                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-11-2002

Glandorf v. W G Prod Inc
Precedential or Non-Precedential:

Docket 0-2443




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Recommended Citation
"Glandorf v. W G Prod Inc" (2002). 2002 Decisions. Paper 164.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/164


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                        NOT PRECEDENTIAL

           UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT


                    NO. 00-2443


           CLAUS GLANDORF; LENORE PETERS

                        v.

 W.G. PRODUCTS CO., INC., a New Jersey corporation

                        Claus Glandorf,
                        Appellant



 On Appeal From the United States District Court
         For the District of New Jersey
       (D.C. Civil Action No. 99-cv-01418)
    District Judge: Honorable Alfred M. Wolin


              Argued November 8, 2001

BEFORE: McKEE, RENDELL and STAPLETON, Circuit Judges

           (Opinion Filed March 8, 2002)




                  John A. Craner (Argued)
                  Craner, Satkin & Scheer
                  320 Park Avenue
                  P.O. Box 367
                  Scotch Plains, NJ 07076
                   Attorney for Appellant

                  Domenick Carmagnola (Argued)
                  Lum, Danzis, Drasco, Positan & Kleinberg
                  103 Eisenhower Parkway
                  Roseland, NJ 07068
                   Attorney for Appellee



                      OPINION
STAPLETON, Circuit Judge:

         Defendant/Appellee W.G. Products terminated Plaintiff/Appellant
Claus
Glandorf on March 2, 1998. Prior to Glandorf's termination, W.G. Products
sponsored a
group health insurance plan with Blue Cross/Blue Shield. Upon his
termination, Glandorf
was notified that he had a right to COBRA coverage. For three months
after his
termination Glandorf made premium payments to W.G. Products on the
assumption he
was securing COBRA benefits. At some point during the summer of 1998,
Blue
Cross/Blue Shield informed Glandorf that he was not eligible for COBRA
because W.G.
Products allowed its employee's insurance coverage to lapse prior to
Glandorf's
termination.
         The president of W.G. Products testified in his deposition that
Blue
Cross/Blue Shield canceled the insurance policy as of February 2, 1998,
but did not notify
W.G. Products of the cancellation until June of 1998. He stated that he
did not receive
any notices of a failure to pay the premium between February 2, 1998 and
June 1998.
Rather, the company's insurance agent told him that W.G. Products had a
large credit and
was working it off. Glandorf does not dispute that he received a refund
of his three
payments.
                                I.
         Glandorf first contends that he was entitled to COBRA coverage.
We agree
with the District Court that he was not.
         COBRA requires employers that sponsor a group health plan for its
employees to provide continuation coverage for employees who lose their
coverage as a
result of a qualifying event. See 29 U.S.C.    1161. Termination
constitutes a qualifying
event. See 29 U.S.C.    1161(2). Congress enacted COBRA so that employees
who lose
their job as a part of a partial layoff can purchase continuation medical
coverage at a rate
approximately equal to the group rate, which is lower than the rate for
individual
coverage. See Local 217, Hotel & Rest. Empl. Union v. MHM, Inc., 976 F.2d
805, 809
(2d Cir. 1992). Continuation coverage is "coverage which, as of the time
the coverage is
being provided, is identical to the coverage provided under the plan." 29
U.S.C.
  1162(1).
         As the Court of Appeals for the Second Circuit held in Local 217,
COBRA
provides that coverage need only extend until the "date on which the
employer ceases to
provide any group health plan to any employee." Id. at 809 (quoting 29
U.S.C.
1162(2)(B)). Further, "an employer is under no obligation flowing from
COBRA to
adopt a group health plan or to maintain one that is in existence." Id.
"Once an employer
ceases to maintain any group health plan . . . COBRA releases the plan
administrator from
the obligation to provide continuation of coverage at the group rate."
Id. at 809-10.
         Here, the uncontradicted evidence establishes that W.G. Products
failed to
pay its premiums and its Blue Cross/Blue Shield Plan lapsed on February 2,
1998, prior to
the date of Glandorf's termination in March. Accordingly, there was no
such coverage
for any employee on the date of Glandorf's termination, and W.G. Products
had no
COBRA obligation to him by virtue of its Blue Cross/Blue Shield Plan.
         Glandorf argues in the alternative before us that W.G. Products
self-insured
during the period between the cancellation and the beginning of its new
Amerihealth
coverage on September 1, 1998. According to Glandorf, W.G. Products
retroactively
paid all of the claims of its employee beneficiaries which would have been
paid by Blue
Cross/Blue Shield had the insurance not been canceled during this interim
period. We are
not persuaded that this self-insurance argument was advanced in the
District Court and
that it is properly before us. It is apparent, however, that it is
without merit. As we have
noted, the statute imposes a COBRA coverage duty only on those employers
that have an
insurance plan in place on the date of termination. It is clear on the
basis of the
undisputed facts that W.G. Products did not have such a plan in March of
1998.
Unbeknownst to it, its Blue Cross/Blue Shield Plan had terminated on
February 2nd. It
had not at that point established a new plan   self-insured or otherwise
because it
believed its Blue Cross/Blue Shield Plan was still in effect.
         Finally, Glandorf argues that W.G. Products should be equitably
estopped
from arguing that he is not eligible for continuation benefits. Section
502(a)(3) of ERISA
permits a plaintiff to obtain equitable relief to redress violations of
ERISA. See 29
U.S.C.   1132(a)(3); Smith v. Hartford Ins. Group, 6 F.3d 131, 137 (3d
Cir. 1993). To
succeed on a claim for relief under a theory of equitable estoppel, an
ERISA beneficiary
must establish a material misrepresentation, reasonable and detrimental
reliance upon the
representation, and extraordinary circumstances. See In re Unisys Corp.
Retiree Medical
Benefit ERISA Lit., 58 F.3d 896, 907 (3d Cir. 1995); Curcio v. John
Hancock Mutual
Life Ins. Co., 33 F.3d 226, 235 (3d Cir.1994). The District Court denied
this claim on the
ground that Glandorf had not shown extraordinary circumstances. While we
are inclined
to agree with the District Court, the clear, short and sufficient answer
to this contention is
that Glandorf failed to come forward with any evidence from which a trier
of fact could
conclude that he reasonably relied to his detriment on his employer's
representation that
he was entitled to COBRA. Indeed, Glandorf affirmatively asserts that he
was unable to
get alternative coverage from another insurer when he was terminated
because his wife
had a pre-existing medical condition. It necessarily follows that he has
failed to show that
he took, or failed to take, action to his detriment in reliance on the
misrepresentation. See
generally Smith, 6 F.3d at 137 ("To establish injury, the Smiths must show
they could
have obtained an alternative health insurance policy that provided for
coverage . . . were it
not for the Hospital's misrepresentations.").
         While we are sympathetic to the Glandorfs, the summary judgment
entered
in favor of W.G. Products must be, and will be, affirmed.
TO THE CLERK:
         Please file the foregoing Not Precedential Opinion.

                                   /s/ Walter K. Stapleton
                                   Circuit Judge
