

Health & Welfare Trust ("UFCW"). UFCW is a multi-employer employee

welfare   benefit    plan    for   the       purposes   of   ERISA,   29   U.S.C.

§ 1002(1), providing health and medical benefits to employees in

the retail food industry.          UFCW is funded through contributions

from participating employers; AppleTree became a participating

employer in the plan in June 1988 and thereafter contributed to

UFCW monthly.

      1
        Although COBRA is referred to by its own name, it is technically a set
of amendments to the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1001 et seq.

                                         2
     In   January    1992,   AppleTree      filed    for    bankruptcy       under

chapter 11 of the Bankruptcy Code.         In the course of its bankruptcy

proceedings,     AppleTree   obtained      court    approval     to   shed     its

collective bargaining agreements.          As a result of the termination

of the agreements, UFCW withdrew AppleTree's membership in the plan

when no agreement could be reached on AppleTree's prospective

contribution rate to the plan.

     AppleTree    established   its       own   group   health    plan    as   of

September 1, 1992, covering only employees active at that time but

not its former employees receiving coverage from UFCW under COBRA.

In other words, AppleTree withdrew its active employees from the

UFCW plan but left behind its COBRA insureds.

     UFCW sued, claiming that AppleTree had an obligation under

COBRA to extend coverage under its new plan to its former employees

now receiving benefits from UFCW under COBRA.              AppleTree contended

that UFCW was obligated to extend the COBRA benefits.                    Neither

party disputes that the former employees are entitled to COBRA

benefits:     The disagreement is whether UFCW or AppleTree should

provide it.

     Relying upon the plain language of COBRA, the district court

granted summary judgment to AppleTree, holding that § 29 U.S.C.

§ 1161(a) defines UFCW as the sponsor of the plan that therefore is

responsible for the coverage.     We affirm.



                                   II.

     We review a grant of summary judgment de novo.                   Hanks v.


                                      3
Transcontinental Gas Pipe Line Corp., 953 F.2d 996, 997 (5th Cir.

1992).       Summary     judgment    is       appropriate      "if    the   pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law."                   FED. R. CIV. P. 56(c).        Here,

our task is made simpler because the facts are undisputed and we

deal       almost     exclusively        with       a     question     of    statutory

interpretation.



                                          III.

                                           A.

       Section 1161(a) reads as follows:

       The plan sponsor of each group health plan shall
       provide, in accordance with this part, that each
       qualified beneficiary who would lose coverage under the
       plan as a result of a qualifying even is entitled, under
       the plan, to elect, within the election period,
       continuation coverage under the plan.

Thus,      the   plan   sponsor    of     a       group    health   plan    must   offer

continuation coverage to employees, their spouses, and dependents

who become qualified for such coverage while covered by the plan,

and that coverage is to be provided under the plan in which the

beneficiary         participated    at    the       time    the     qualifying     event2

occurred.        See id.; 29 U.S.C. § 1167.

       COBRA defines the "plan sponsor" as

       (i) the employer in the case of an employee benefit plan

       2
        "Qualifying events" include, among other things, the death,
termination, or divorce of a covered employee. See 29 U.S.C. § 1163.

                                              4
     established or maintained by a single employer, . . . or
     (iii) in the case of a plan established or maintained by
     two or more employers or jointly by one or more
     employers and one or more employee organizations, the
     association, committee, joint board of trustees, or
     other similar group of representatives of the parties
     who establish or maintain the plan.

29 U.S.C. § 1002(16)(B).     The UFCW plan was a multi-employer,

"joint" plan.    Under the plain language of the statute, the

"association, committee, joint board, or other similar group of

representatives" of UFCW is the plan sponsor.     Therefore, under

§ 1161(a), UFCW, not AppleTree, is responsible for providing

continuation coverage to the COBRA employees.

     Once the statutory relationship is established, it can be

terminated only for one of the reasons enumerated in 29 U.S.C.

§ 1162(2).   UFCW has not alleged that any of the events listed in

§ 1162(2) has occurred; therefore, there is no legal basis for UFCW

to terminate coverage of these COBRA employees.



                                B.

                                1.

     UFCW contends, however, that this case is controlled by

29 U.S.C. § 1162(1), defining "continuation coverage," and not by

§ 1161(a).   Section 1162(1) provides:

     The coverage must consist of coverage which, as of the
     time the coverage is being provided, is identical to the
     coverage provided under the plan to similarly situated
     beneficiaries under the plan with respect to whom a
     qualifying even has not occurred.       If coverage is
     modified under the plan for any group of similarly
     situated beneficiaries, such coverage shall also be
     modified in the same manner for all individuals who are
     qualified beneficiaries under the plan pursuant to this
     part in connection with such group.

                                 5
     UFCW claims that § 1162(1) requires an employer that modifies

health coverage for its employees by transferring them from one

plan to another, but does not terminate all of its health plans, to

transfer coverage for all COBRA-qualified beneficiaries as well.

According    to     UFCW,    "similarly       situated      beneficiaries"     are

AppleTree's active employees and their dependents who have not

experienced a COBRA-qualifying event.               Further, when the active

employees'   "coverage"         was   "modified,"    the    COBRA    beneficiaries

coverage must be changed identically.

     UFCW's reading of the statute is strained and insupportable by

the language of § 1162(1).            A natural reading of § 1162(1) reveals

an intent to forbid plan sponsors from discriminating between COBRA

and active employees within a given plan.

     There is no support for UFCW's position that a discrete

movement from one plan to another can qualify as a modification of

coverage    under   the     original     plan.      The    statute   refers   to   a

modification of coverage under the plan. This implication that the

statute is intended to prevent discrimination within a single plan

cannot reasonably be read to extend to those participating in a

separate plan.

     Thus, § 1162(1) does not apply to this case and would become

relevant    only    if   UFCW    modified     coverage     to   active   employees

participating in its plan.            If so, § 1162(1) would require it to

modify similarly the benefits of beneficiaries of continuation

coverage.    Nothing in § 1162(1) requires an entity that has never

previously sponsored health care coverage for an individual to


                                          6
provide continuation coverage to him simply because it later gives

coverage to others.



                                        2.

       UFCW relies upon proposed Treasury Department regulations to

buttress its claim that "modification" includes elimination of

coverage for similarly situated employees.                   The authority of

proposed regulations has not been addressed by this circuit.

       UFCW relies upon district court opinions holding that proposed

regulations are entitled to "great judicial deference."               See Swint

v. Protective Life Ins. Co., 779 F. Supp. 532, 554 (S.D. Ala.

1991); Johnson v. Reserve Life Ins. Co., 765 F. Supp. 1478, 1480-82

(C.D. Cal. 1991).      AppleTree argues that a proposed regulation has

no force or effect until it becomes final.              See Oakley v. City of

Longmont, 890 F.2d 1128, 1133 (10th Cir. 1989), cert. denied,

494 U.S. 1082 (1990).       Thus, proposed regulations are not entitled

to judicial deference and carry no more weight than a position

advanced in a brief by one of the parties.               See Natomas N. Am.,

Inc. v. Commissioner, 90 T.C. 710, 718 n.11 (1988); F.W. Woolworth

Co. v. Commissioner, 54 T.C. 1233, 1265-1266 (1970).             We agree with

AppleTree and hold that proposed regulations are entitled to no

deference until final.

       Our view accords with other circuits that have considered the

question.     In Oakley, 890 F.2d at 1133, the Tenth Circuit noted

that    "[u]ntil   the    agency   completes        formal    rule-making     and

promulgates    final     regulations,       the   proposed   rules,   which   the


                                        7
Internal      Revenue       Service          has    already       deemed     interpretive

regulations, are unpersuasive."                    Similarly, when presented with

proposed regulations from the Securities and Exchange Commission,

the Fourth Circuit refused to consider their effect, noting that

the "regulations are not in effect and we do not know when, if

ever, they will become effective."                   Telvest, Inc. v. Bradshaw, 618

F.2d 1029, 1036 n.10 (4th Cir. 1980).

      To give effect to regulations that have merely been proposed

would      upset    the   balance       of    powers      among    the     constitutional

branches.      Deference is due the Executive when Congress delegates

"authority to the agency to elucidate a specific provision of the

statute by regulation.             Such legislative regulations are given

controlling        weight   unless      they       are    arbitrary,     capricious,    or

manifestly contrary to the statute."                        Chevron U.S.A. Inc. v.

Natural Resources Defense Council, 467 U.S. 837, 843-44 (1984)

(emphasis added).

      The Chevron doctrine is based upon separation of powers:                          As

Justice     Stevens's       use    of   the        term   "legislative      regulations"

suggests, Congress is delegating to the Executive Branch authority

to act in an essentially legislative manner to fill the interstices

of   the    statute.        "The   power       of    an    administrative      agency   to

administer a congressionally created . . . program necessarily

requires the formulation of policy and the making of rules to fill

any gap left, implicitly or explicitly, by Congress."                          Id. at 843

(quoting Morton v. Ruiz, 415 U.S. 199, 231 (1974)).

      In effect, statutory ambiguity cedes legislative authority to


                                               8
the Executive. The Executive Branch need not promulgate rules that

best    mirror    legislative     intent;         its    rules    only     need   not   be

arbitrary or capricious.          Absent executive rulemaking, it remains

the duty of courts to construe the statute in order to divine

congressional      intent.        In    other          words,    if   final     executive

regulations interpreting an ambiguous statute are promulgated, then

the Executive is the "gap-filling" institution; if there is no

authoritative statement from the Executive, the courts "fill the

gap" by attempting to divine congressional intent.

       Once it is recognized that Executive rulemaking is actually

interstitial legislation, it becomes inappropriate to defer to

proposed    regulations,     as     that     would       upset    the     constitutional

balance of power among the branches in the same manner as would

deference to laws considered but not enacted by Congress.



                                           C.

       UFCW argues that by contributing to the plan, AppleTree

"established and maintained" the plan within the language of

29 U.S.C. § 1002(16)(B). Thus, when AppleTree quit contributing to

the    plan,   UFCW   no   longer      was       the   plan     sponsor    as   to   these

individuals.       Under this reading, the plan sponsor changes as

members enter and exit the plan.                 The statute indicates, however,

that multi-employer plans have only one sponsor, the joint board of

trustees.        Membership changes in the plan do not affect this

definitional fact.

       Furthermore, once the UFCW board became the plan sponsor, it


                                             9
could not be relieved of this duty until the occurrence of an event

listed in § 1162(2).    UFCW admits that it was the plan sponsor for

at least the time that AppleTree contributed to the plan; from then

on it remained the plan sponsor, as nothing in § 1162(2) permits a

plan sponsor of a multi-employer plan to terminate its COBRA

obligation   to   qualified   individuals      because   a   participating

employer subsequently sponsors its own plan for other covered

persons.



                                     IV.

     UFCW contends that adopting AppleTree's reading of the statute

would lead   to   an   inequitable    result   and   therefore   should   be

eschewed. UFCW argues that allowing AppleTree to relieve itself of

responsibility for the COBRA beneficiaries would create an "adverse

selection" problem allowing AppleTree to foist poor-risk COBRA

beneficiaries onto the plan, while retaining the good risks in its

new plan.

     An adverse selection problem arises because even though the

COBRA beneficiaries continue to pay premiums, the amount they can

be charged is limited by law.    Moreover, the plan cannot condition

the availability of COBRA coverage on evidence of insurability.

See 29 U.S.C. § 1162(4); 26 U.S.C. § 4980B(f)(2)C).          As a result,

"Former employees choose continuation coverage only when that is

cheaper than insurance at market prices." Herrmann v. Cencom Cable

Assocs., 978 F.2d 978, 979 (7th Cir. 1992).           "[F]ormer employees

would like to treat continuation coverage as an option, to be


                                     10
exercised only if they are sure that they face medical costs

exceeding the premiums.         If they turn out to be healthy, they do

not enroll and pay nothing.           If medical needs loom, they exercise

their   option."        Id.      Because      COBRA-qualified         beneficiaries

rationally will elect coverage only if their premiums will be less

than their benefits, the remaining members of the plan subsidize

their benefits.         In    turn,   employers       would   prefer    to    provide

coverage only for good risks, rather than subsidizing the COBRA-

qualified bad risks as well.

     Allowing AppleTree to abandon coverage of its COBRA-qualified

ex-employees allows it to bring only the good risks within its new

plan, while leaving the bad risks in the UFCW plan.                   UFCW contends

that this result is inequitable and contrary to congressional

intent. UFCW claims that it is more equitable to require AppleTree

to subsidize its poor risks, rather than having the remaining plan

members subsidize them.        Thus, we should ignore the plain language

of   the    statute     and    force    AppleTree        to    cover    the     COBRA

beneficiaries.

     We reject the UFCW's argument for two reasons.                      First, to

ignore the plain language of the statute would be to substitute

improperly our own policy predilections for the express intent of

Congress.    Second, coherent and sensible policies undergird the

plain language of the statute.



                                        A.

     The    allegedly    inequitable         result    the    plain    language   of


                                        11
§ 1161(a) commands results from Congress's caps on rates and its

forbidding      conditioning        of    availability       on   evidence     of

insurability, not from the statutory definition of "plan sponsor."

If the plan could charge the market price for insuring these high-

risk individuals, there would be no adverse selection problem.

     UFCW would have us accept the price caps as given and define

the term "plan sponsor" to account for the side-effects of the

caps.     We could as easily accept § 1161(a)'s definition of plan

sponsor, and then declare the price caps invalid as inequitable.

There is no more ground for ignoring the statutory definition of

"plan sponsor" than for ignoring the rate caps or the ban on

evidence of insurability.

     UFCW has cited no evidence that Congress was aware that its

price regulation created an adverse selection process or that

Congress intended to rectify the problem by requiring courts

deliberately to misread § 1161(a).            We can avoid the unintended

consequences spawned by COBRA's price caps only be eviscerating

§ 1161(a).     Correcting the ill effects of price caps by choosing

which    provisions     in   ERISA's      "complex     and   highly   technical

regulatory program"3 will be given effect is the duty of Congress,

not the judiciary.        Such a course invites us to substitute our

policy preferences for those reflected in the language of the

statute.       We   reject   this    invitation      and   construe   §   1161(a)

according to its plain meaning.



     3
         Meredith v. Time Ins. Co., 980 F.2d 352, 357 (5th Cir. 1993).

                                         12
                                    B.

      If we examine the policies underlying the statutory language,

we   must   reject   UFCW's   classification    of     them    as    absurd    or

inequitable.     Multi-employer    benefit     plans    such    as    UFCW    are

concerned that participants such as AppleTree will exit the plan,

leaving the high risk employees behind. But the coverage agreement

between the employer and the plan is a voluntarily-bargained

document; thus, the agreement can provide for this concern.              Since

all elements of the agreement between the plan and an employer are

freely negotiated at the time of joining the plan, the parties can

allocate this risk.

      Indeed, establishing actuarial risk is easier as the size of

the participant pool grows.      Thus, there are strong countervailing

forces   providing   AppleTree   with    incentives     to    remain    in    the

program.     For smaller employees, these pressures to remain in a

multi-employer plan are even stronger.          In fact, multi-employer

plans can refuse to admit prospective members who are unable to pay

their way.

      The statutory solution to a loss of revenue because of a

withdrawal of participants is not to terminate coverage for some,

as UFCW attempted to do here.      Rather, if revenue falls because of

defections, § 1162(1) requires the joint board to change coverage

for all participants, not to terminate coverage for some while

retaining full coverage for others.

      Finally, we reject UFCW's premise that it is somehow more

"equitable" for AppleTree than for the other UFCW plan members to


                                    13
subsidize coverage for the COBRA beneficiaries.              When UFCW became

the    plan   sponsor,      it    assumed     responsibility      for        these

beneficiaries.     It is not inequitable to hold it to its statutory

responsibilities.



                                      V.

       Giving the statutory language its plain meaning and construing

it in light of reasonable congressional policy goals, we conclude

that   AppleTree   is   entitled    to   judgment   as   a   matter     of    law.

Therefore,    we   AFFIRM   the    district   court's    grant    of    summary

judgment.




                                      14
JACQUES L. WIENER, Jr., Circuit Judge, specially concurring.

      I fully recognize that, inasmuch as I am concurring in Judge

Smith's typically well-crafted opinion for the panel in this case,

affirming the equally well-crafted opinion of the district court,

I run the risk of gilding the proverbial lily when I write

separately.    I do so nonetheless in the hope of adding a bit of

perspective to the situation and thereby bolstering further this

court's position in the instant appeal.       I am satisfied that when

the instant case is viewed in the framework of the purposes for

which multiemployer plans are created, the types of workers and

types of industries which such plans are generally intended to

serve, and certain overarching features of ERISA, such as its "Type

of   Benefit   Coverage"   provision   and   its   "Written   Instrument"

requirement, our ruling today will be seen not solely as the

product of a fair reading of the plain language of the statute "in

a vacuum," but more broadly as a fair and sensible determination

that is wholly consistent with the goals and purposes of ERISA in

general and multiemployer plans in particular.

                                   I

                      PLAIN LANGUAGE REVISITED

      First, I would re-emphasize the point that ERISA's "Type of

Benefit Coverage" provision does not require AppleTree as an

employer participating in a multiemployer welfare benefit plan, to

provide COBRA benefits to those of AppleTree's former employees and

their dependents who had been receiving, or became eligible to

receive, COBRA coverage under the UFCW prior to September 1, 1992
("SCP    Qualified    Beneficiaries").            Section    602(1)     of       ERISA4

provides:

     (1)    The coverage must consist of coverage which,
            as of the time the coverage is being provided,
            is identical to the coverage provided under
            the plan to similarly situated beneficiaries
            under the plan with respect to whom a
            qualifying event has not occurred.          If
            coverage is modified under the plan for any
            group of similarly situated beneficiaries,
            such coverage shall also be modified in the
            same manner for all individuals who are
            qualified   beneficiaries   under   the   plan
            pursuant to this part in connection with such
            group.5

In applying § 602(1) to the instant case, UFCW's joint board (the

"Board")SQthe     designated     plan      sponsorSQinterprets          the        term

"similarly    situated    beneficiaries      under    the     plan    for       whom   a

qualifying event has not occurred" to mean AppleTree's employees.

But the Board's interpretation ignores the unambiguous wording of

the statute which specifies that similarly situated beneficiaries

are those beneficiaries who are participating in the same plan as

the COBRA qualified beneficiaries.

     Section 602(1) describes the "type of benefit coverage" to be

provided     to   COBRA   qualified        beneficiaries       under        a     plan.

Specifically,     §   602(1)   requires     the    plan     sponsor    to       provide

identical health care coverage to the COBRA qualified beneficiaries

of the plan as is provided to other persons who are "similarly

situated" to them and who are participating in the same plan.                          To

achieve this objective, § 602(1) also requires that if the plan

     4
         29 U.S.C. § 1162(1).
     5
         Id. (emphasis added).

                                      16
sponsor modifies coverage for such "similarly situated" persons, it

must also modify the coverage for COBRA qualified beneficiaries in

the same manner.        Correctly applying the above quoted language of

the   statute,     no    support   can    be   discerned   for   the    Board's

interpretation that individuals become "similarly situated" to

COBRA qualified beneficiaries of one plan when the individuals

participate in another plan.          Instead, the language of § 602(1)

demonstrates that the intent of Congress was to prohibit plan

sponsors from discriminating between COBRA qualified beneficiaries

and active employees who are participating in the same plan.

      Further, the plain language of the statute does not support

the Board's contention that AppleTreeSQa formerly participating

employerSQsomehow caused a modification of the coverage within the

meaning of § 602(1) when it sponsored its own group health plan for

its employees after the SCP Qualified Beneficiaries became eligible

for and began to receive COBRA coverage under the UFCW.                       The

statute refers to a modification of coverage under the same plan.

The language of § 602(1) reflects that the intent of Congress was

to prohibit a plan sponsor from modifying coverage to provide

coverage   to    COBRA    qualified   beneficiaries    different       from   the

coverage provided to "similarly situated" active employees of the

same plan.      Nothing in § 602(1) requires an entity that has never

sponsored health care coverage for an individual to provide COBRA

benefits for that individual simply because the entity happened to

have been his employer when he experienced a COBRA qualifying event

under a multiemployer plan and the entity subsequently establishes


                                         17
a group health plan for its own employees.         The majority opinion

makes this abundantly clear.

     To reach a different conclusion would not only ignore the

plain language of the statute but would also fail to recognize the

purpose and structure of multiemployer plans.

     The primary purpose of multiemployer plans is to provide

benefits to workers of a particular industry or area.       Through this

structure, the workers are able to continue their coverage under

the plan despite moving from one employer to anotherSQa phenomenon

typical of certain industries, including retail food sales and

serviceSQwithin the group of employers participating in the plan.

To terminate an individual's COBRA coverage under a multiemployer

plan just because he happened to work for one particular employer

among the many at the time he became eligible to receive COBRA

benefits under the plan would fly in the face of a principal

purpose of multiemployer plans.         More about this later.

Applying the foregoing principles, § 602(1) would be applicable in

the instant case ifSQbut only ifSQthe Board modified the coverage

of the active employees and their dependents who are participating

in the UFCW and who are similarly situated beneficiaries with

respect   to   the   SCP   Qualified    Beneficiaries.   Here,   no   such

modification of coverage occurred.            Accordingly, § 602(1) is

inapplicable and does not relieve the Board of its obligation to

provide COBRA coverage to the SCP Qualified Beneficiaries; neither

can § 602(1) be stretched to shift such obligation to AppleTree.

                                       II


                                       18
                       DEFINITION OF PLAN SPONSOR

     ERISA's   "definition    of    plan   sponsor"   actually    prohibits

AppleTree from replacing the Board as plan sponsor of the SCP

Qualified Beneficiaries, absent some express written provision to

that effect in the UFCW or its plan documents.           Nevertheless, as

amicus, the National Coordinating Committee for Multiemployer Plans

("NCCMP") insists, on behalf of the Board, that AppleTree was

required to relieve the Board of its COBRA obligations on August

31, 1992.   I disagree.

     Recognizing as it must that COBRA requires the "plan sponsor"

to provide COBRA coverage, NCCMP proceeds to argue that AppleTree

"established and maintained" the UFCW by making contributions

thereto; and that as a result when AppleTree ceased contributing to

the UFCW and established a group health plan for its employees on

September 1, 1992, the Board ceased to be the plan sponsor as to

AppleTree's former and active employees, and the duty of providing

COBRA benefits reverted to AppleTree as plan sponsor of those

individuals on that date.          On the basis of that bit of legal

legerdemain,   NCCMP     concludes    that   AppleTree    is     the   party

responsible for providing the SCP Qualified Beneficiaries with

COBRA coverage as of September 1, 1992.

     This contention, however, finds no support in the statute, the

plan documents, or reality.    ERISA provides the specific statutory

definition of "plan sponsor":        Multiemployer plans have only one

plan sponsor, the joint board of trustees. Changes in the identity

of employers who from time to time participate in the plan have no


                                     19
effect on the party designated by ERISA to be the "plan sponsor."

The joint board of trustees remains the "plan sponsor" regardless

of which employers are permitted to withdraw from (or join) the

plan.

                                        III

   THE MULTIEMPLOYER PENSION PLAN AMENDMENT ACT - A COMPARISON

     Indirect but strong support for the conclusion that withdrawal

of an employer from a multiemployer welfare benefit plan does not

change the party designated as plan sponsor is found in the

adoption by Congress of the Multiemployer Pension Plan Amendment

Act of 1980 ("MPPA").          Congress enacted the MPPA in response to

concerns about the extreme financial hardships of multiemployer

pension plans (as distinguished from multiemployer welfare benefit

plans) and the resulting potential liability of the Pension Benefit

Guaranty Corporation to pay for certain unfunded pension benefits.

These concerns arose because of the tension between the plan

sponsors    on    the   one   hand    and    the   contributing   employers    of

multiemployer pension plans on the otherSQtension resulting from

the disparate identities and interests of those parties.

     In    response     to    those   concerns,     Congress   elected   not   to

redesignate the plan sponsor of a multiemployer pension plan upon

the withdrawal therefrom of an employer.             Instead, the legislative

solution was to impose withdrawal liability on an employer who

withdraws.       Through the enactment of MPPA, Congress amended ERISA

to require an employer who withdraws from a multiemployer pension

plan to continue to pay additional contributions to the plan to


                                        20
fund adequately certain unfunded pension benefits.

      The obvious significance of the history of the MPPA to the

instant case is that no comparable amendment act was ever adopted

for welfare benefit plans.         And the reason is equally obvious:

The pertinent rules that apply to pension plans simply do not apply

to welfare benefit plans.             Given the substantial differences

between pension plans and welfare benefit plans, the latter just do

not experience the funding problems that are endemic to the former.

For   example,    pension     plans   are    subject     to   ERISA's    vesting

requirements and funding obligations, whereas welfare benefit plans

are not.

                                        IV

                            THE QUALIFYING EVENT

      COBRA imposes on the sponsor of the plan that covered the

individual when he experienced a qualifying event the duty of

providing COBRA coverage.       This statutory obligation arises at the

moment the individual experiences a qualifying event that triggers

a   loss   of   coverage   under   the   plan,   and   ends    only     upon   the

occurrence of one of the terminating events specified in § 602(2)

of ERISA.       Nothing contained therein permits the sponsor of a

multiemployer plan to terminate or transfer its COBRA obligation to

a   withdrawing    employer    simply    because,   at    a   time    after    the

individual experiences a qualifying event, the employer withdraws

from the plan and sponsors its own plan for its own employees.                  On

the contrary, the obligation to provide COBRA coverage to the

individual remains with the plan sponsor of the multiemployer plan.


                                        21
      To recap:       The UFCW is a multiemployer plan, and the plain

language of ERISA expressly designates the Board as the plan

sponsor of the UFCW.         The SCP Qualified Beneficiaries experienced

their COBRA qualifying events prior to September 1, 1992, at a time

when they were covered under the UFCW.                         Thus COBRA expressly

imposes on the Board the duty to provide COBRA benefits to the SCP

Qualified Beneficiaries until a terminating event occurs. The fact

that AppleTree ceased making contributions to the UFCW on August

31, 1992, and thereafter sponsored a group health plan for its

employees   could      not    and    does       not   relieve       the   Board       of    its

obligations      to   provide       COBRA   benefits          to    the   SCP    Qualified

Beneficiaries.                              V

                ERISA's "WRITTEN INSTRUMENT" REQUIREMENT

      Another    aspect      of   ERISA     that      helps    to    frame      the   proper

perspective within which to consider the narrow issue of this case

is the statute's "written instrument" requirement.                           It prohibits

the Board from shifting its COBRA obligation to AppleTree absent

the   required    documentationSQdocumentation                 which      here    is       non-

existent.       To appreciate fully the true significance of this

requirement in the instant appeal, a more extensive explanation of

the above alluded to purpose and structure of multiemployer plans

should prove beneficial.

      Multiemployer plans typically are established and maintained

to provide employee benefits to workers in particular industries.6

      6
        See Langbein & Wolk, Pension and Employee Benefits Law,
48-52; 359-2d, BNA Tax Management, "Multiemployer PlansSQSpecial
Rules," A-1.

                                            22
Multiemployer plans tend to be prevalent in those industries that

have in common lower level workers who are employment-peripatetic

by nature, such as the retail food, garment, trucking, mining,

construction, and entertainment industries.              Multiemployer plans

are common      in   these   and   other    similar   industries,    which   are

typified by many small companies that are "too small to justify an

individual plan."7      Multiemployer plans comprise the pooled assets

of numerous employers (each of which usually makes contributions

pursuant   to    collective    bargaining     agreements)   and     the   income

generated by those assets.8          Thus, multiemployer plans generally

have participant populations that are larger than those of single-

employer plans, and generally experience better risk-spreading

opportunities.       To the extent multiemployer plans are larger, they

also enjoy economies of scale unavailable to all but the largest

single-employer plans.         As a result, multiemployer plans often

provide more favorable coverage to the participants and their

beneficiaries than single employer plans are able to provide.

     Of particular importance to the instant case is the widely

recognized fact that multiemployer plans are common in those

industries in which, due to seasonal or irregular employment and

high labor mobility, few workers would qualify for coverage under


     7
         Langbein & Wolk, Pension and Employee Benefits Law at 49.

     8
        See Central States, Southeast and Southwest Areas Pension
Fund v. Central Transport, 472 U.S. 559 (1985); Schneider Moving
& Storage Co. v. Robbins, 466 U.S. 364 (1984); Central States,
Southeast and Southwest Areas Pension Fund v. Gerber Truck, 870
F.2d 1148, 1154 (7th Cir. 1989) (en banc).

                                       23
an individual employer's plan if one were established.9                        For

example, construction workers are frequently hired by a contractor

for a single project that takes only a matter of weeks or months to

complete.10        Once the project is finished, those workers may be

unemployed until another contractor needs their particular skills

for a different project.11          Thus, multiemployer plans, in contrast

to    single-employer      plans,     promote   portability   of    benefits    by

workers whoSQgenerally not on their own volitionSQmove from one

employer to another.12

       A worker is eligible to participate in a single-employer plan

because      of    his   employment    relationship    with   one    particular

employer.         In contrast, a worker is eligible to participate in a

multiemployer plan because of his employment relationship with a

particular industry and the several employers which participate in

the    plan.        Consequently,     multiemployer   plansSQunlike     single-

employer plansSQare able to achieve portability of benefits through

a plan structure that permits a worker who moves from one employer

to another within the plan's group of participating employers to

enjoy continuous coverage under the plan.13               The United States

Department of Labor ("DOL") also recognizes that multiemployer

plans are primarily established and maintained for the purpose of

       9
            Langbein & Wolk, Pension Employee Benefit Law at 49.
       10
             Id.
       11
             Id.
       12
             Id. at 52.
       13
            Id.

                                         24
permitting portability of benefits for the workers of a particular

industry.14

     Within that framework, the "written instrument" requirement is

all the more meaningful.            Section 402(a)(1) of ERISA expressly

requires that "[e]very benefit plan shall be established and

maintained      pursuant   to   a   written   instrument."15     The   written

instrument must "provide for one or more named fiduciaries who

jointly or severally shall have the authority to control and manage

the operation and administration of the plan."16               One purpose of

ERISA's   "written     instrument"      requirement    is   to   protect   the

interests of employees and their beneficiaries in employee benefit

plans by giving them a clear understanding of their rights and

obligations under the plan.17        Recognizing that ERISA requires that


     14
        See 29 C.F.R. § 2510.3-37(c). The DOL requires a
substantial business purpose before a multiemployer plan may be
established. Such business purpose includes the interest of a
labor organization in securing employee benefit plans for its
members. The DOL examines four factors to determine the
existence of a substantial business purpose, any one of which may
be sufficient: (1) maintenance of a plan by a substantial number
of unaffiliated contributing employers covering a substantial
portion of a trade, craft or industry in terms of employees or
locality; (2) closeness of relationship of benefits to years of
service within the trade, craft or industry rather than with a
given employer; (3) extent of collective bargaining in matters
other than employee benefit plans between the employer
organization and the employers maintaining the plan; and (4) the
extent to which the administrative burden and expense of
providing benefits through single-employer plans would be greater
than through multiemployer plans.
     15
          29 U.S.C. § 1102(a)(1).
     16
          Id.
     17
        Cefalu v. B. F. Goodrich Co., 871 F.2d 1290, 1296 (5th
Cir. 1989).

                                       25
employee benefit plans and any changes made to such plans be in

writing, we have held that we lack the power to create a federal

common law remedy in this area because ERISA specifically and

clearly     addresses       the     issue.18         Thus,       participants     and

beneficiaries of employee benefit plans must be able to rely on the

plans'    written    instruments         for    determination     of   benefits   and

determination       of    the    party    responsible      for    providing     those

benefits.    Here, the UFCW designates the Board as that responsible

party, and does so expressly and in writing.19

     Further,       the   UFCW    expressly       grants   its   participants     and

beneficiaries the right to elect COBRA coverage under the UFCW when

a qualifying event triggering loss of coverage thereunder is

experienced.20      There is nothing written in the UFCW, however, that

permits the Board to terminate an individual's COBRA coverage under

the plan when and if that individual's former employer withdraws

from the plan and subsequently sponsors a group health plan for its

own employees.       Under the statute, the pertinent plan provisions,

and the applicable legal authorities, it is the BoardSQnot a

formerly participating employerSQwhich is obligated by law and

under the terms of the UFCW to provide COBRA benefits to the SCP

Qualified Beneficiaries.           For us to hold otherwise would violate

ERISA's "written instrument" requirement and improperly deny the


     18
          Id. at 1297.
     19
        See §§ 1.33 and 4.5 of the UFCW; §§ 1.8, 7.1, 7.2, 7.3,
8.1 and 9.2 of UFCW's Trust Agreement.
     20
          See § 2.8 of the UFCW.

                                           26
SCP Qualified Beneficiaries their right to uninterrupted COBRA

coverage under the UFCW.

       Additionally, for us to rule in this case in the manner urged

by    the    Board   could    broadly    but    adversely     affect    the   current

structure and operation of multiemployer plans, including the

rights      and    obligations    of    the    participants    and     participating

employers alike. As noted, over longer periods of time, workers in

a given industry tend to work for numerous employers within that

industry. It was principally in recognition of this revolving door

facet of such employment that employers and union representatives

devised the multiemployer plan.               Such a plan provides the means to

ensure maintenance of a desired level of benefits for workers who

toil in a particular industry and who change employers with some

frequency. Through participation in a multiemployer plan, both the

workers and the employers understand that the plan will continue to

provide health coverage to such workers even though they may work

for    two    or   more    employers    which    participate     in    the    plan   at

different times.           Clearly, if we were now to permit plan sponsors

to shift their COBRA obligations to employers such as AppleTree,

plan    sponsors      of    multiemployer      plans   would   be     able    to   deny

participants their "portability of benefits" right without being

required to amend the plan's written instrument as required by

ERISA.

       In turn, the denial of the portability right could severely

affect other benefit rights of the participants in multiemployer

plans.       For example, if AppleTree were required to provide the SCP


                                          27
Qualified Beneficiaries with COBRA coverage under the new, single-

employer AppleTree plan, the SCP Qualified Beneficiaries would

become participants in the AppleTree plan and would be terminated

as   participants   in   the   UFCW   as   of   August   31,   1992.    This

termination of coverage under the UFCW might well produce harsh

consequences to the SCP Qualified Beneficiaries.               First, to the

extent that the level of coverage provided under the AppleTree plan

were less favorable than the coverage provided under the UFCW, the

SCP Qualified Beneficiaries would suffer a diminution in coverage

(for, as noted earlier, multiemployer plans generally provide more

favorable coverage than single-employer plans given economies of

scale).

      Second, such a termination of participation might adversely

affect the level of the SCP Qualified Beneficiaries' coverage under

the UFCW when and if they were subsequently to become employed by

other participating employers during their COBRA coverage period.

For example, if an SCP Qualified Beneficiary were to be employed

subsequently by a participating employer of the UFCW, that worker

would again be required to meet the eligibility requirements of the

UFCW prior to receiving the level of coverage to which he had been

entitled immediately before his participation in the UFCW ended on

August 31, 1992.21       Also, to the extent that the "pre-existing

condition" exclusion of certain ailments or diseases might apply to

the SCP Qualified Beneficiary, he would now be denied coverage for

such conditions, even though he would otherwise have continued to

      21
           See §§ 2.3 and 2.5 of the UFCW.

                                      28
be entitled to coverage for them had his COBRA coverage not been

terminated.22

     Clearly, the public interestSQand the intent of CongressSQin

encouraging the formation of employee benefit plans could be

adversely affected if we were to hold that AppleTree, rather than

the Board, is obligated to provide COBRA benefits to the SCP

Qualified     Beneficiaries.         And    just    as        participants    and

beneficiaries     must   be   able   to    rely    on    the    plan's   written

instrument, so too must employers be able to rely on the plan's

written instrument to determine their obligations.                Employers are

frequently discouraged from participating in or forming employee

benefit plans if they perceive potential exposure to unlimited

liability for participants' benefits.           This is another reason for

which ERISA requires the instrument to define in writing the

employers' obligations under the plan.

     Notably, neither the UFCW nor any other plan document either

expressly   or    impliedly   permits     the   Board    to    shift   its   COBRA

obligations      to   AppleTree   simply    because      the     SCP   Qualified

Beneficiaries happened to have been employed by AppleTree when

those beneficiaries experienced their COBRA qualifying event under

the UFCWSQand AppleTree subsequently sponsored a group health plan

for its own employees.        That is not to say that the UFCW or the

other plan documents could not have so provided.               I simply note the

fact that the UFCW does not in writing impose any liability on the

withdrawing employer to subsidize the plan's cost of providing

     22
          See § 4.4 of the UFCW.

                                     29
COBRA   benefits;    but    neither     does   it   permit      recovery   by   the

withdrawing    employer      of   any     reserves       attributable      to   the

contributions such employer may have made to the UFCW.                  Again, I do

not mean to suggest that the plan documents could not so provide;

I simply observe that no such writing exists in connection with the

UFCW. The admittedly belabored point I make is that in the absence

of contrary written provisions ERISA does not allow the Board to

evade its COBRA obligation simply because the financial soundness

of the UFCW may be adversely affected if the Board is required to

provide COBRA coverage to the SCP Qualified Beneficiaries.

                                        VI

                                  AD HOMINEM

       In closing, I am constrained to comment on another aspect of

the position urged by the Board in this case.                   Given the strong

motivation of the entities and organizations that bargain so

vigorously with the employers for the adoption of multiemployer

plansSQa central feature of which is the designation of the Board

rather than the employer as the plan sponsorSQI find illogical, if

not disingenuous, the strident urgings of the Board to this court

that we mystically pass the mantle of plan sponsor from the Board

to the employer, thereby imposing liability on AppleTree for the

costs    of   providing     COBRA     benefits      to    the     SCP    Qualified

Beneficiaries.      The constant emphasis of such bargaining is, as

noted above, the ability to ensure to the workers the portability

of their plan benefits and the avoidance of breaks in coverage and

such    attendant   evils    as   requalification,         delay    periods     for


                                        30
eligibility, and exposure to denial of coverage of "new" pre-

existing conditions that were not pre-existingSQand thus were not

excluded from coverageSQfor purposes of former participation in the

same plan.   It ill behooves those whose minions benefit so greatly

from   the   Board's   position   as    plan   sponsor   to   gainsay    such

sponsorship for the expediency of shifting COBRA costs to the

departing or withdrawing employer.

                                    VII

                                CONCLUSION

       To repeat, I wholeheartedly concur in Judge Smith's opinion

that, based on the plain language of ERISA and UFCW's written

instruments, the Board is the plan sponsor and thus is obligated to

provide COBRA coverage to SCP Qualified Beneficiaries under the

UFCW until a statutory event should occur to trigger termination of

such coverage.    The fact that AppleTree withdrew from the UFCW and

thereafter sponsored a single-employer group health plan for its

employees after the SCP Qualified Beneficiaries became entitled to

receive COBRA coverage under the UFCW is clearly not an event that

terminates the Board's obligations to provide COBRA coverage to the

SCP Qualified Beneficiaries.      I find that the broad perspective in

which this decision can and should be viewed provides additional

undergirding     for   the   majority     opinion,   consistent   with    the

policies, reasons and rationale of ERISA and COBRA and the raison

d'etre of multiemployer plans.




                                    31
