                 United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 14-1408
                         ___________________________

    Bonnie Cole, Individually and as Next Friend of P.C., a Minor; Lyle Cole,
               Individually and as Next Friend of P.C., a Minor

                       lllllllllllllllllllll Plaintiffs - Appellants

                                            v.

                             Trinity Health Corporation

                       lllllllllllllllllllll Defendant - Appellee
                                      ____________

                     Appeal from United States District Court
                   for the Northern District of Iowa - Ft. Dodge
                                  ____________

                           Submitted: September 8, 2014
                             Filed: December 15, 2014
                                  ____________

Before BENTON, BEAM, and SHEPHERD, Circuit Judges.
                           ____________

SHEPHERD, Circuit Judge.

      When Bonnie Cole1 stopped working for Trinity Health Corporation (“Trinity
Health”), the company failed to timely notify the Coles of their right to continuing


      1
        We refer to Bonnie Cole, her husband Lyle Cole, and their minor son P.C.
collectively as “the Coles.”
health care coverage, as it was required to do. The Coles sought statutory damages,
which may be awarded in the court’s discretion after a violation of this notification
requirement, but the district court2 declined to award damages and granted summary
judgment to Trinity Health. We are asked to decide whether this decision was in
error. We find no abuse of discretion in the district court’s denial of statutory
damages and therefore affirm the grant of summary judgment.

                                           I.

       When Bonnie was a Trinity Health employee, she enrolled in an employer-
sponsored group health plan with Blue Cross Blue Shield of Michigan (“Blue
Cross”), for which Trinity Health served as plan administrator. Lyle and P.C.
enrolled as beneficiaries. Bonnie later began a period of leave from Trinity Health,
first under the Family and Medical Leave Act of 1993, and then under short-term
disability leave. Her short-term disability benefits expired June 8, 2011. When they
did, Bonnie requested long-term disability benefits. While it considered this request,
Unum, Trinity Health’s long-term disability benefits provider, provisionally paid
Bonnie’s medical care claims under a “Reservation of Rights.” On October 18, 2011,
however, Unum denied Bonnie’s request but chose not to seek repayment of the
provisional benefits it had provided.

       Bonnie’s termination date should have been June 8, 2011, the last day she
qualified for benefits and was considered a Trinity Health employee. But because of
an error3 her termination was not processed when Unum denied her long-term
disability benefits request. As a result, Bonnie, Lyle, and P.C. continued to receive
Blue Cross health insurance benefits well into 2012. Trinity Health finally


      2
      The Honorable Mark W. Bennett, United States District Judge for the
Northern District of Iowa.
      3
          The record indicates only that “an error was made.”

                                          -2-
discovered its error and processed Bonnie’s termination in late April and early May
2012. Righting itself, Trinity Health set Bonnie’s termination date at June 8, 2011,
but deemed her benefits retroactively terminated January 1, 2012. Although Trinity
Health’s system indicated that on May 8, 2012, the Coles were sent notice that their
health care coverage had been terminated, Trinity Health later determined no notice
was sent on that date.

       The Coles were first alerted to their benefits change on June 1, 2012, when
Lyle visited his physician and was told his family no longer had insurance. Bonnie
contacted Blue Cross for clarification. On June 8, 2012, Blue Cross notified the
Coles their benefits had been terminated effective January 1, 2012. The Coles later
received a letter from Trinity Health, dated June 19, 2012, explaining that while
Bonnie’s coverage was terminated effective January 1, 2012, Bonnie first received
notice of this termination June 8, 2012. After they learned their Blue Cross coverage
had ended, the Coles were able to obtain health insurance through Lyle’s employer.
That coverage was made retroactively effective June 1, 2012.

       While Trinity Health retroactively terminated Bonnie’s benefits January 1,
2012, it failed to notify Blue Cross of Bonnie’s termination until May 2012. The
Coles thus received Blue Cross benefits through April 2012 and Blue Cross did not
deny any of the Coles’ claims based on termination of coverage until May 1, 2012.
Blue Cross has not sought a refund of the claims it paid between January 1, 2012, and
April 30, 2012. Beginning May 1, 2012, Blue Cross denied approximately $1,300 in
claims. When Bonnie’s short-term disability benefits expired on June 8, 2011, her
portion of the insurance premium was $135.12 per two-week pay period and Trinity
Health’s portion was $405.37. Bonnie paid her last employee contribution during the
pay period ending June 11, 2011.

      In October 2012, the Coles filed this action against Trinity Health alleging that
the company violated the Consolidated Omnibus Budget Reconciliation Act of 1985

                                          -3-
(“COBRA”) by failing to notify them of their right to continuing health care
coverage.4 The district court declined to award the Coles statutory damages and
granted summary judgment to Trinity Health. Specifically, the district court reasoned
the Coles were not entitled to actual damages because the amount of their
unreimbursed medical bills from May 2012 was less than the COBRA premiums they
would have had to pay to maintain medical insurance. The district court also
reasoned the Coles were not entitled to statutory penalties because “Trinity Health
acted in good faith,” “the Coles were not harmed or prejudiced by Trinity Health’s
tardy notice of their COBRA rights,” and “the Coles were provided continued
medical coverage for approximately eleven months after Bonnie’s termination.”

                                          II.

       When a covered employee is terminated, COBRA requires plan administrators
like Trinity Health to timely notify qualified beneficiaries of their right to continued
health care coverage. See 29 U.S.C. §§ 1163(2), 1166(a)(4)(A), (c). The Employee
Retirement Income Security Act of 1974 (“ERISA”) provides that a plan
administrator that fails to meet the COBRA notification requirement “may in the
court’s discretion be personally liable to such participant or beneficiary in the amount
of up to [$110] a day from the date of such failure . . . and the court may in its
discretion order such other relief as it deems proper.” Id. § 1132(c)(1); 29 C.F.R.
§ 2575.502c-1 (increasing maximum amount of civil penalty from $100 a day to $110
a day). “The purpose of this statutory penalty is to provide plan administrators with
an incentive to comply with the requirements of ERISA and to punish
noncompliance.” Starr v. Metro Sys., Inc., 461 F.3d 1036, 1040 (8th Cir. 2006)
(citations omitted).



      4
       The Coles also claimed Trinity Health violated the Patient Protection and
Affordable Care Act of 2010 (“ACA”). The Coles have not appealed the district
court’s grant of summary judgment to Trinity Health on their ACA claims.

                                          -4-
       We typically review summary judgment rulings de novo. See Fed. R. Civ. P.
56(a). Here, however, there is no dispute Trinity Health violated the COBRA
notification requirement. The question before us, then, is whether the district court
erred in declining to assess statutory damages.5 Because this decision is left to the
discretion of the district court, see 29 U.S.C. § 1132(c)(1), we review for abuse of
discretion. See Christensen v. Qwest Pension Plan, 462 F.3d 913, 919 (8th Cir. 2006)
(“We review the discretionary aspect of the court’s decision not to assess a penalty
for abuse of that discretion.”); see also Kwan v. Andalex Grp. LLC, 737 F.3d 834,
848 (2d Cir. 2013) (“We review the District Court’s determination that a plaintiff is
not entitled to statutory penalties under 29 U.S.C. § 1132(c)(1) for abuse of
discretion.”). A district court abuses its discretion when it “rel[ies] on clearly
erroneous factual findings,” Lester E. Cox Med. Ctr., Springfield, Mo. v. Huntsman,
408 F.3d 989, 993 (8th Cir. 2005) (internal quotation marks omitted), or “makes an
error of law.” Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 947 (8th Cir. 1999)
(internal quotation marks omitted).




      5
        Trinity Health argues we may alternatively affirm the district court’s grant of
summary judgment as to Lyle and P.C.’s claims because 29 U.S.C. § 1132(c)(1)
permits only the plan participant, here Bonnie, to recover damages for a violation of
29 U.S.C. § 1164(a)(4). Other courts are divided on this issue. Compare Wright v.
Hanna Steel Corp., 270 F.3d 1336, 1344 (11th Cir. 2001) (participants only), with
Honey v. Dignity Health, No. 2:12-cv-00416-MMD-GWF, 2014 WL 2765614, at *7-
8 (D. Nev. June 16, 2014) (participants and beneficiaries). We have not addressed
this issue directly, although the Coles contend our precedent implies beneficiaries
may recover. See, e.g., Chestnut v. Montgomery, 307 F.3d 698, 703-04 (8th Cir.
2002). We decline to address this issue here and assume for purposes of this appeal
that Lyle and P.C. may recover as beneficiaries.


                                         -5-
        The Coles first challenge the district court’s denial of actual damages.6 The
district court found the Coles’ only damages were $1,307 in unreimbursed medical
bills from May 2012. The Coles argue that the district court overlooked Lyle’s
unpaid claims from January and February 2012, and that it ignored the fact that they
were without coverage during part of June 2012. As to Lyle’s unpaid claims from
January and February 2012, the Coles’ argument is foreclosed by their admissions
before the district court that (1) Blue Cross did not deny any claims they submitted
based on termination of coverage until May 1, 2012, and (2) no documents were
produced indicating Blue Cross sought a refund on any claims between January 1,
2012, and April 30, 2012. The Blue Cross statement of claims further indicates that
Blue Cross paid Lyle’s last claim from February 2012 and all of Bonnie’s claims from
January and February 2012, and that May 1, 2012, is the earliest Blue Cross denied
payment for lack of active coverage. As to the period of time in June 2012, the Coles
fail to identify any damages they incurred. Moreover, they later obtained coverage
through Lyle’s employer retroactively effective June 1, 2012. Thus the district court
did not clearly err in finding the Coles’ only damages were for $1,3077 in
unreimbursed medical bills.

       The Coles also argue the district court erred in determining that the amount of
their COBRA premiums would have exceeded their out-of-pocket expenses. The


      6
        Their argument is that genuine issues of material fact preclude summary
judgment on actual damages. As stated above, we review the district court’s decision
not to award statutory damages for abuse of discretion and therefore ask whether the
district court relied on clearly erroneous factual findings. Yet we note that on de
novo review we would find no genuine issues of material fact remain as to actual
damages.
      7
        The Coles insist Blue Cross denied $1,310 in claims beginning May 1, 2012.
According to the Blue Cross statement of claims, Blue Cross denied $1,212 in claims
during May 2012 and $95 in claims during June 2012, for a total of $1,307. The
district court’s use of $1,307 was therefore not clearly erroneous.

                                         -6-
exact amount of the Coles’ COBRA premiums was never established. But the record
shows that Bonnie’s last employee contribution was $135.12 per two-week pay
period while Trinity Health’s employer contribution was $405.37 per two-week pay
period. And COBRA premiums may reach 102 percent of the plan premiums. See
29 U.S.C. §§ 1162(3)(A), 1164(1); Geissal v. Moore Med. Corp., 524 U.S. 74, 80-81
(1998) (“The beneficiary who makes the election must pay for what he gets, however,
up to 102 percent of the ‘applicable premium’ for the first 18 months of continuation
coverage, and up to 150 percent thereafter. The ‘applicable premium’ is usually the
cost to the plan of providing continuation coverage, regardless of who usually pays
for the insurance benefit.” (citations omitted)); Kwan, 737 F.3d at 849 (“Had [the
plaintiff] elected to receive coverage under COBRA, it is undisputed that she would
have had to pay premiums in the range of hundreds or thousands of dollars each
month.”). In light of this, the district court did not clearly err in determining that the
amount of the Coles’ COBRA premiums would have exceeded their damages.

                                           III.

       The Coles’s next challenge the district court’s decision not to award statutory
penalties. They first contend the district court relied on three clearly erroneous facts.8
One, the Coles claim the district court erroneously concluded they “received
approximately eleven months of free health insurance coverage.” They maintain the
period of time was less than eleven weeks, starting when Unum denied Bonnie long-
term disability benefits in October 2011, and ending when the Coles’ coverage was
retroactively terminated January 1, 2012. Strictly speaking, the Coles misattribute
this “eleven months” quote: the district court recited “Trinity Health argues . . . the


      8
      The Coles additionally argue genuine issues of material fact preclude summary
judgment on statutory penalties. Again, although on de novo review we would find
no genuine issues of material fact remain, we review only for abuse of discretion.


                                           -7-
Coles received approximately eleven months of free health insurance coverage”
(emphasis added). What the district court found was the Coles “received free health
insurance coverage for a substantial period,” “the Coles’ benefit of receiving
extended free health care coverage far outweighs their claimed damages from the lack
of COBRA notice,” and “the Coles were provided continued medical coverage for
approximately eleven months after Bonnie’s termination.” As discussed above, the
Coles received benefits through April 2012 even though Bonnie’s coverage should
have been terminated in June 2011, which amounts to about eleven months coverage.
Against this, Bonnie made her last employee contribution during the pay period
ending June 11, 2011.9 Thus the district court’s assessment of the coverage the Coles
received after Bonnie’s termination was not clearly erroneous.

       Two, the Coles claim the district court mistakenly found they were able to
obtain health care coverage beginning June 1, 2012. If this were the case, the Coles
argue, then Trinity Health would not have needed to send them a letter dated June 19,
2012, purportedly to help them switch insurance. We are unpersuaded by this
argument. Although the Coles were initially uncovered in early June 2012, the record
is clear they later obtained coverage through Lyle’s employer retroactively effective
June 1, 2012. The district court’s finding was not clearly erroneous.




      9
        The Coles argue their “free” insurance did not begin until October 2011
because Bonnie paid “deductions” from the claims Unum paid under its “Reservation
of Rights.” But Unum paid those claims only provisionally, later denied Bonnie’s
long-term disability benefits request, and ultimately chose not to seek repayment of
the benefits it provided. On these facts, we would find it not clearly erroneous to
conclude the Coles’ “free” insurance began in June 2011. Regardless, the district
court looked to the fact that the Coles benefitted by Trinity Health’s mistake. This
conclusion remains the same whether the Coles’ “free” coverage began in June or
October 2011. Thus there was no abuse of the district court’s discretion.

                                         -8-
       Three, the Coles claim the district court incorrectly stated they were without
coverage for one month. They argue their lack of coverage began on January 1, 2012,
when their benefits were retroactively terminated, and continued until at least mid-
June 2012. Again, the Coles’ benefits might have been retroactively terminated
January 1, 2012, but they received benefits through April 2012. And while they
might have been uncovered in early June 2012, they later obtained coverage
retroactively effective June 1, 2012. The district court’s finding was not clearly
erroneous.

        The Coles finally contend the district court abused its discretion by considering
the wrong factors when declining to award statutory penalties. They maintain we
have “repeatedly and clearly rejected” a “prejudice and good faith” standard. We
disagree. We have consistently held that “[i]n exercising its discretion to impose
statutory damages, a court primarily should consider the prejudice to the plaintiff and
the nature of the plan administrator’s conduct.” Deckard v. Interstate Bakeries Corp.
(In re Interstate Bakeries Corp.), 704 F.3d 528, 534 (8th Cir. 2013) (internal quotation
marks omitted). We recognize, of course, that “[a]lthough relevant, a defendant’s
good faith and the absence of harm do not preclude the imposition of” a statutory
penalty. Id. (internal quotation marks omitted). But this recognition stops well short
of our having rejected the consideration of prejudice and good faith. Thus the district
court acted consistent with our precedent when it found that “Trinity Health acted in
good faith. Moreover, the Coles were not harmed or prejudiced by Trinity Health’s
tardy notice of their COBRA rights.”

       We therefore find unavailing the Coles’ argument that the district court erred
by not considering the delay in Trinity Health’s actions, the decision to retroactively
terminate the Coles’ coverage, and the failure to quickly notify the Coles of this
decision. We believe instead the district court did not abuse its discretion where there
was no evidence Trinity Health willfully failed to notify the Coles of their COBRA
rights or of the retroactive termination of their coverage, and where the district court


                                          -9-
reasoned “if Trinity Health intended to act in bad faith, free health care coverage
would not have been extended to the Coles.” See In re Interstate Bakeries Corp., 704
F.3d at 537 (recognizing “finding of bad faith typically requires a willful failure” to
send COBRA notice and upholding finding of good faith where employer was
unaware it failed to send COBRA notice as it normally would and repaid all benefits
that had been clawed back after termination of coverage (internal quotation marks
omitted)); Starr, 461 F.3d at 1040 (upholding denial of statutory penalty where
district court found employer did not act in bad faith because it did not willfully fail
to send COBRA notice and provided benefits after scheduled termination).

                                          IV.

      Accordingly, we affirm the grant of summary judgment to Trinity Health.
                     ______________________________




                                         -10-
