Petition for Writ of Certiorari — Geissal v. Moore Medical Corp.

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Supreme Court, U.S.

|, FILED

03-874 DEC 11 2003,

Supreme Court of the United States

Bonnie L. Geissal, as personal representative

of the Estate of James W. Geissal,

Petitioner,

Vv.

Moore Medical Corporation; Group Benefit Plan, of Moore

Medical Corp.; Hebert Walker

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth Circuit

PETITION FOR A WRIT OF CERTIORARI

Sheldon Weinhaus

Counsel of Record

906 Olive Street

Suite 900

St. Louis, MO 63101-1463

(314) 621-8363

Attorney for Petitioner

ROT TEPER AAR TE EET STRAIN A HT EEE

CURRY & TAYLOR @ WASH D.C. @ (202) 223-3160 @ USSCINFO.COM

Il.

III.

QUESTIONS PRESENTED

When an ERISA plan administrator’s COBRA

violation forces innocent health care providers

and secondary carriers to pay for a participant’s

health care benefits, is the plan participant

entitled to recover such benefits as legal

restitution and hold it in constructive trust for

the benefit of these third parties?

Can an ERISA health care plan administrator

take advantage of later payments made by

another COB insurer to avoid paying benefits,

where the other insurer would not have paid but

for the administrator’s COBRA violation and the

express terms of the primary insurer's plan

prohibits taking credits for such other COB

insurer's payments?

Should a lower court refuse to entertain ERISA

502(c) penalties against a clear "disparagement"

of the plain meaning of the COBRA statute and

attempt to create "draconian alternatives" to

Congressional intent, on the basis that the plan

administrator’s refusal to comply with the

COBRA statute is "reasonably justifiable."

PARTIES TO THE PROCEEDINGS

Petition here, and plaintiff and appellant in the

courts below, is Bonnie L. Geissal, personal

representative of the Estate of James W. Geissal,

deceased.

Respondents herein and defendants and

appellees in the courts below, and are

Moore Medical Corp.

Group Benefit Plan of Moore Medical Corp., and

Herbert Walker

The Respondents were also cross appellants in

the Court of Appeals.

ill

TABLE OF CONTENTS

pages

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APPENDIX

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DISTRICT COURT MEMORANDUM ....cecscecceseseseceosesecese 18a

DISTRICT COURT DECISION .........cccccccecessssesesesecesescees 54a

COURT OF APPEALS ORDER DENYING

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COURT OF APPEALS ORDER ........ccccscecececesscsssesseceseoeee 73a

TABLE OF AUTHORITIES

Cases

ADMINISTRATIVE COMMITTEE OF THE

WAL-MART STORES, INC. V. VARCO,

2003 U.S. App. LEXIS 17772 (7™ Cir.

UNPUBLISHED 2008) ..cscsccsosssscosessoscesosessosessoess

ALLIS-CHALMERS CORP. V. LUECK, 471

SNe (RI Pere. conicteisninansivinaliistntibvinesctinatoidiinebinetions

ARANA V. OCHSNER HEALTH PLAN, 338

Fe COTE CUR, Bt) vistensecasccseresessstnonnsimnnes

BOONE V. LEAVENWORTH ANESTHESIA,

INC., 20 F.8D 1108 (LOTH CIR. 1994)............. ome

COMMUNITY HEALTH PLAN OF OHIO V.

MUSSER, 347 F.3D 619 (6TH CIR. 2008)............

DAUGHTREY V. HONEYWELL, INC., 3 F.3D

Re ee re ee IE saiisiestasdsstaitcaeeceearcerrsaeatnaines

FARMER V. PERSONNEL POOL OF PLATT

COUNTY, 110 S.W.3D 818 (MO. 2008)..............4.

FIRESTONE TIRE & RUBBER CoO. V.

BRUCH, 489 U.S. 101, 112-113 (1989)...

FOSSO V. STATE FARM MUT. AUT. INS. Co.,

940 F.2D 388 (8TH CIR. 1991)........c.cecccccccccccccceee

FRANCONIA ASSOCIATES V. UNITED

STATES, 536 U.S.129, 142-143 (2002)............004

pages _

3 Fs ee

FRANKLIN V. GWINNETT CO. PUBLIC

SCHOOLS, 503 U.S. OD, FO CII ance sictsesctnisssesicaseceeee 20

GEISSAL V. MOORE MEDICAL Corp. , 024

SE DD, FRUIT scstsnssieoriannnpviseninsinniinicase sada: 1,7, 10, 12,19

GREAT-WEST LIFE ASSURANCE CORP. V.

KNUDSON, 524 U.S. 204 | 10, 11, 13, 14

KING V. JOHN HANCOCK MUTUAL LIFE

INS. CO., 500 N.W.2D 619 (S.D. 1998) .eecccccsccccsccssseccccosse 7

LUTHERAN HOSPITAL OF INDIANA, INC. Vv.

SAINT JOSEPH MEDICAL CENTER, 51

F.3D 1808 (7TH CIR. 1995) ....ssscsscssssssecsssssssssseccosseccsseccs... 7

LUTHERAN MED. CTR. v. CONTRACTORS

HEALTH & WELFARE PLAN, 25 F.3D 616,

SED ORE CEM, TIES ccvesscnvensncssossiisotnsenmuiunacascns cc, 15

MATHIAS V. ACCOR ECONOMY LODGING,

INC., 347 F.3D 672 (7TH CIR. Ee nee 20

MERTENS V. HEWITT & ASSOCIATES, 508

AED SO NO cciinniaiekceuannude ie eaten 11,14

MOOTHART V. BELL, 21 F3D 1499 (10TH

AR, FO sisiscsscscncnscaviebaiseasemanee aan 19

OAKLEY V. CITY OF LONGMONT, 890 F.2p

LEZS (LOTH CIR. 19BD) q...vcsssesececssovesseserseseouceaseeteresonssisec2, 7

REICH V. CONTINENTAL CASUALTY Co., 33

F.3D 754 (7TH CIR. 1994) ooo cecccccccoscecoccoseeeesn, 10, 13, 14, 18

vil

SAMSEL V. ALLSTATE INS. Co., 59 P.8D 281

EIT TTI TD cieriitensnscnnnncsnieseseicsiacetinsinsininenaannatien 18

SCOTT V. SUNCOAST BEVERAGE SALES,

LTD., 295 F.3D 1233 (11TH CIR. 2002).........scscossescesseees 19

VENEZIANO V. LONG ISLAND PIPE

FABRICATION & SUPPLY, 2003 U.S. APP.

LEXIS 21755 GRD CER, BOUD) nrsccscosoeressssasencscosonsenssunness 19

WINSTEAD V. J.C. PENNY CoO., 933 F.2D

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Statutes

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OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Eight Circuit rendered July 31, 2003, is reported

at 338 F.3d 926, and is reprinted in the appendix hereto as

la through 17a. A petition for rehearing or rehearing en

banc was denied September 12, 2008, and is not officially

reported; it is printed in the appendix as 72a. A later

grant of fees and costs to Plaintiff by the Eighth Circuit

on Plaintiff's appeal and for Plaintiffs success in opposing

Defendants’ cross-appeal on fees is also unreported and

appears in the appendix as 78a.

Of the two opinions of the United States District

Court for the Eastern District of Missouri from which

Plaintiff appealed, the first is reported at 158 F.Supp.2d

976, and is reprinted in the appendix as 18a to 53a. The

second decision of the District Court, issued one year

later, is unreported, and appears in the appendix as 54a to

71a.

JURISDICTION

This case was earlier before this Court. Geissal v.

Moore Medical Corp., 524 U.S. 74 (1998).

The district court had jurisdiction of this action

pursuant to 28 U.S.C. §1331 and 29 U.S.C. §§1132(a) and

1161. Upon remand by this Court, the magistrate judge

continuing to act under the original consent given

pursuant to 28 U:S.C. §636(c)(1) denied any remedy for

Petitioner save for attorneys fees and costs, and issued

final judgment on March 29, 2002.

RL A NE ET aT a TT TE

Petitioner appealed to the Eighth Circuit Court of

Appeals pursuant to 28 U.S.C. §1291. The judgment of

the Court of Appeals was entered July 31, 2003.

Petitioner filed a petition for rehearing by the panel or,

alternatively, for rehearing en banc. The Court of

Appeals denied the petition September 12, 2003.

Pursuant to Supreme Court Rule 13.1, this petition

has been filed within 90 days of the denial of rehearing.

The jurisdiction of this Court is invoked pursuant to 28

U.S.C. §1254.

RELEVANT PROVISIONS

ERISA

ERISA $8502, 29 U.S.C. §1132, in pertinent part

provides:

See. 1132 - Civil enforcement

(a) Persons empowered to bring a civil

action

A civil action may be brought -

(1) by a participant or beneficiary

(A) for the relief provided for in

subsection ©) of this section, or

(B) to recover benefits due to him under

the terms of his plan, to enforce his rights

under the terms of the plan, or to clarify

his rights to future benefits under the

terms of the plan;

(2) by the Secretary, or by a participant,

beneficiary or fiduciary for appropriate

relief under section 1109 of this title;

(3) by a participant, beneficiary, or

fiduciary (A) to enjoin any act or practice

which violates any provision of this

subchapter or the terms of the plan, or (B)

to obtain other appropriate equitable

relief (i) to redress such violations or (ii)

to enforce any provisions of this

subchapter or the terms of the plan;

a * *

©) Administrator's refusal to supply

requested information; penalty for failure

to provide annual report in complete form

(1) Any administrator (A) who fails to

meet the requirements of paragraph (1)

or (4) of section 1166 [2] of this title or

section 1021(e)(1) of this title with respect

to a participant or beneficiary, or (B) who

fails or refuses to comply with a request

for any information which such

administrator is required by this

subchapter to furnish to a participant or

beneficiary (unless such failure or refusal

results from matters reasonably beyond

the control of the administrator) by

mailing the material requested to the last

known address of the requesting

participant or beneficiary within 30 days

after such request may in the court's

discretion be personally liable to such

participant or beneficiary in the amount

of up to $100 a day from the date of such

failure or refusal, and the court may in its

discretion order such other relief as it

deems proper.

COBRA NOTICE

The Consolidated Omnibus Budget Reconciliation Act

("COBRA") 29 U.S.C. provides

Sec. 1166. - Notice requirements

(a) In general — In accordance with

regulations prescribed by the Secretary -

(4) the administrator shall notify -

(A) in the case of a qualifying event

described in paragraph (1), (2), (4), or (6)

of section 1163 of this title, any qualified

beneficiary with respect to such event,

and

(B) in the case of a qualifying event

described in paragraph (3) or (5) of section

1163 of this title where the covered i

employee notifies the administrator under

paragraph (8), any qualified beneficiary

with respect to such event, of such

beneficiary's rights under this subsection.

§1161. Plans must __— provide

continuation coverage to certain

individuals

(a) In general — 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 event is entitled, under the

plan, to elect, within the election period,

continuation coverage under the plan.

§1162. Continuation coverage

For purposes of section 1161 of this

title the term "continuation coverage"

means coverage under the plan which

meets the following requirements:

(2) Period of coverage — The coverage

must extend for at least the period

beginning on the date of the qualifying

event and ending not earlier than the

earliest of the following:

(A) Maximum required period. -

* * *

In the case of a qualified beneficiary who

is determined, under title II or XVI of the

Social Security Act (42 U.S.C. 401 et seq.,

1381 et seq.), ... to have been disabled at

the time of the qualifying event,” any

reference in clause (I) or (ii) to 18 months

is deemed a reference to 29 months (with

respect to all qualified beneficiaries), but

only if the qualified beneficiary has

provided notice of such determination

under section 1166(8) of this title before

the end of such 18 months.

STATEMENT

When the deceased plan participant James Geissal

was terminated from employment status while suffering

from cancer, defendants gave him what purported to bea

COBRA notice which concealed the possibility or

conditions for an eleven month extension. 29 U.S.C. §

1162(2)(A). Geissal elected COBRA coverage and paid

premiums. Respondents did not treat their written notice

or Geissal’s election or premium payments as having

meaning. Respondents secretly held up the medical bills

they received for Geissal’s care during this time,

aggregating to $104,4587.34, and did not pay them.

After six months Respondents advised Geissal that

they were rescinding and revoking the COBRA notice,

dishonoring his election and their notice obligations ab

initio. Respondents told all the medical services

providers whose bills they had held up, that Respondents

were never responsible for payment. The providers were

told that they could only look to the TWA plan for

payment. Aetna was the TWA plan’s claims

YCongress later amended this provision to cover those

determined disabled within 60 days of the qualifying event.

administrator. Respondents were aware that there were

already decided appellate cases holding that the

terminating employer had the obligation to provide

health coverage under COBRA. Lutheran Hospital of

Indiana, Inc. v. Saint Joseph Medical Center, 51 F.3d 1308

(7th Cir. 1995); Oakley v. City of Longmont, 890 F.2d 1128

(10th Cir. 1989); King v. John Hancock Mutual Life Ins.

Co., 500 N.W.2d 619 (S.D. 1993). This Court said the

question was never even close, and charged the Eighth

Circuit with engaging in social legislation to ameliorate

the effects that Respondents’ counterviews would cause .

Geissal v. Moore Medical Corp., 524 U.S. 74 (1998)

(“Geissal 1’’).

After ruling by this Court in Geissal I, and remand,

the magistrate judge initially viewed his obligation to

address this Court’s footnote 3, 524 U.S. at 78.2

The parties presented to the district court an

elaborate spreadsheet on what part of what bills TWA

plan/Aetna had paid after Respondents’ rescission of their

COBRA notice. The spreadsheet also listed what parts of

what bills had been charged to the Geissal’s account or

paid by Petitioner, and what part Aetna had forced the

of This Court said in part

nothing in the record indicates one way or another whether Aetna

has fully reimbursed Geissal for James Geissal's medical bills.

Geissal's counsel represented at oral argument that at a minimum

there are unpaid medical bills incurred on a trip to the Greek Islands.

Quite apart from this, we cannot tell from the record whether Geissal

may be entitled to recover from Moore even if sometime later Aetna

would have a claim against Geissal to recover the insurance costs that

it paid.

providers to discount though they had no discounting

agreement with Respondents.

Based on the spreadsheet’s showing of what

Respondents gained by avoiding their COBRA

obligations, Petitioner urged the doctrine of negative

restitution entitled her to recover from Moore all the |

benefits it should have paid. However, Petitioner

proposed in both in the district court and on appeal to

hold all such monies that Moore wrongfully avoided

paying, be held by her in constructive trust for TWA plan

and for the discounting providers.

This constructive trust suggestion was long before

the case ever came to the second appeal. In the district

court Respondents acknowledged “Plaintiff, creatively,

has requested a constructive trust in favor of

TWA/Aetna.” On page 2 of her opening brief in the

current appeal to the Eighth Circuit, Petitioner noted

that constructive trust was a subject urged by plaintiff

below, saying

Moore’s counsel at one time assured the

[Supreme] Court his only concern was

that Moore “don’t intend to pay twice.”

Plaintiffs always recognized they would

have to deal with Aetna, the secondary

insurer acting for the TWA plan, once

benefits were paid. That recognition was

exactly why they urged McGee on the

district court, albeit more in terms of

constructive trust and common fund.

[citations omitted; emphasis supplied]

- The Eighth Circuit nonetheless determined

Petitioner had never raised the issue of constructive

trust until her reply brief on appeal.

Upon remand from this Court, Petitioner offered

the TWA plan contained a subrogation clause, confirming

Petitioner’s always stated position that “sometime later

Aetna would have a claim against Geissal to recover the

insurance costs that it paid” if Petitioner had obtained

any monetary relief whatsoever. Contrary to the Eighth

Circuit, 338 F.3d at 930, Petitioner always acknowledged

plaintiff's obligation under the TWA subrogation clause,

and in oral argument earlier told this Court that she will

have to deal with TWA plan if she recovers the relief she

seeks.

In that part of the Moore plan having to do with

the Moore plan’s coordination of benefits, one term

prohibited crediting the Moore plan for payment of any

benefits unless the Moore plan had paid the other

“coordinating” plan. Moore paid nothing to the TWA plan.

The question posed by this Court in its footnote 3

in Geissal I and quoted in footnote 2 above, was never

answered by the district court. The magistrate judge

concluded that when a participant seeking an unpaid

benefit dies at any time before the conclusion of

litigation, all rights to plan benefits under ERISA

§1132(a)(1) cease. He then appeared to accept the

doctrine that “restitution seeks to punish the wrongdoer

by taking his ill-gotten gains,” Geissal v. Moore Medical

Corp., 158 F.Supp.2d 976, 981 (E.D. Mo. 2001), but he

concluded this doctrine would somehow be giving plaintiff

what he called “compensatory damages.” Jd. at 983. He

did not address Petitioner’s suggestion that the monies be

held as a constructive trust for the many third parties

who had been injured, but instead joined the chorus of

lamenters of the inadequacy of proper ERISA remedies.

Id. at 983-84, as if ERISA tied his hands in awarding

restitution or creating a voluntary constructive trust.

- Without reference to this Court’s finding in

Geissal I of “no justification for [Respondents]

disparaging” statutory clarity, 524 U.S. at 87, and the

“draconian alternative” defendants would lead the nation

to accept, id. at 85, the magistrate judge and the Eighth

Circuit found Respondents had provided an initial

COBRA notice and they would go no further. Both lower

courts ignored the uncontested evidence that

Respondents made no attempt to comply with the notice

save for collecting premiums from Mr. Geissal, that.

Respondents held up over a hundred thousand dollars of

medical billings while premiums were being paid, and

then later Respondents “revoked” such notice retroactive

to the giving of the notice. Both lower courts found

Respondent’s conduct to have been “based on a

reasonable interpretation,” words foreign to Geissal I.

Both lower courts freed Respondents of all ERISA

imposed penalties for a written notice Respondents

voided ab initio.

REASONS FOR GRANTING THE WRIT

Upon remand in Geissal v. Moore Medical Corp.,

524 U.S. 74 (1998), on the issue of ERISA remedies the

Eighth Circuit rejected the ERISA doctrine of

restitution made clear by this Court in Great-West Life

Assurance Corp. V. Knudson, 524 U.S. 204 (2002), citing

Reich v. Continental Casualty Co., 33 F.3d 754 (7 Cir.

1994), assuring that the wrongdoer avoided any loss from

its COBRA obligations and shifted that loss to third

parties, whom Petitioner asked to protect by having her

hold such amounts of promised but unpaid benefits in

constructive trust for those who did eventually pay for

the health care Petitioner’s decedent required and which

Respondents refused to pay. The Eight Circuit instead

would again engage in its own form of social legislation by

its judicial amendment of ERISA to allow the a dual

coverage secondary plan that suffered loss due to

Respondents’ defalcation, to sue the Respondents as

wrongdoer directly for a monetary recovery for sums the

secondary plan paid in violation of ERISA’s limitation on

proper parties to an ERISA suit in 29 U.S.C. §1182(a) and

in violation of this Court’s decisions in Knudson, supra,

and in Mertens v. Hewitt & Associates, 508 U.S. 248

(1993) limiting parties and prohibiting monetary remedies

to all but the participant. The issue of the status of the

secondary payer to seek relief under ERISA does come

up, as exampled by past cases such as Winstead v. J.C.

Penney Co., 933 F.2d 576, 579-80 (7th Cir. 1991). This is

an important issue of ERISA remedies in dual coverage

situations that are not unique. Answer is needed.

The Eighth Circuit in determining ERISA

penalties, seemed determined to ignore this Court’s prior

finding that the Respondents disparaged the plain

meaning of the law to avoid their COBRA obligations,

and the Eighth Circuit wrongly puts form over substance,

finding that an illusory COBRA notice never intended to

be followed or have effect, and then revoked ab initio is

statutory notice and meets statutory notice and right of

election requirements. Adherence to this Court’s prior

opinion and statutory demands deserves further review

by this Court. Most courts impose penalties of some kind

even if the plan administrator is in good faith to assure

deterrence.

ARGUMENT

QUESTION 1. This case presents ERISA remedy

issues. The Eighth Circuit rejects the doctrine of

negative restitution, and legislatively creates new causes

of action for new parties in addition to those allowed in 29

U.S.C. §1132(a). To deny restitution the circuit creates

monetary remedies for third parties that do not exist

under ERISA except for participants. In prior oral

argument before this very Court, Geissal I, Respondents’

counsel said it only wanted to assure it only pays “once.”

Now the Eighth Circuit holds Respondents be entitled to

keep the monies they wrongfully avoided paying.

Respondents need not pay promised benefits even “once,”

they are to benefit by their wrongdoing under ERISA.

Although in oral argument in Geissal I Justice

Bryer and Respondents’ counsel engaged in a colloquy

which concluded that no double recovery was possible,

Respondents renewed the argument upon remand by this

Court. Geissal I. The Eighth Circuit chose to use the

term “windfall double recovery,” 338 F.3d at 930, putting

the onus on the victim rather than the wrongdoer, as if

negative restitution were an abhorrent concept and it

would serve ERISA purposes better if wrongdoers are

enriched, rather than give the promised benefits to

plaintiff who in turn is subjected to a subrogation clause

to pay third parties and who is herself willing to be

subjected to a constructive trust.

Although the Eighth Circuit criticized the time

consuming exposition of remedies by Petitioner’s counsel

while remedies were pursued in the district court, 388

F.3d at 935-36, as if this Court’s note 3 in Geissal I were to

be ignored, Petitioner had envisioned, explained and

proposed the viability of a constructive trust even before

this Court’s decision in Great-West Life Assurance Corp.

V. Knudson, 524 U.S. 204 (2002), made a holding in

constructive trust relevant. This Court said without a res

to impose a constructive trust, a plan as subrogee cannot

obtain monies the participant collects from third parties.

There must be a constructive trust. See, e.g.,

Administrative Committee of the Wal-Mart Stores, Inc.

V. Varco, 2003 U.S. App. LEXIS 17772 (7 Cir.

unpublished 2003) (constructive trust established in

participant to service subrogation claim of plan that paid

the health providers).

This case presents the Court with the opportunity

to address the issue of adequate ERISA remedies in dual

coverage or, more corrrectly, in coordination of benefits

cases in which two plans have no contractual or statutory

connection and neither has made any direct promise to

the other.

Unlike other remedies cases, this case also raises in

the dual coverage context the question of negative

restitution, what to do about misconduct to wrongly shift

the primary preempted benefits burden to another to

avoid losses that the Eighth Circuit puts beyond remedy.

338 F.3d at 932. Judge Posner in his decision in Reich v.

Continental Casualty Co., 33 F.3d 754 (7 Cir. 1994),

clearly and succinctly sets out the concept of negative

restitution as a valid ERISA and remedies concept. In

Great-West Life Assurance Corp. v. Knudson, 524 U.S.

204 (2002) the Court cited Judge Posner’s decision as the

one setting out the correct view of restitution, whether

legal or equitable, the latter calling for a res. Yet the

Eight Circuit says ERISA intended no remedy, no

restitution, legal or equitable, for the wrongdoer’s

avoidance of paying benefits it had promised and was

supposed to have paid. 338 F.3d at 932. Either Judge

Loken or Judge Posner err. They both can’t be right.

It is submitted the Eighth Circuit misreads this

Court’s Great West decision when it cites Great West to

reject Reich. Ina time when there is a clamor for better

remedy, the Eighth Circuit chooses to limit remedies

further.

The Eighth Circuit does not deny the secondary

plan (TWA plan) and its member participants have lost

monies they spent for Mr. Geissal’s care that was the

Moore plan’s primary obligation to pay. While it suggests

a decision favoring Petitioner would hurt the Moore plan,

in the instant case the Moore plan is wholly unfunded.

There is no trusteed monies at Moore in contrast to the

TWA plan, a Taft-Hartley plan wherein funding exists.

The Eighth Circuit is not protecting any participants in

the Moore plan, but solely Moore’s general revenues.

Moore has no welfare fund to which trust concepts might

apply. The Eighth Circuit decision cannot create the

Moore plan into some deserving institution to which the

doctrine of negative restitution of Reich would create a

harm to innocents. Courts often believe that some “fund”

exists when except for the largest employers there is

none, as is the case here with the Moore plan.

Recognizing it may stand accused of rewarding the

wrongdoer, the Eighth Circuit searched to find a way to

eliminating the dilemma. To do this the Eight Circuit all

but nullifies the decisions of this Court, such as Mertens

v. Hewitt& Associates, 508 U.S. 248 (1993) and Knudson,

supra, which clearly limits litigants for breach under

ERISA and prohibits monetary recoveries except to

participants under §1132(a)(1). Even the terribly dated

decision the Eighth Circuit relies upon to allow the TWA

plan the right to sue the Moore plan, Winstead v. J.C.

Penney Co., 933 F.2d 576, 579-80 (7th Cir. 1991), that

circuit recognized how tenuous it was at the time to allow

such a suit. How after Mertens and Knudson does the

TWA plan or other coordinating (secondary) coverage

plan sue under ERISA for monetary repayment of

benefits that the primary coverage plan, Moore, owed

only to its own participant Geissal? TWA plan is no party

to the Moore plan. No promises were made by

Respondents to TWA plan or its administrator. Is not the

Eighth Circuit once again engaged in legislation to effect

a “cure” for others, similar to its “substantial gap”

legislation condemned in Geissal I?

The Eighth Circuit never explain how after

Mertens and Knudson the TWA plan is to ever get a

monetary judgment against Moore for benefits not paid to

or for Geissal? TWA plan supplies no medical services to

be a provider assignee, as was the case in Lutheran Med.

Ctr. v. Contractors Health & Welfare Plan, 25 F.3d 616, -

619 (8 Cir. 1994), upon which the Eighth Circuit relies.

338 F.3d at 933. No patient assignments were ever even

in evidence in the instant case. Does this “carefully

reticulated” ERISA statute say a subrogee stands in the

shoes of a participant. Knudson suggests the two are

different. Cf., Community Health Plan of Ohio v. Musser,

347 F.3d 619 (6" Cir. 2003) (the courts are without

jurisdiction under ERISA to hear the claims of

enforcement of the subrogation clauses).

There are no state laws in this case enabling such

suits between non-contracting insurers even if they both

have (different or the same) coordination of benefits

clauses. Even if there were state laws, does not ERISA

preempt such laws. Cf. Arana v. Ochsner Health Plan,

338 F.3d 483 (5'" Cir. 2003) (complete preemption for

subrogation claims).

These questions beg for answer, for plans with the

primary obligations under COBRA and “funded” solely

by the employer paying for services out of general

corporate revenues as billed, are encouraged by the

Eighth Circuit to reject their COBRA obligations,

assured that time can only work only a benefit to them.

This case is example how a skillful defense can stall a case

for years until the lower court can even justify no remedy

sufficient to allow repaying the vulnerable secondary

plan. Geissal is no latecomer to raising his rights, as the

district court acknowledges. The issue of dual coverage

and who bears the responsibility for paying, and how

collection of those obligations to the secondary are to be

enforced, are greater than ever. Should the Eighth

Circuit once again be heard to suggest it need not wait for

legislation before allowing the TWA plan to. sue another

plan for a monetary remedy under ERISA which ERISA

does not allow, Mertens, in preference to allowing

Petitioner to obtain and hold such benefits in a

constructive trust for TWA plan and providers she has

long ago offered to assume.

QUESTION 2. The second question presented for

review more directly raises the question about plans in

dual coverage cases, such as this, and the Eight Circuit’s

unwillingness to give any credence to the plan terms that

affect what happens when there are plans that have

coordination of benefit provisions. When there are

coordinating plans and the Moore plan is primary, as

would be the case here,” the Moore plan expressly

prohibits Respondents from taking credit for any

payments made by a secondary plan unless Moore had

made payment to the secondary plan” The Eighth

Circuit reads this clause out of the plan, to find an earlier

appearing generic plan provision that provides “benefits

are not payable for . . . services for which there is no

obligation to pay,” somehow applicable because of

Respondents’ own default and disparagement of its

COBRA obligations.

There was an obligation on the Geissals to pay at

the time the bills when rendered, and the fact that TWA

plan had to come in to later make good because

Respondents refused, does not remove the fact that an

obligation had been incurred that became Moore’s

obligation. Even the Eighth Circuit had once agreed with

that. See Fosso v. State Farm Mut. Aut. Ins. Co., 940

F.2d 388 (8'" Cir. 1991) (at the time of receiving the bill

the plaintiff was entitled to the insurance benefit, and

insurer cannot take advantage of the other insurer’s

*Because of the magistrate judge’s view that death forecloses

benefits, he never had to determine whether any terms of the planas

to benefits had been breached, whether the coordination provisions

applied, and whether one looks only in hindsight almost ten years

after suit was brought, to see if medical bills were still owed. Though

it found the magistrate to have erred on the issue of death, the

Eighth Circuit chose not to remand, but to act as the trial court on

these construction issues.

#1V2(4) of the Moore plan provides its “benefits are

determined before those of the other program, and without

considering the other Program’s benefits.”

payments unless the other insurer is first liable). The

concept of not crediting the wrongdoer for later payments

of another insurer, even if not a coordinating one, is not

unusual outside ERISA. See Samsel v. Allstate Ins. Co.,

59 P.3d 281 (Az en banc 2002) reviewing cases. Missouri

follows the majority. Farmer v. Personnel Pool of Platt

County, 110 S.W.3d 818 (Mo. 2003). There is nothing in

the legislative history to suggest Congress intended by

ERISA to change state law interpretation of essentially

health insurance policies. See Firestone Tire & Rubber

Co. v. Bruch, 489 U.S. 101, 112-113 (1989).

When to this we add the doctrine of negative

restitution, that a wrongdoer must be required to pay the

loss it improperly avoided by its disparagement of the law

and its own contract promises when there are

coordinating group plans, Reich, supra, the Eighth

Circuit opinion raises such a significant departure from

established law that a writ is deserving to determine

ERISA remedies.

QUESTION 3. On the third question dealing with

penalties, the Eighth Circuit practically discounts this

Court’s prior unanimous reversal. In most cases in which

there has been a failure of compliance with COBRA the

courts have had no difficulty in imposing some penalty,

even if they found defendant’s conduct had some

reasonable bases on either fact or law. See, e.g.

Daughtrey v. Honeywell, Inc., 3 F.3d 1488 (11 Cir. 1993)

(even if plaintiff suffered no prejudice, ERISA penalty

provisions were designed not to rectify prejudice to a

participant but “to punish noncompliance” with ERISA’s

statutory requirements: “the mere absence of bad faith no

more exonerates the [statutory] failure ... than does the

absence of prejudice to the plan participant.”) Accord,

———————

Moothart v. Bell, 21 F.3d 1499 (10 Cir. 1994) (upholding

$30/day penalty); Boone v. Leavenworth Anesthesia, Inc.,

20 F.3d 1108 (10 Cir. 1994) ($50/day penalty): Scott v.

Suncoast Beverage Sales, Ltd., 295 F.3d 1233 (11' Cir.

2002) (even if plaintiff suffered no prejudice and

defendant acted in good faith, $20/day for 18 months

duration was proper exercise of discretion). This past

month, for example, the Third Circuit determined

penalties appropriate even when the defendant had acted

in totally good faith. Veneziano v. Long Island Pipe

Fabrication & Supply, 2003 U.S. App. LEXIS 21735 (3"4

Cir. 2003).

Petitioner does not suggest the circuits to be much

“split” on the issue, for we have found no case other than

the instant one that suggests penalties are inappropriate

for a disparager, a word the courts below were unwilling

to even use after remand. In the instant case, how could

the magistrate judge or Eight Circuit have found

Respondents’ defiance of COBRA and the fraudulent

acceptance of premiums while holding up of payment of

bills as “reasonably justified” or in “good faith” when this

Court in Geissal I described Respondents’ conduct in

terms of “no justification for disparaging the clarity of

§1162(2)D)(i),” 524 U.S. at 87, and found Respondents

suggested “draconian alternatives” to Congressional

intent. 524 U.S. at 85. After this Court unanimously

determined in the earlier opinion that there was “no

Justification for disparaging the clarity” of statutory

requirements, the Eighth Circuit seemingly challenges

this Court to say that Respondents acted “in good faith.”

338 F.3d at 934.

The Eighth Circuit puts form over substance. Ifa

notice was issued, however inaccurate as to extensions,

both lower courts ignore the fact that Respondents ignore

it from the beginning. They held up billings amounting to

over a hundred thousand dollars while collecting Geissal’s

premiums, misleading Geissal to believe they were good

guys concerned about his welfare and thus dissuading him

from filing charges with the Equal Employment

Opportunity Commission for age and disability violations

in connection with his loss of employment. After the time

for filing charges with the EEOC had expired,

Respondents then rescinded the notice ab initio. None of

this notice withdrawal is of any interest to the Eighth

Circuit.

Respondents’ COBRA notice had been rendered

nothing more than an illusion. Cf. Franconia Associates

v. United States, 536 U.S.129, 142-143 (2002) (a promise

not intended to be kept is illusory and a repudiation). This

Court should not tolerate the evasion of statutory

obligations by putting form over substance. See, ¢.g.,

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985).

Congress surely did not intend the issuance of a notice

and a right to elect that the Respondents had no intent to

effectuate, meets the notice Congress required.

Respondents’ recision ab initio makes the giving itself a

nullity.

This Court has suggested in Franklin v. Gwinnett

Co. Public Schools, 503 U.S. 60, 76 (1992) that penalties

are all the more appropriate where because of intervening

events relief can no longer be given. While ERISA and

COBRA are not criminal statutes, the fact they these

statutes allow penalties and little civil remedy, makes

relevant Judge Posner’s observations in his recent

decision in Mathias v. Accor Economy Lodging, Inc., 2003

U.S. App. LEXIS 21299 (7 Cur. Oct. 21, 2003) which

suggests perhaps what we are looking at may be

something like the “civil alternative to criminal

prosecution of minor crimes.” In the instant case, for six

months plaintiff was even paying premiums unaware that

billings were being held up and going unpaid, what could

be a fraudulent taking of monies save for ERISA

preemption.

The Eighth Circuit makes very clear that

Respondents are to keep their wrongful gains from

paying benefits they avoided paying, which burden they

wrongfully shifted to others, even if it cuts down the size

of the funding available for participants in the TWA plan

that came to the rescue. If ERISA cuts down on

remedies, then the writ should be granted to determine if

penalties are appropriate for such blatant acts of

misconduct.

CONCLUSION

The Court should grant the petition for a writ of

certiorari and reverse the decision of the United States

Court of Appeals for the Eighth Circuit.

"The evidence is that the TWA plan is a trusteed Taft-

Hartley plan with actual funds held by trustees. In contrast, the

Moore plan is not a self-funded plan in the sense of having any funds

held in trust. The Moore plan is “funded” solely. by whatever amount

Moore Medical Corporation chooses from time to time to pay to

providers our of the corporation’s general revenues. The Eight

Circuit’s suggestion that a restitutional recovery will do harm to the

Moore plan is without evidential_support, unless the Eight Circuit

opinion uses the terms ”Moore plan” and “Moore pocketbook” as

synonyms. No Moore plan participant is thus endangered by any

relief Petitioner seeks.

Respectfully Submitted,

Sheldon Weinhaus

Counsel of Record

906 Olive Street

Suite 900

St. Louis, MO 63101-1463

(314) 621-8363

Attorney for Petitioner

(Any footnotes trail the end of each document)

No. 02-2255 No. 02-2256

UNITED STATES COURT OF APPEALS FOR THE

EIGHTH CIRCUIT

Bonnie L. Geissal, as personal representative of the

Estate of James W. Geissal,

Plaintiff- Appellant/Cross Appellee,

Moore Medical Corporation, et al.,

Defendants-Appellees/Cross Appellants.

February 10, 2003, Submitted

July 31, 2003, Filed

COUNSEL: For Bonnie L. Geissal, Plaintiff -

Appellant (No. 02-2255): S. Sheldon Weinhaus,

WEINHAUS & DOBSON, St. Louis, MO.

For Moore Medical Corporation, Group Benefit Plan, of

Moore Medical Corp., Herbert Walker, Defendants -

Appellees (No. 02-2255): Edward M. Goldenhersh,

Daniel J. Schwartz, GREENSFELDER & HEMKER,

St. Louis, MO.

For Bonnie L. Geissal, Plaintiff - Appellee (No. 02-

2256): S. Sheldon Weinhaus, WEINHAUS & DOBSON,

St. Louis, MO.

For Moore Medical Corporation, Group Benefit Plan, of

Moore Medical Corp., Herbert Walker, Defendants -

Appellants (No. 02-2256): Edward M. Goldenhersh,

Daniel J. Schwartz, GREENSFELDER & HEMKER,

St. Louis, MO.

JUDGES: Before HANSEN, * Chief Judge, LOKEN

and SMITH, Circuit Judges.

OPINIONBY: James B. Loken

OPINION: LOKEN, Chief Judge.

After Moore Medical Corporation ("Moore") terminated

employee James Geissal in 1993, he elected to purchase

continuation health insurance coverage’ through

Moore's Group Benefit Plan (the "Moore Plan"). Some

months later, the Moore Plan canceled this coverage

when it determined that Geissal was not entitled to

continuation coverage under the Consolidated Omnibus

Budget Reconciliation Act of 1986 ("COBRA"), 29

U.S.C. §§ 1161-1169, which amended the Employee

Retirement Income Security Act ("ERISA"), 29 U.S.C.

§§ 1001 et seq. Geissal sued Moore, the Moore Plan, and

its administrator, alleging that he was entitled to at

least eighteen months of COBRA coverage. The

Supreme Court ultimately agreed and remanded the

case for further proceedings.

On remand, addressing questions of remedy, the

district court denied Geissal compensatory damages

and statutory penalties but granted him an award of $

217,369.70 in attorney's fees. Geissal's widow appeals on

behalf of his estate, seeking money damages, penalties,

and additional attorney's fees under 29 U.S.C. § 1132(a),

(c), and (g). Moore cross-appeals, arguing that the

district court erred in awarding attorney's fees because

Geissal is not a prevailing party. We affirm the district

court in all major respects but remand for further

consideration of whether the estate should recover

unreimbursed medical expenses paid by Geissal or the

estate.

I. Background

Throughout Geissal's employment at Moore, Trans

World Airlines ("TWA") employed his wife, Bonnie

("Mrs. Geissal"). Geissal as her spouse was covered

under TWA's health insurance plan (the "TWA Plan"),

which was administered by Aetna Life Insurance

Company ("Aetna"). Before Moore terminated Geissal

in July 1993, the Moore Plan paid for his ongoing cancer

treatments. The Moore Plan is a self-funded employee

welfare benefit plan governed by ERISA and COBRA.

After Geissal's termination, he elected COBRA

continuation coverage under the Moore Plan and made

six monthly premium payments of $ 148.51 per month.

In January 1994, the Moore Plan cancelled the COBRA

coverage and refunded Geissal's premium payments

because he was also covered by the TWA Plan during

this period.

After the cancellation, Aetna as administrator of the

TWA Plan paid nearly all claims for medical expenses

incurred by Geissal between the date of his termination

and January~ 17, 1995, when the eighteen-month

COBRA continuation coverage period ended. During

that period, the TWA Plan paid $86,795.25 to Geissal's

health care providers and $ 6,528.65 to Geissal for his

covered out-of-pocket expenses. During this same

period, Geissal did not seek reimbursement for

expenses incurred on a trip to Greece for cancer

treatment, and he incurred $ 4,425.55 in medical

expenses that the TWA Plan declined to reimburse.

Geissal commenced this lawsuit in June 1994, seeking

compensatory damages for past due COBRA benefits,

injunctive and equitable relief, penalties under 29

U.S.C. § 1182(c), and costs and expenses including

reasonable attorney's fees. After Geissal died on June

23, 1995, Mrs. Geissal as representative of his estate

was substituted as plaintiff. The district court granted

summary judgment in favor of the defendants. Geissal

v. Moore Medical Corp., 927 F. Supp. 352 (E.D. Mo.

1996). We affirmed, construing the term "first becomes .

. . covered under any other group health plan" in 29

U.S.C. § 1162(2)(D)(i) as including Geissal's pre-existing

coverage under the TWA Plan. Geissal v. Moore

Medical Corp., 114 F.3d 1458 (8th Cir. 1997). The

Supreme Court granted certiorari, rejected our

interpretation of the statute, and remanded. Geissal v.

Moore Medical Corp., 524 U.S. 74, 82, 87, 141 L. Ed. 2d

64, 118 S. Ct. 1869 (1998).

On remand, the principal remedy issue was whether

Geissal may recover the substantial health benefits paid

on his behalf by Aetna and the TWA Plan. In rejecting

this claim, the district court ruled that Geissal's estate

was entitled to no monetary relief under 29 U.S.C. §

1132(a). Geissel v. Moore Medical Corp., 158 F. Supp. 2d

976 (E.D. Mo. 2001). The court subsequently denied

Mrs. Geissal's motion for an award of statutory

penalties under § 1132(c)(1)(A) but granted in part her

motion for an award of attorney's fees under §

1132(¢)(1). All of these rulings are challenged on appeal.

We review the summary judgment rulings de novo. See

Phillips-Foster v. Unum Life Ins. Co. of Am., 302 F.3d

785, 794 (8th Cir. 2002).

II. Monetary Relief

Before turning to the applicable ERISA remedial

provisions, it may be helpful to outline the principal

issue as to monetary relief -- whether Mrs. Geissal may

recover the health benefits paid to Geissal's medical

providers by Aetna on behalf of the TWA Plan. The

Moore Plan provides that "benefits are not payable for .

. services for which there is no obligation to pay."

Defendants argue that Geissal and his estate have no

obligation to pay the substantial medical expenses paid

by Aetna under the TWA Plan. Mrs. Geissal concedes

She has no obligation to reimburse the TWA Plan for

paying those expenses but argues she is entitled to

recover those benefit payments because the Moore Plan

would have paid them but for its wrongful cancellation

of Geissal's COBRA continuation coverage. Defendants

respond that, assuming the TWA Plan's coverage was

secondary to the Moore Plan's primary COBRA

coverage, the Moore Plan's coordination of benefits

provisions provide a remedy to the secondary insurer,

the TWA Plan. But those provisions provide no remedy

to the plan participant or beneficiary, who would

receive a windfall double recovery if allowed to recover

expenses already paid by a third party. Mrs. Geissal

replies that the third parties in this case -- which

include medical providers who discounted their bills to

Aetna, as well as Aetna and the TWA Plan -- have

failed to assert timely claims against Moore and the

Moore Plan for reimbursement, so she should be

entitled to recover on their behalf to prevent the self-

funded Moore Plan from being unjustly enriched by its

wrongful denial of COBRA coverage.

Because ERISA preempts state law remedies, the

parties agree that Mrs. Geissal's right to this remedy

must be found in ERISA's remedial provisions and

more particularly in 29 U.S.C. § 1182(a), which provides

in relevant part:(a) ... A civil action may be brought -

(1) by a participant or beneficiary —

* *K KOK *K

(B) to recover benefits due to him under the terms of

his plan, to enforce his rights under the terms of the

plan, or to clarify his rights to future benefits under the

terms of the plan....

(3) by a participant, beneficiary, or fiduciary (A) to

enjoin any act or practice which violates any provision

of this subchapter or the terms of the plan, or (B) to

obtain other appropriate equitable relief (i) to redress

such violations or (ii) to enforce any provisions of this

subchapter or the terms of the plan. The district court

concluded that Mrs. Geissal is not entitled to monetary

relief under either § 1132(a)(1)(B) or § 11382(a)(8)(B). On

appeal, she challenges both rulings.

A. Relief Under § 1132(a)(1)(B). The district court

concluded that Mrs. Geissal and the estate may not

recover plan benefits under § 1132(a)(1)(B) because

Geissal, the plan beneficiary, is deceased. 158 F. Supp.

2d at 982. The statute provides that "[a] civil action may

be brought .. . by a participant or beneficiary." But we

have declined to construe this language as precluding

ERISA claims after the participant or beneficiary has

died. In Shea v. Esensten, 107 F.3d 625, 628 (8th Cir.),

cert. denied, 522 U.S. 914, 139 L. Ed. 2d 229, 118 S. Ct.

297 (1997), we held that the representative of a

deceased participant's estate had standing to sue for

breach of ERISA fiduciary duties. In McGee v.

Funderburg, 17 F.3d 1122 (1994), we upheld a widow's

claim for COBRA continuation benefits without

discussing the issue. Addressing the precise question

here at issue, the Third Circuit held that an action for

benefits under § 1132(a)(1)(B) survives the death of the

beneficiary because Congress intended ERISA to be

remedial, and "actions that are remedial in nature

generally survive the death of a party." Harrow v.

Prudential Ins. Co. of Am., 279 F.3d 244, 248 (8d Cir.

2002). We agree. Therefore, the district court erred in

ruling that Geissal's estate may not recover Moore Plan

benefits under § 1132(a)(1)(B). nl

(1) That brings us to the main issue, whether Mrs.

Geissal may recover benefits paid by the TWA Plan.

Section 1132(a)(1)(B) provides that a participant or

beneficiary may recover "benefits due to him under the

terms of his plan." COBRA provides that continuation

coverage must be "identical to the coverage provided

under the plan to similarly situated beneficiaries." 29

U.S.C. § 1162(1). The Moore Plan provides that

"benefits are not payable for .. . services for which

there is no obligation to pay." In our view, the plain

language of § 1132(a)(1)(B) and the Moore Plan

preclude Mrs. Geissal from recovering medical

expenses paid by another health insurer. See Larocca v.

Borden, Inc., 276 F.3d 22, 30-31 (1st Cir. 2002).

On appeal, Mrs. Geissal argues that § 1132(a)(1)(B)

allows her to recover the TWA Plan benefit payments

and the medical provider discounts under a legal

restitution theory. As support for this novel theory,

Geissal relies upon the Supreme Court's recent decision

in Great-West Life & Annuity Insurance Co. v.

Knudson, 534 U.S. 204, 151 L. Ed. 2d 635, 122 8S. Ct. 708

(2002), which held that legal restitution may not be

recovered under § 1132(a)(3) because it is not "equitable

relief." However, Knudson did not address whether a

participant or beneficiary may recover legal restitution

under § 1132(a)(1)(B). We doubt that such a remedy is

available, because the statute is expressly limited to

claims for benefits due "under the terms of the plan."

But even if a claim for legal restitution is available

under § 1132(a)(1)(B), the Supreme Court limited the

theory to a claim in which the plaintiff can "show just

grounds for recovering money to pay for some benefit

the defendant had received from him." Knudson, 534

U.S. at 213 (emphasis added) (quotation omitted). Here,

any unjust enrichment of the Moore Plan resulted from

benefits indirectly conferred by third parties, not by

Geissal or his estate. Thus, Mrs. Geissal has no claim for

legal restitution.

(2) Concluding that Mrs. Geissal may not recover TWA

Plan payments and provider discounts does not end our

inquiry under § 1132(a)(1)(B). Mrs. Geissal also argues

that the Moore Plan is liable for $ 4,425.55 in health

expenses paid by Geissal that were not covered by the

TWA Plan, n2 and for some $ 9,000 in expenses for

cancer treatments in Greece. Defendants argue that

Mrs. Geissal is entitled to no recovery whatsoever

because $ 1,811.47 of the $ 4,425.55 was for uncovered

expenses, the remainder is less than COBRA premiums

and deductibles that Geissal would have been required

to pay, and the Greek cancer treatments were not

covered expenses because they were "experimental in

nature or application." The district court did not resolve

these issues because it ruled that an estate may not

recover under § 1132(a)(1)(B). As the issues are

contested, we remand for further consideration of

whether Mrs. Geissal may recover all or any part of

these amounts as "benefits due . . . under the terms of

his plan." We note that this case is very old, and we

encourage the parties to settle this small remaining

part of the original dispute. To encourage common

sense in this regard, we instruct the district court that

any attorney's fee awarded for the proceedings on

remand may not exceed one-third of the remaining

amounts in controversy.

B. Relief Under Section 1132(a)(3). Alternatively, Mrs.

Geissal argues that she may recover TWA Plan

payments and provider discounts under 29 U.S.C. §

1132(a)(8)(B), which provides that a participant or

beneficiary may obtain "appropriate equitable relief" to

redress ERISA violations. Mrs. Geissal argues that this

provision entitles her either to equitable restitution or

to an order directing the Moore Plan to pay Geissal's

medical expenses into a constructive trust for the

benefit of the TWA Plan and Geissal's health care

providers. n3

As the district court recognized, 158 F. Supp. 2d at 981,

we have twice held "that where a plaintiff is ‘provided

adequate relief by the right to bring a claim for benefits

under . . . § 1182(a)(1)(B),' the plaintiff does not have a

cause of action to seek the same remedy under §

1132(a)(3)(B)." Conley v. Pitney Bowes, 176 F.3d 1044,

1047 (8th Cir. 1999), cert. denied, 528 U.S. 1136, 145 L.

Ed. 2d 930, 120 S. Ct. 979 (2000), quoting Wald v.

10a

Southwestern Bell Corp. Customeare Med. Plan, 83

F.3d 1002, 1006 (8th Cir. 1996); accord Larocca, 276

F.3d at 28-29, and cases cited). As the Supreme Court

observed in Varity Corp. v. Howe, 516 U.S. 489, 515,

134 L. Ed. 2d 130, 116 S. Ct. 1065 (1996), "Where

Congress elsewhere provided adequate relief for a

beneficiary's injury, there will likely be no need for

further equitable relief, in which case such relief

normally would not be ‘appropriate.'" Thus, Mrs.

Geissal may not seek to recover these amounts both as

benefits due under § 1182(a)(1)(B) and as equitable

restitution under § 1132(a)(8).

Mrs. Geissal argues her right to this kind of equitable

relief was established by our decision in McGee, 17 F.3d

at 1126. We disagree. Our opinion in McGee did not

identify the ERISA remedial provision under which we

granted COBRA coverage relief. McGee is best viewed

as granting relief under § 1132(a)(1)(B). Indeed, if our

decision in McGee was based upon the grant of

equitable relief under § 1182(a)(8), it was superseded by

the Supreme Court's subsequent decision in Varity

Corp. as construed by this court in Conley and Wald.

III. Statutory Penalties

COBRA requires that a plan administrator notify any

qualified beneficiary "of such beneficiary's rights under

{COBRA|" upon the occurrence of a qualifying event. 29

U.S.C. § 1166(a)(4). ERISA remedies include a

provision that an administrator who breaches this duty

"may in the court's discretion be personally liable to

such participant or beneficiary in the amount of up to $

100 a day." 29 U.S.C. § 1132(c).

lla

At termination, Moore sent Geissal a written COBRA

notice and election form substantially similar to the

Department of Labor model COBRA notice. Mrs.

Geissal argues that the Moore Plan administrator is

nonetheless liable for § 1182(c) penalties because (i) the

notice failed to advise that Geissal would be entitled to

an additional eleven months of COBRA coverage if the

Social Security Administration determined he was

disabled at the time of the qualifying event; and (ii)

Moore later revoked COBRA coverage based upon an

interpretation of the statute later rejected by the

Supreme Court. The district court declined to assess

penalties, concluding that Moore's notice was based

upon a reasonable interpretation of the law. We review

that ruling for abuse of discretion. Chesnut v.

Montgomery, 307 F.3d 698, 703 (8th Cir. 2002).

Section 1132(c) authorizes penalties for noncompliance

with the notice requirements of § 1166(a)(4). See

Chesnut, 307 F.3d at 704. Therefore, the issue under §

1132(c) is whether the plan administrator gave a proper

notice, not whether Geissal was improperly denied

COBRA continuation coverage. The notice must

adequately inform the beneficiary of the COBRA

coverage he is entitled to receive (or, in this case,

arguably entitled to receive) and the money owed to

maintain this coverage. Lincoln Gen. Hosp. v. Blue

Cross/Blue Shield, 963 F.2d 1136, 1140 (8th Cir. 1992).

Here, the only alleged deficiency in the-initial notice

was its failure to advise that coverage was available for

a longer period if Geissal was disabled on the date of his

termination. As we have noted, Geissal was not eligible

for this additional continuation coverage. See supra

note 2. Mrs. Geissal argues that, with proper notice,

Geissal could have persuaded the Social Security

12a

Administration to adopt an earlier onset date, thereby

making him eligible. We reject this contention. as

entirely speculative. Moreover, to trigger the additional

coverage, the qualified beneficiary must notify the plan

administrator of the disability determination. See 29

U.S.C. § 1166(a)(3) (Supp. I. 1989). Geissal gave no such

notice before the Moore Plan administrator sent him

the July 1993 COBRA notice. Finally, because Geissal

elected continuation coverage, no harm resulted from

this alleged notice deficiency. See Chesnut, 307 F.3d at

702. In these circumstances, the district court did not

abuse its discretion in refusing to impose § 1132(c)

penalties for the Moore Plan administrator's good faith

attempt to comply with the COBRA notice

requirements.

IV. Attorney's Fee Issues

ERISA's remedial provisions include the discretion to

award attorney's fees to either party: "In any action

under this subchapter . . . by a participant, beneficiary,

or fiduciary, the court in its discretion may allow a

reasonable attorney's fee and costs of action to either

party." 29 U.S.C. § 1132(g)(1). At the end of this

protracted litigation, the district court concluded that

Mrs. Geissal was a prevailing party and awarded her $

217,369.70 in attorney's fees and expenses. In arriving

at that amount, the court determined a reasonable fee

using the lodestar method and then reduced the fee by

fifty percent because of her limited success. On appeal,

Mrs. Geissal argues she is entitled to a substantially

increased award. In their cross appeal, defendants

argue the fee award should be overturned because Mrs.

Geissal is not a prevailing party. Reviewing the district

court's fee award for abuse of discretion, we reject both

13a

contentions. See Griffin v. Jim Jamison, Inc., 188 F.3d

996, 997 (8th Cir. 1999) (standard of review).

A. Was a Fee Award Proper? In responding to the

cross appeal, Mrs. Geissal initially argues that she need

not be a prevailing party to receive a fee award under §

1132(g)(1). Though she cites no support for this

contention, it is an interesting issue that has received

considerable attention in other circuits. See Gibbs v.

Gibbs, 210 F.3d 491, 501-03 (5th Cir. 2000) (citing cases

discussing attorney's fees in ERISA cases). This court

has frequently assumed that only prevailing parties

may be awarded fees in ERISA cases. See, e.g., Martin

v. Ark. Blue Cross & Blue Shield, 299 F.3d 966, 970-71

(8th Cir. 2002) (en banc), cert. denied, 154 L. Ed. 2d 893,

123 S. Ct. 967 (2003) (overruling the presumption that

ERISA prevailing parties are entitled to a fee award);

Jackson v. Metro. Life Ins. Co., 303 F.3d 884, 890 (8th

Cir. 2002) (vacating a fee award after reversing on the

merits). The fact that the statute does not expressly

limit fee awards to prevailing parties is significant, but

not conclusive. In Ruckelshaus v. Sierra Club, 463 U.S.

680, 698, 77 L. Ed. 2d 938, 103 S. Ct. 3274 (1983), for

example, a divided Supreme Court concluded that "the

language and legislative history of § 307(f) [of the Clean

Air Act] do not support respondents' argument that the

section was intended as a radical departure from

established principles requiring that a fee claimant

attain some success on the merits before it may receive

an award of fees." But we do not read the decision in

Ruckelshaus as necessarily meaning that the Court

would construe what it has often referred to as

"ERISA's carefully crafted and detailed enforcement

scheme" the same way. Knudson, 534 U.S. at 209

‘(quotation omitted). In this case, we agree with the

14a

district court that Mrs. Geissal was a prevailing party

for fee award purposes. Therefore, we leave unresolved

the question whether, in ERISA cases, a district court

may only award attorney's fees to a prevailing party.

Defendants argue that Mrs. Geissal was not a

prevailing party because she was granted no relief. We

agree with the district court that she became a

prevailing party when "she obtained a favorable ruling

from the United States Supreme Court that Moore's

basis for denying Geissal benefits was invalid." The

Supreme Court has expressly recognized that a fee

award may be appropriate when a party “has

established the liability of the opposing party, although

final remedial orders have not been entered." Hanrahan

v. Hampton, 446 U.S. 754, 757, 64 L. Ed. 2d 670, 100 S.

Ct. 1987 (1980). To be sure, such an interlocutory order

must create a "material alteration of the legal

relationship of the parties" to confer prevailing party

status. Texas State Teachers Ass'n v. Garland Indep.

School Dist., 489 U.S. 782, 792-93, 103 L. Ed. 2d 866, 109

S. Ct. 1486 (1989). That test is satisfied by the Supreme

Court's ruling that Geissal was entitled to COBRA

continuation coverage. This ruling would have entitled

Geissal to injunctive relief had the coverage period then

been unexpired, and it entitled his estate to seek

monetary relief under § 1132(a)(1)(B), which for the

most part it was unable to prove.

B. Was the Fee Award an Abuse of Discretion? In

determining the amount of attorney's fees to award, the

district court first applied the five-factor test set forth

in Lawrence v. Westerhaus, 749 F.2d 494, 495-96 (8th

Cir. 1984), and then applied the lodestar method to

calculate a reasonable fee. Mrs. Geissal argues the court

15a

abused its discretion when it set lead counsel's lodestar

rate at $ 250 per hour, rather than the $ 350- $ 500 per

hour requested; when it failed to enhance the lodestar

rate; and when it reduced the award by fifty percent

because of her limited success in the litigation. After

careful review of the record, we _ reject these

contentions. The Supreme Court's favorable ruling

came nearly three years after Geissal died. Mrs.

Geissal's attorneys then spent approximately 750 hours

pursuing novel damage theories that were determined

to be almost totally without merit. "A reduced fee

award is appropriate if the relief, however significant,

is limited in comparison to the scope of the litigation as

a whole." Hensley v. Eckerhart, 461 U.S. 424, 440, 76 L.

Ed. 2d 40, 108 S. Ct. 1933 (1983). Here, Mrs. Geissal

prevailed on the question of liability and then wasted

valuable resources of all the parties, including an

ERISA plan, in litigating monetary remedy questions

that should have been settled. The district court did not

abuse its discretion in reducing by fifty percent the

award determined by the lodestar method.

The judgment of the district court is reversed and the

case is remanded for further consideration of the issues

discussed in Part IJ.A.(2) of this opinion. In all other

respects, the judgment of the district court is affirmed.

Appellant's Motion To Strike Supplemental Appendix

is denied.

FOOTNOTES

* The Honorable David R. Hansen stepped down as

Chief Judge at the close of business on March 31, 2003,

succeeded by the Honorable James B. Loken.

16a

nl The district court relied for its contrary conclusion

on Turner v. Fallon Community Health Plan, Inc., 127

F.3d 196, 198 (1st Cir. 1997), cert. denied, 523 U.S. 1072,

140 L. Ed. 2d 666, 118 S. Ct. 1512 (1998), and on Bast v.

Prudential Insurance Co. of America, 150 F.3d 1008,

1009 (9th Cir. 1998), cert. denied, 528 U.S. 870, 145 LE.

Ed. 2d 144, 120 S. Ct. 170 (1999). But those cases

involved claims for money damages for the beneficiary's

death after the plan denied coverage for a medical

procedure the beneficiary could not afford. The courts

decided that § 1132(a)(1)(B) does not permit a damage

action for breach of the plan, only for benefits due

under the plan. They did not decide the issue in this

case, whether a beneficiary's estate may recover money

benefits due under the plan before the beneficiary died.

n2 This amount does not include unreimbursed medical

expenses Geissal incurred between the end of the

eighteen-month COBRA period and June 23, 1995, the

date of his death. Mrs. Geissal argues the Moore Plan is

liable for these expenses because he was entitled to an

additional eleven months of COBRA coverage when the

Social Security Administration determined in March

1994 that Geissal was disabled as of September 3, 1993.

We disagree. The COBRA provisions in effect at the

time Geissal was terminated granted eleven additional

months of continuation coverage to a qualified

beneficiary "who is determined, under title II or XVI of

the Social Security Act ...to have been disabled at the

time of a qualifying event," here, termination. 29 U.S.C.

§ 1162 (2)(A)(iii) (Supp I. 1989) (emphasis added). As

Geissal was not disabled when he was terminated on

July 17, 1993, he did not qualify for the additional

eleven months of COBRA coverage.

17a

n3 Geissal first suggested the constructive trust

remedy in the middle of her lengthy, scatter-gun reply

brief. The theory is unsound, in part because it is not

"appropriate" equitable relief to make the plan

beneficiary's estate a constructive trustee for third

parties who could have, but did not, assert their own

rights against the beneficiary and/or the Moore Plan.

See Larocca, 276 F.3d at 31; Lutheran Med. Ctr. v.

Contractors Health & Welfare Plan, 25 F.3d 616, 619

(8th Cir. 1994); Winstead v. J.C. Penney Co., 933 F.2d

576, 579-80 (7th Cir. 1991).

18a

No. 4:94 CV 1263 DDN

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

BONNIE L. GEISSAL,

Plaintiff,

MOORE MEDICAL CORP., GROUP BENEFIT

PLAN OF MOORE MEDICAL CORP., AND

HERBERT WALTER,

Defendants.

MEMORANDUM

March 29, 2002

This action is before the court upon the motion of

plaintiff for the imposition of penalties (Doc. No. 167),

for an award of attorneys' fees and costs against

defendants (Doc. No. 169), and for reconsideration of

the decision denying monetary relief (Doc. No. 198).

Defendants argue that plaintiff is not entitled to

penalties, and that she is not entitled to fees or costs,

because she is not the prevailing party. Defendants

argue, alternatively, that the fees and costs claimed are

excessive.

The parties consented to the exercise of plenary

authority by the undersigned Magistrate Judge under

19a

28 U.S.C. § 636(c). A hearing was held on January 14,

2002.

BACKGROUND

James Geissal, the late husband of plaintiff Bonnie L.

Geissal, commenced this four-count action under the

Employee Retirement Income Security Act (ERISA),

as amended by the Comprehensive Omnibus Budget

Reconciliation Act of 1996 (COBRA). Defendants are

Geissal's former employer, Moore Medical Corporation;

the Group Benefit Plan of Moore Medical Corporation;

and Herbert Walter, the Plan Administrator

(collectively, Moore). Count I claimed that Moore

violated COBRA by failing to provide James Geissal

with continuation health insurance coverage after

terminating his employment. Count II claimed that

Moore was estopped from denying Geissal COBRA

coverage, because he relied on its initial representation

that he was entitled to such coverage. Count III

claimed that Moore's misrepresentation waived any

right to assert a reading of the plan that would deprive

Geissal of continuation coverage. Count IV claimed that

plan administrator Walter violated COBRA by failing

to provide Geissal with certain requested plan

documents.

On July 16, 1993, Moore terminated James Geissal from

employment. At that time, he was 62 years old and had

cancer. During his employment at Moore, Geissal was a

participant in the employee health benefits plan

sponsored by Moore, a plan subject to ERISA and

COBRA. The plan or its reinsurer paid large sums for

medical care provided to Geissal prior to his

termination.

20a

While he was employed by Moore, Geissal was covered

also by the group health plan provided by his wife's

employer, Trans World Airlines (TWA), through Aetna

Life Insurance Company. Upon his termination from

Moore, Geissal received notice of his right under

COBRA to continue health insurance coverage for 18

months under Moore's plan. He elected to continue this

coverage and began making premium payments, which

Moore accepted.

Approximately six months after his termination,

relying upon 29 U.S.C. § 116 (2)(D)(i),’ Moore informed

Geissal that he was not entitled to continuation

coverage under COBRA, because he had been already

covered under the Aetna group policy. The COBRA

premiums Geissal had paid were returned. The cost of

most? of the medical care Geissal received after his

termination was not paid by the Moore plan, but by the

TWA/Aetna plan.

After limited discovery, Geissal moved for summary

judgment on Counts I and II of the complaint. He

argued that Moore's reliance on § 1162 (2)(D)(i) was

misplaced, because he was covered under the TWA

plan before he elected COBRA continuation coverage,

not after. In any event, Geissal maintained, Moore was

estopped from denying him continuation health

benefits, because he had detrimentally relied upon its

assurances that he was entitled to these benefits. While

the summary judgment motion was pending, on June

23, 1995, Geissal died of cancer. Bonnie Geissal, his wife

and personal representative of his estate, was

substituted for him as plaintiff in this action.

2la

In March 1996, this court denied Geissal's motion for

summary judgment on Counts I and II, and granted

summary judgment for Moore on these counts. Geissal

v. Moore Med. Corp., 927 F. Supp. 352, 361 (E.D. Mo.

1996). On Count I, the court concluded that under §

1162(2)(D)(i) an employee with coverage under another

group health plan as of the date he elects COBRA

continuation coverage is ineligible four COBRA

coverage. On Count II, the court held that Geissal had

presented insufficient evidence of detrimental reliance

on Moore's initial representation that he was entitled to

benefits under COBRA. On interlocutory appeal, the

Eighth Circuit Court of Appeals affirmed. Geissal v.

Moore Med. Corp., 114 F.3d 1458 (8th Cir. 1997).

The United States Supreme Court granted Geissal's

petition for certiorari in order "to resolve a conflict

among the Circuits on whether an employer may deny

COBRA continuation coverage under its health plan to

an otherwise eligible beneficiary covered under another

group health plan at the time he elects coverage under

COBRA." Geissal v. Moore Med. Corp., 524 U.S. 74, 79

(1995). On June 8, 1998, the Supreme Court reversed.

and remanded the action. The Court held that the

existence of other coverage did not disqualify James

Geissal from being a "covered employee" or a qualified

beneficiary of the Moore plan under ERISA. Id. It held

that Moore was obligated to provide Geissal with

coverage under COBRA, because the language of §

1162(2)(D) (i) clearly referred only to coverage added

after COBRA was elected. Id. at 84-86. The Supreme

Court's ruling related to the Count I claim; the denial of

relief on the Count II claim was left undisturbed. By

separate order, the Supreme Court awarded Bonnie

22a

Geissal printing costs and clerk's costs in the amount of

$2,302.55.

On August 31, 1998, plaintiff moved this court for

reconsideration of her motion for summary judgment

on (a) the main issue of Moore's obligation to have

provided COBRA coverage to James Geissal, (b)

whether Moore provided Geissal with a valid notice of

his rights, (c) whether Moore actually covered Geissal

as the law required, (d) whether Moore was justified for

not providing the required notice and coverage, and (e)

whether Moore should pay Geissal restitution of unpaid

benefits, statutory penalties, fees, and costs.

On March 23, 1999, consistent with the rulings of the

Supreme Court and the Eighth Circuit Court of

Appeals on remand, this court held that Moore was

obligated to provide COBRA coverage to Geissal. The

court, however, ruled that the balance of the relief

sought by plaintiff, monetary damages, penalties, fees

and costs, must await further fact finding proceedings.

Thereafter, the parties engaged in discovery litigation,

plaintiff unsuccessfully moved to disqualify defendants'

counsel, and the parties sought summary judgment on

plaintiffs claims.

On August 4, 2000, the parties filed cross-motions for

partial summary judgment on Geissal's Count. I claim

for damages. Geissal argued that Moore had been

unjustly enriched in the amount of approximately

$145,000 by its failure to provide COBRA benefits to

James. Therefore, Geissal argued, she was entitled to

"other appropriate equitable relief," as provided for by

29 U.S.C. § 1132(a)(8),? in the form of restitution.

Geissal submitted documentation that James had

' GSE: Ragen ee

23a

incurred approximately $9,000 in expenses for the trip

to Greece. She argued that she was entitled to recover

this amount under the Moore plan provision that

covered alternative medical treatments that are cost-

effective and "in accordancé with accepted standards of

medical practice." Geissal submitted published articles

describing the immunology treatment provided in

Greece.

Moore argued that Geissal was not entitled to any

monetary relief. Under 29 U.S.C. 1132(a)(1)(B)* and the

Moore plan, her damages were limited to the

unreimbursed out-of-pocket medical expenses covered

under the Moore plan, assuming James had been

provided with COBRA continuation coverage, less the

deductible and premium payments that would have

been due Moore for such coverage. The amount of his

unrelmbursed® expenses from July 17, 1998, through

January 17, 1995, was $2,614.08, which is less than the

$2,973.18 in deductibles and premiums that would have

been due Moore.

Moore argued that the unreimbursed medical expenses

for the trip to Greece were not covered under the

Moore plan, because they were excluded as

experimental, unapproved’ treatments. Moore

submitted articles establishing that the "'"Greek Cancer

Cure" did not meet the usual medical industry

standards.

Moore argued that any claim TWA/Aetna may have

against Geissal for reimbursement, if Moore were to

pay Geissal now for expenses already paid by

TWA/Aetna, would be barred by the statute of

limitations. Furthermore, any claim TWA/Aetna may

24a

have against Moore was between those two parties.

Therefore, argued Moore, to allow Geissal to recover

for expenses paid by TWA/Aetna would present a

windfall to Geissal. Lastly, Moore argued that the relief

sought by Geissal was not “equitable relief” within the

meaning of § 1182 (a)(3).

On March 29, 1999 (Doc. No. 158), this court denied

Geissal's motion for summary judgment and sustained

Moore's motion for summary judgment on Count I's

claim for damages. The court reasoned that, because

James Geissal died, benefits under the plan were no

longer recoverable under § 1132(a)(1). The court then

considered the propriety of "other appropriace

equitable relief under § 1132(a)(3) and determined that

an award of restitution in this case would be the

equivalent of awarding compensatory damages, which

would be contrary to the holding In Mertens v. Hewitt

Assocs., 508 U.S. 248, 256-58 (1993 ), that § 1132(a)(8)

recovery is limited to classic equitable remedies. The

court recognized that this left Geissal without relief

against Moore, a consequence of the failure of Congress

to amend ERISA to reflect the changing realities of

insurance and health care practices. Counts II and III

were dismissed as moot, and the penalties sought in

Count IV, as well as the issue of attorneys' fees, were

reserved for later resoiution. At a hearing held on

January 14, 2002, Geissal voluntarily abandoned her

claim in Court IV, and this count will be dismissed.

RECONSIDERATION OF MARCH 29, 2001. ORDER

In her sur-rebuttal memorandum in support of the

motion for attorneys' fees and costs, discussed below,

Geissal invites the court to reconsider the March 29,

25a

2001, grant of summary judgment to Moore on her

Count I. In doing so, Geissal adverts to a recent

decision of the first Circuit, LaRocca v. Borden Inc., 276

F.3d 22 (1* Cir. 2002). LaRocca supports this court's

determination that forcing Moore to pay Geissal the

costs of James's medical expenses during the COBRA

period is not a form of equitable relief available under

ERISA. In that case, retirees who were improperly

terminated from their former employer's ERISA health

plan sought, in addition to reinstatement in the plan,

the amount by which the employer was "unjustly

enriched" by failing to pay for insurance coverage after

the improper terminations. Relying on Merten, 508 U.S.

at 256, the First Circuit held that this relief was not

available under § 1132(a)(3). 276 F.3d at 27-29.

By her later motion for reconsideration (Doc. No. 198),

Geissal has directed the court's attention to several

other reported opinions, including Great-West Life &

Annuity Ins. Co. v. Knudson, 122 S. Ct. 708 (2002).

Geissal invokes the statement in Knudson that by its

enactment of ERISA

Congress authorized "a participant or beneficiary" to

bring a civil action "to enforce his rights under the

terms of the plan," without reference to whether the

relief sought is legal or equitable. 29 U.S.C. § 1182

(a)(1)(B)(1994 ed.).

122 S. Ct. at 718. This court held, however, that after

James Geissal died, benefits under the plan were no

longer recoverable under 29 U.S.C. § 1132(a)(1), citing

Turner v. Fallon Community Health Plan, 127 F.3d 196,

198 (1st Cir.1997), cert. denied, 523 U.S. 1072 (1998);

Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1010

26a

(9th Cir. 1998), cert. denied, 528 U.S. 870 (1999); and

Foster v. Blue Cross and Blue Shield of Michigan, 969

F. Supp. 1020, 1029 (E.D. Mich. 1997). Plaintiff Bonnie

L. Geissal, even as the representative of James

Geissal's estate, is not a participant or beneficiary of the

Moore plan and thus is not able to sue for plan benefits

under § 1132(a)(1)(B). LaRocca, 276 F.3d at 332.

Geissal urges the court to follow McGee v. Funderburg,

17 F.3d 1122 (8th Cir. 1994), by holding that unpaid,

covered medical expenses may be recovered by the

widow of a beneficiary. McGee dealt only with whether

the COBRA coverage was wrongfully terminated

because he was covered by another health plan. The

court therein did not at all discuss the survivability of a

beneficiary's past due benefits, which is the issue

Geissal is asking the court to revisit.

Geissal directs the court's attention to Harrow v.

Prudential. Ins. Co. of Am., 279 F.3 d 244 (3 Cir. 2002).

Therein, following the death of the original plaintiff and

plan beneficiary, his surviving wife and administratrix

of his estate, sought in part to recover an unpaid,

covered medical expense. Before affirming the

dismissal of the action for plaintiff's failure to exhaust

administrative remedies, the Third Circuit Court of

Appeals, without extended discussion, ruled that the

decedent's claims under ERISA survived his death and

may be pursued by his widow. 279 F.3d at 248. This

court, however, continues to be persuaded by the

contrary holding of the First Circuit in Turner, supra,

that plan benefits are no longer available after the

death of the beneficiary. See also LaRocca, 276 F.3d at

32; Foster, 969 F’. Supp. at 1029.

27a

Looking alternatively to 29 U.S. C. § 1132(a)(8) for the

recovery of unpaid plan benefits as equitable

restitution, Geissal invokes the treatment of equitable

relief by the Supreme Court its Knudson, supra, Rather

than undermining the authority of Mertens, 508 U.S. at

256-58, Knudson reaffirms it. In Knudson, the Supreme

Court held that "other appropriate equitable relief"

available under § 1132(a)(3) refers only "'to those

categories of relief that were typically available in

equity ...."" 122 S. Ct. at 712 (quoting Mertens, 508

U.S. at 256). This is not a case, as Geissal argues, of

Moore acquiring legal title to property, including

money, under circumstances which render it

unconscientious for Moore to retain the money. Id. at

715-16. Here Gissal seeks specific performance of an

alleged past due monetary obligation, relief that was

not typically available in equity. See id. at 718.

Other cases cited byGissal are inapposite. Harris Trust

and Savings Bank v. Solomon Smith Barney Inc., 530

U.S. 238 (2000) (suit brought under 29 U.S.C. § 1132

(a)(3) against a nonfiduciary party in interest based on a

transaction prohibited by ERISA); Kerr v. Charles F.

Vatterott & Co., 184 F.3d 938 (8 Cir. 1999) (lost

investment opportunity consequential damages are

compensatory damages not available for a breach of

fiduciary duties); and Kwatcher v. Mass. Serv.

Employees' Pension Fund, 879 F.2d 957, 967 (1*

Cir.1989)(involved in vart a claim for the return of

mistaken payments 2! retirement fund contributions).

The court stands by its earlier grant of summary

judgment to Moore on Geissal's Count I claim for

monetary damages.

28a

PLAINTIFF'S MOTION FOR PENALTIES

Plaintiff Geissal seeks penalties under ERISA, 29

U.S.C. § 1132(¢)(1)(A), which provides r

Any administrator who failed to meet the requirements

of paragraph (1) or (4) of § 606 [to provide written

notice of COBRA rights] . . . may in the court's

discretion be personally liable to such participant or

beneficiary in the amount of up to$100 a day from the

date of such failure ....

See 29 U.S.C. § 1132 (c) (1)(A). Geissal argues that

Moore is subject to penalties, because it wrongly

revoked the COBRA notice and never reissued a

proper notice. She also argues that the COBRA notice

was defective for not advising James of his right to an

additional 11 month continuation period, because he

was disabled. She also asserts that penalties are

warranted, because Moore did not change its COBRA

notice to other employees covered by other group

insurance plans at the time of their COBRA election.

Geissal seeks penalties of $100 per day for the 706 days

from James's termination until his death, or "until the

present time or until the time defendants establish

correction of their COBRA notices." See Memorandum

in support of motion for penalties at 8.

The court concludes that this is not a proper case for

penalties under § 1132(c)(1)(A). Moore's revocation of

the initial notice it issued James Geissal was based on a

reasonable interpretation of the law as it stood at that

time. The Supreme Court ultimately held that the

initial notice was correct. The court does not believe it

would be equitable to impose a penalty now for

29a

revocation of that notice; the matter was fairly litigated

in good faith by the parties. Nor does the court believe

that Moore should pay Geissal penalties based on

Moore’s allegedly improper COBRA notice to other

plan beneficiaries.

Therefore, the motion for the imposition of penalties is

denied.

PLAINTIFF’S MOTION FOR ATTORNEYS' FEFS,

COSTS AND EXPENSES

Geissal seeks substantial attorneys' fees, plus costs and

expenses, as the prevailing party in this action. Geissal

has submitted documentation for hours worked and

hourly rates, as follows:

Sheldon Weinhaus

(lead counsel):

Jerome Dobson: $225-$250/hr. x 29.75 hrs.

$355-$500/hr. x 1,237.03 hrs.

Jonathan Berns: $175/hr. x 52.58 hrs.

Gregory Rich: $125lhr. x 6.17 hrs.

Scott Holwitt: $1251hr. x 4,34 hrs.

prlenm $75/hr. x 17.6 hrs.

Mark Moreland: 2.42 hrs.

Robin Thebeau: 3.50 hrs.

Paula Weinman: 1.65 hrs.

Carol Bewig: A2 hrs.

30a

The amounts claimed for Washington, D. C., counsel

hired to aid with the Supreme Court portion of the case

are as follows:

January 29, 1998 through August 20, 1998 (Exhibit 1)

Mare

Greidinger $275/hr. x 280.52hrs. = $77,143.00

David

F. Phillips :

Gilliam $210/hr. x 4.10hrs. = $861.00

James

Winn $85/hr. x 24.75hrs. = $2,103.75

=i $75/hr. x 10.00hrs. = $750.00

Drummy

Pai $95/hr. x 16.00hrs. = $1,056.00

Campo

October 20, 2000, through August 28, 2001 (Exhibit 2)

= $230/hr. x 140.55hrs. = $32,326.50

Geissal has also submitted documentary support for the

opinion that attorney Weinhaus is a highly regarded

expert in ERISA law and should be compensated at a

rate not less than that of senior partners in law firms in

the St. Louis metropolitan area.

Geissal also has documented total expenses in the

amount of $31,534.04, of which Moore has paid

$2,808.24. She now seeks the remaining $28,725.85.

dla

Prevailing party

Moore argues that Geissal is not entitled to attorneys’

fees, because she did not obtain any direct benefit as a

result of this litigation. Geissal maintains that the root

of the action was the question of an employer's

obligation to provide COBRA coverage to a terminated

employee who was covered under his spouse's group

plan at the time of termination. She asserts that this

suit served as a catalyst for a change in the law which

will benefit many employees. Geissal argues that the

fact that the Supreme Court awarded her costs

establishes that she is the prevailing party. Geissal also

argues that she is entitled to fees under the five-factor

analysis, discussed below, for determining entitlement

to attorneys' fees in an ERISA action.

ERISA section 502 (g)( 1) provides that "[i]n any action

under this subchapter [other than an exception not

relevant here] by a participant, beneficiary, or

fiduciary, the court in its discretion may allow

reasonable attorney's fee and costs of action to either

party." 29 U.S.C. § 1132(g)(1). The statute does not

state that fees may be awarded only to a prevailing

party, and there is a split of judicial authority on this

issue. The Eighth and the First Circuits appear to

assume that only a prevailing party may recover

attorneys' fees under ERISA's fee-shifting provision.

See, e.g., Brown v. Seitz Foods, Inc. Disability. Benefit

Plan, 140 F.3d 1198, 1201 (8th Cir. 1998); Cottrill v.

Sparrow, Johnson & Ursilo, Inc., 100 F.3d 220, 225 (1st

Cir.1996).

The Fourth, Seventh, and Ninth Circuits expressly

have held that only a prevailing party may be

32a

considered for attorneys' fees in an ERISA action. See

Quinn v.. Blue Cross & Blue Shield Ass’n, 161 F.3d 472,

478 (7th Cir. 1998); Martin v. Blue Cross Blue Shield of

Va.. Inc., 115 F.3d 1201, 1210 (4th Cir.)(collecting cases),

cert. denied, 522 U.S. 1029 (1997); Flanagan v. Inland

Empire Elec. Workers Pension Plan & Trust, 3 F.3d

1246, 1253 (9th Cir. 1993) ("Plaintiffs cannot recover

fees under section 1132(g)(1) until they succeed on

[some] significant issue in litigation which achieves

some of the benefit .. . sought in bringing the suit"). On

the other hand, the Fifth Circuit recently reached the

opposite conclusion in Gibbs v. Gibbs, 210 F.3d 491, 501-

03 (5th Cir. 2000)(collecting cases and holding that a

party need not prevail to be eligible for an award of

attorneys’ fees under § 1132(g¢)(1)).

Especially in light of the earlier Eighth Circuit

precedent, this court believes that the better view is

that a party must be considered a prevailing party for

entitlement to fees in an ERISA action. See Brown, 140

F.3d at 1201.

To assess the parties' arguments over whether Geissal

is a prevailing party in this action for fee-shifting

purposes, the court must look beyond the general

principle that, for purposes of federal fee-shifting

statutes, a prevailing party is one xvho receives a

judgment on the merits. Buckhannon Bd. & Care Home

v. West Va. Dep't of Health & Human Res., 532 U.S.

598, 604 (2001). Here plaintiff seeks attorneys fees for

litigating both successful and unsuccessful claims.

The court rejects Moore's argument that, because

Geissal ultimately did not recover any monetary

damages, she is not a prevailing party and is entitled to

33a

no fees at all. Although she did not prevail on her claim

for monetary damages, penalties, or "other equitable

relief," Geissal prevailed on a significant aspect of this

case -- she obtained a favorable ruling from the United

States Supreme Court that Moore's basis for denying

Geissal benefits was invalid, and judgment on the

merits of that claim was entered in her favor in this

court on March 23, 1999. This was a judgment that

"materially altered [Moore's] policy limiting the rights

[of its employees]." Texas State Teachers Ass’n v.

Garland Indep. School Dist., 489 U.S. 782, 793 (1989).

The Supreme Court's ruling in this case immediately

altered the specific legal relationship between Geissal

and Moore; absent other considerations, which proved

to be determinative, Moore was held to have wrongly

terminated James Geissal's continuing health insurance

coverage. Jenkins v. State of Missouri, 127 F.3d 709, 713

(8th Cir. 1997).

The court concludes that plaintiff Geissal is a prevailing

party in this action for fee-shifting purposes. The court

also concludes that she is entitled to fee-shifting

consideration under 29 U.S.C. § 1132(g)(1).

In Landro v. Glendenning Motorways, Inc., 625 F.2d

1344 (8 Cir. 1980), the Eighth Circuit held that a

prevailing plan participant “should ordinarily recover

an attorney's fee unless special circumstances would

render such an award unjust.” Id. at 1356. Several

years later, the Eighth Circuit set forth five factors a

court should consider in deciding whether to award fees

to a prevailing party in an ERISA case:

(1) the degree of the opposing parties’ culpability or bad

faith; (2) the ability of the opposing parties to satisfy an

34a

award of attorneys' fees; (8) whether an award of

attorneys' fees against the opposing parties could deter

other persons acting under similar circumstances; (4)

whether the parties requesting attorneys’ fees sought

to benefit all participants and beneficiaries of an

ERISA plan or to resolve significant legal question

regarding ERISA itself; and (5) the relative merits of

the parties' positions.

Lawrence v. Westerhaus, 749 F. 2d 494, 495-96 (8th Cir.

1984); see also Dodson v. Woodmen of the World Life

Ins. Soc’y, 109 F.3d 486, 440 (8th Cir. 1997).

In Martin v. Arkansas Blue Cross Blue Shield, 270 F.3d

673 (8th Cir. 2001) (per curiam), a panel held that

"merely finding that the live factors favor the’ plan does

not amount to special circumstances that would make

are award unjust." Id. at 676 (reversing the denial of

fees to a prevailing ERISA plaintiff where the district

court failed to consider the Landro presumption in

favor of awarding fees to a prevailing plaintiff absent

special circumstances). This decision has been vacated

and submitted to the Eighth Circuit en banc. Oral

argument was held on January 15, 2002, and to date, no

decision has been. issued. Thus, the continued validity

of the five-factor test, as well as of the Landron

presumption, are under consideration.

Under the Lawrence v. Westerhaus factors, the court

concludes that Geissal generally is entitled to an award

of attorneys' fees. The first of the factors does not call

for an award of fees. The court does not discern in this

case "culpability or bad faith" on the part of Moore.

However, the remaining four factors support an award.

On the second factor, Moore has not factually

—

35a

contradicted Geissal's argument that it is able to

satisfy a reasonable fee award; the court recollects no

information during this litigation that Moore is in any

way insolvent. On the third factor, an award of

reasonable attorneys' fees would likely have a

deterrent effect upon plans incorrectly denying

benefits. Regarding the fourth factor, this litigation

resolved a significant legal question regarding ERISA

itself; the Supreme Court's ruling in this case will

benefit a wide class of ERISA plan beneficiaries.

Regarding the fifth factor, the relative merits of the

parties' positions were close, until the Supreme Court

resolved a split in the circuits. Then, as noted above,

Geissal ultimately prevailed on the question of whether

Moore's basis for denying Geissal benefits was valid.

On balance, primarily because Geissal prevailed before

the Supreme Court on a significant issue, she is a

prevailing party entitled to reasonable counsel's fees

and expenses. It remain for the court to determine

what fee is "reasonable." Hensley, 461 U.S. at 433.

Lodestar method

The lodestar method is applicable to calculating

reasonable attorney's fees in this action. See

Emmenegger v Bull Moose Tube Co., 33 F. Supp. 2d

1127, 1188 (E.D.Mo. 1998), aff'd, 197 F.3d 929 (8th

Cir.1998); see also City of Burlington v. Dague, 505 U.S.

557, 562 (1.992)(in applying various federal fee-shifting

statutes, there is a "strong presumption" that the

lodestar represents the "reasonable fee"); Van Gerwen

v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9" Cir,

2000) (the lodestar approach is the proper method for

determining attorneys' fees in an ERISA case).

Da recat PW Ne SL rR Bae SURE anes EN IR Tab gy BRS ue we

36a

In the lodestar method, the court first determines the

lodestar amount by multiplying the number of hours

reasonably expended on the litigation by reasonable

hourly rates. Hensley, 461 U.S. at 433. The party

seeking an award of fees must submit evidence

supporting the hours worked and the rates claimed. Id.

The court should exclude from the lodestar amount

hours that are not reasonably expended because they

are "excessive, redundant, or otherwise unnecessary."

Id. at 434.

Reasonable hours

Attorney Weinhaus seeks compensation far 1,237.03

hours representing plaintiff in this action.

Non - legal, clerical work

Moore points out instances in which it argues that

attorney Weinhaus performed non-legal, clerical work

during the relevant time period. See Exhibit 4 to Defs'

Memorandum (Doc. No. 183), filed November 13, 2001.

Clerical work by counsel is not recoverable as an

attorney's fee. Emmenegger, 33 F. Supp. 2d at 1138.

The court has studied these record entries and agrees

with Moore only with respect to the entries set out in

Appendix A to this opinion. These entries total 31.33

hours.

The remaining entries record work that appears to

have been substantially attorney work in nature,

although it may have included incidental, office

administrative or support work. It is now common for

attorneys themselves reasonably to use _ office

automation equipment to perform tasks which might

37a

have been assigned to secretaries and support staff.

When the evidence indicates that, for a given billing

entry the work performed was substantially attorney

work, the entry ought to be compensable fully as such,

even though incidental, apparently clerical work also

was performed by the attorney. Where the entry

indicates that the work performed by the attorney was

largely clerical, even though in support of an attorney

work-product effort, it ought not be compensable at an

attorney's rate. The facts of each case will differ.

Paralegal — type work

Moore argues that on other occasions, attorney

Weinhaus performed paralegal-type work for which he

should not be compensated at an attorney's rate. See

Exhibit 5 to Defs' Memorandum (Doc. No. 183), fled

November 138, 2001. The court has studied these record

entries and agrees with Moore only with respect to the

entries set out on Appendix B to this opinion. These

entries total 17.60 hours.

These entries were for work that did not require

licensed attorney expertise and ought not be

compensated at such a rate. The court concludes that a

reasonable fee-shifting rate for the paralegal-type work

performed by attorney Weinhaus is one-half the

reasonable attorney's rate for him determined by the

court below.

Duplicative attorney work

Moore argues further that Geissal is claiming instances

in which more than one attorney worked together on

the same matter. The court generally agrees that the

38a

cost of duplicative attorney effort ought not be shifted

to the .non-prevailing party. See Emmenegger, 33 F.

Supp. 2d at 1139. However, attorney conferences and

the exchange of ideas can reduce unproductive effort.

Id. Moore applies this argument to the work of St.

Louis attorney Jerome Dobson, a partner of Mr.

Weinhaus, and Washington attorney Marc Greidinger,°

who prepared the briefs submitted to the Supreme

Court. Moore characterizes their efforts as merely

duplicative of Mr. Weinhaus's work. After carefully

reviewing the entries identified by Moore, the court

disagrees with Moore and finds that the indicated

conferencing is recoverable. Such work has not been

shown to have been merely duplicative.

The preparation of briefs before the Supreme Court is

sufficiently specialized in nature to warrant fee-shifting

compensation. Therefore, even though attorney

Weinhaus was qualified to draft and file the required

briefs alone, but did not, the court will authorize the

shifting to Moore of attorney Greidinger’s billing.

Non - legal, supportive efforts

Moore argues that Geissal claims attorney time spent

investigating the availability of others to participate in

or to confer with in the litigation and in performing

non-attorney work such as conferring with the estate of

the original plaintiff about the retention of counsel. See

Exhibit 7 to Defs' Memorandum (Doc. No. 183), filed

November 13, 2001. Such administrative work is non-

legal in nature and, while possibly necessary to the

financial or other support of the litigation, ought not be

a fee shifted to the defendants. Upon review of this

record, the court agrees with Moore with respect to the

39a

following entries which are set out in Appendix C to

this opinion. These hours total 76.66.

In sum, upon careful consideration, the court concludes

that Geissal is entitled to the attorney time claimed,

except that described in Appendix C.

Reasonable rates

The court has carefully studied the documentary

evidence submitted by Geissal and Moore regarding

reasonable rates. Given Mr. Weinhaus's substantial

expertise in ERISA beneficiary matters, the court will

award him a rate of $ 250 per hour for his work in this

action. From the same record, the court awards

attorney Dobson a reasonable rate of $200 per hour. See

Exhibits 9 and 10 to Affidavit of Plaintiff's Lead

“Counsel, filed July 31, 2001. The court also finds that

the rates claimed for attorney Greidinger and the

remaining attorneys and paralegals are reasonable. The

individuals whose rates are not noted by Geissal shall

be compensated at $60 per hour.

Thus, the reasonable numbers of hours of attorney

effort and the reasonable rates for the attorneys and

paralegals are a follow:

Sheldon

Walaiesie $250/hr. x 1111.44hrs. = $277.860.00

Sheldon : i

Weinhaus: $125/hr. xX 17.60 hrs. = $2,200.00

—— $200/hnr. x 29.75hrs. = $5,950.00

Dobson:

40a

— $175/hr. x 52.58hrs. =

ig $195/nr. x G17hra. =

—eKetem $125/hr. x 434hrs. =

Jerry

Rappold $75/hr. x 17.66hrs. =

(paralegal):

en j. 860/hr, x 242hrs, =

Saco $60/hr. x 3.50hrs. =

so ee $60/hr. x 1.65hrs. =

ba a $60/hr. x 42 hrs. :

January 29, 1998, through August 20, 1998

Mare

Greidinger

David

Hominik

F. Phillips

Gilliam

James

Winn

David

Drummy

$275/hr. x 280.52 hrs.

$275/hr. x 4.20 hrs.

$210/hr. x 4.10hrs.

$85/hr. x 24.75hrs.

$75/hr. x 10.00 hrs.

$9,201.50

$771.25

$542.50

$1,324.50

$145.20

$210.00

$99.00

$25.20

$298,329.15

$77,143.00

$1,155.00

$861.00

$2,103.75

$750.00

4la

Robin

Campo $95/hr. x 16.00hrs. = $1,056.00

$83,068.00

October 20, 2000, through August 28, 2001

Mare

Greidinger $230/hr. x 140.55hrs. = $32,326.50

TOTAL ATTORNEY®Y’ FEES = $413,723.65

COSTS AND EXPENSES

In the application of Federal Rule of Civil procedure

54(d), which authorizes the award of costs to a

prevailing party, the court must carefully scrutinize the

claimed costs and the support offered for them. Farmer

v. Arabian Am. Oil Co., 379 U.S. 227, 232-33, 235 (1964);

Koppinger v. Cullen-Schultz & Assoc., 518 F.2d 901, 911

(8* Cir.1975). Generally, in a civil action only those

items of costs authorized by 28 U.S.C. § 1920° may be

taxed by the court. Crawford Fitting Co. v. J.T.

Gibbons, Inc., 482 U.S. 437, 444-45 (1987). The same

definition of costs applies to both § 1920 and to ERISA

(29 U.S.C. § 1132(g)). Emmenegger, 33 F. Supp. 2d at

1132.

In the application of a fee-shifting statute, however, "a

reasonable attorney's fee" includes the factors that

produce the attorney's work product, including

the work not only of attorneys, but also of secretaries,

messengers, librarians, janitors, and others whose labor

contributes to the work product for which an attorney

42a

bills her client; and it must also take account of other

expenses and profit.

Id. at 1133 (quoting Missouri v. Jenkins, 491 U.S. 274,

285 1989)). The reasonable attorney’s fee “must include

‘reasonable out-of-pocket expenses of the kind normally

charged to clients by attorneys.” Id. (citing Pinkham v.

Camex, Inc., 84 F.3d 292, 294-95 (8th Cir.1996)). Such,

expenses can include long distance telephone calls,

facsimile transmissions, messenger services, express

mail, deposition related travel expenses, photocopying

expenses, and court reporter fees for transcripts. Id. at

1133-36 (collecting cases).

Moore objects to the following costs and expenses

claimed by Geissal:

(a) long-distance telephone calls, Federal Express and

local delivery services, miscellaneous office expenses,

PACER automated internet information gathering, and

postage. See Exhibit 11, attached to Defs'

Memorandum (Doc. No. 183), filed November 13, 2401;

(b) $226.87 expended by attorney Greidingr for Federal

Express charges, postage, mileage, and telephone calls.

See Exhibit 12, attached to Defs' Memorandum (Doc.

No. 183), filed November 13, 2001; and

research. See Exhibit 11, attached to Defs'

Memorandum (Doc. No. 188), filed November 18, 2001.

The court disagrees with Moore regarding (a) and (b).

Although they are not recoverable costs under 28

U.S.C. § 1920, see Hollenbeck v. Falstaf, Brewing

43a

Corp., 605 F. Supp. 421, 439 (E.D. Mo. 1984), aff'd 780

F.2d 20 (8th Cir. 1985), these are expenses that are

attorney would be expected to bill to his client

separately, and as such may be shifted to Moore under

29 U.S.C. 1132(g)(1). See Emmenegger, 33 F. Supp. 2d

at 1133; ef., Emery v. Hunt, 272 F.3d 1042, 1048 (8 Cir.

2001). However, the cost of computer assisted legal

research, must be borne by the attorney's fee rate and

may not be separately shifted to the defendants either

as a recoverable cost of litigation, Leftwich v. Harris-

Stowe State College, 702 F.2d 686, 695 (8th Cir.1983)

(costs for computer-aided research are not covered

under § 1920), or as an expense shifted under §

1132(g)(1). Emmenegger, 33 F. Supp. 2d at 1136-37; U

& I Sanitation, 112 F. Supp. 2d 902, 905-06 (D. Neb.

2000); see also, Montgomery v. Aetna Plywood, Inc.,

231 F.3d 399, 409-10 (7th Cir. 2000).

Expert witness fee

The court sustains Moore's objection to a $1,000 expert

witness fee paid to Jack B. Helitzer on August 20,1998.

See Exhibit 11, attached to Defs' Memorandum (Doc.

No. 183), filed November 13, 2001. The fees of expert

witnesses are not recoverable as costs, other than as

are the fees of ordinary witnesses. Only the statutory

witness fees, per diem, and transportation costs of

witnesses are recoverable. 28 U.S.C. §§ 1920(3),

1821(b); see Crawford Fitting Co., 482 U.S. at 445;

Pinkham, 84 F.3d at 295. Nor may the fees of expert

witnesses be shifted under 29 U.S.C. § 1132(g)(1).

Emmnegger, 33 F. Supp. 2d at 1136.

44a

Payments to retained counsel

Geissal seeks to recover a total of $5,000 paid to

attorney Greidinger on November 6, 2000, and

February 27, 2001. See Exhibit 11, attached to Defs'

Memorandum (Doc. No. 183), filed November 13, 2001.

Moore argues that such payments are not recoverable

under 28 U.S.C. § 1920. The court agrees. Such costs

appear from the record to be items included in an

attorney's overhead, which is _ not _ separately

recoverable.

The remaining claimed’ costs and expenses are taxable

and reasonable, and shall be paid by Moore. The

recoverable costs and expenses total $21,015.75.

All tolled, the court determines the lodestar amount to

be $434,739.40.

The lodestar amount is presumptively the reasonable

fee, and a court may adjust it upward or downward,

only upon specific evidence on the record and detailed

findings that the lodestar amount is unreasonably low

or unreasonably high. Pennsylvania v. Delaware Valley

Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986).

Adjustment of lodestar

In the second step of the lodestar method of

determining attorneys’ fees, the court may adjust the

lodestar upward or downward based on factors not

subsumed in the initial calculation of the lodestar. Blum

v. Stenson, 465 U.S. 886, 898-901(1984). Specifically, the

court may look at the results obtained. Hensley v.

Eckerhart, 461 U.S. 424, 440 (1983) ("A reduced fee;

—

45a

award is appropriate if the relief, however significant,

is limited in comparison to the scope of the litigation as

a whole"); 10 see also Jenkins, 127 F.3d a 716 ("If the

plaintiff's success is limited, he is entitled only to an

amount of fees that is reasonable in relation to the

results obtained").

In this case, plaintiff has prevailed only on the Count I

claim that Moore violated COBRA by failing to provide

James Geissal with continuation health insurance. The

sole relief received by plaintiff is the declaration of

rights by the Supreme Court. Plaintiff has been

determined not to be entitled to any monetary

recovery. Counts II and III were dismissed as moot.

And the court has determined that Geissal is not

entitled to penalties under Count IV.

The cardinal issue presented is whether the relief

awarded under Count I merits a fee-shifting of the

attorney effort on the unsuccessful portion of Count I

and on Counts II, III, and IV. Because of its seminal

relevance, the Supreme Court's early pronouncement in

this area is restated:

The congressional intent to limit awards to prevailing

parties requires that these unrelated claims be treated

as if they had been raised in separate lawsuits, and

therefore no fee may be awarded for services on the

unsuccessful claim.

It may well be that cases involving such unrelated

claims are unlikely to arise with great frequency. Many

civil rights cases will present only a single claim. In

other cases the Plaintiff's claims for relief will involve a

common core of facts or will be based on related legal

46a

theories. Much of counsel's time will be devoted

generally to the litigation as a whole, making it difficult

to divide the hours expended on a claim-by-claim basis.

Such a lawsuit cannot be viewed as a series of discrete

claims. Instead the district court should focus on the

significance of the overall relief obtained by the plaintiff

in relation to the hours reasonably expended on the

litigation.

Where a plaintiff has obtained excellent results his

attorney should recover a fully compensatory fee.

Normally this will encompass all hours reasonably

expended on the litigation, and indeed in some cases of

exceptional success an enhanced award may be

justified. In these circumstances the fee award should

not be reduced simply because the plaintiff failed to

prevail on every contention raised in the lawsuit.

Litigants in good faith my raise alternative legal

grounds for a desired outcome, and the courts rejection

of or failure to reach certain grounds is not a sufficient

reason for reducing a fee. The result is what matters.

If, on the other hand, a plaintiff has achieved only

partial or limited success, the product of hours

reasonably expended on the litigation as a whole times

a reasonable hourly rate may be an excessive amount.

This will be true even where the plaintiff's claims were

interrelated, nonfrivolous, and raised in good faith.

Congress has not authorized an award of fees whenever

it was reasonable for a plaintiff to bring a lawsuit or

whenever conscientious counsel tried the case with

devotion and skill. Again, the most critical factor is the

degree of success obtained.

47a

Hensley, 461 U.S. at 435-36 (internal citation and

footnotes omitted).

This is not a case such as Emery, 272 F.3d 1042, in

which plaintiffs obtained some ultimate relief on an

successful state law claim but not an the alternative

federal law claim for the same relief. 272 F.3d at 1047.

In that case, the prevailing plaintiffs were entitled to

shift their attorneys' fees for their work on the

unsuccessful federal claim. Id.

Considering the degree of success obtained, Geissal's

case may be likened to one where the plaintiff won a

judgment of liability, but lost on the past judgment

remedy efforts. E.g., Jenkins, 127 F.3d 709; Association

for Retarded Citizens of N. Dak. v. Schafer, 83 F.3d

1008 (8th Cir. 1996), cert. denied, 519 U.S. 993 (1996). In

such a case, the court should determine whether

Geissal's efforts toward a monetary recovery are

"inextricably intertwined with" or are distinct from the

efforts which achieved the judgment of liability.

Clearly, both efforts were based on the same federal

statutes and arose out of a generally common set of

facts that included James Geissal's employment with

Moore, the notice and actions of Moore, James'

entitlement to continuation coverage, and his medical

expenses. Nevertheless, the court must still consider

that out of all the litigation in this action, Geissal's

victory was early on and entirely declaratory; all

subsequent efforts to derive a personal, monetary

benefit were unsuccessful. For the purpose of fee-

shifting, this last factor “certainly [changes] the overall

significance of the plaintiffs victory.” Jenkins, 127 F.3d

at 718.

48a

This is like a case where the plaintiff achieved one

victory and then expended entirely unsuccessful efforts

not to defend the victory but to achieve a greater

victory. In such a case the plaintiff “is entitled to a

proportionately lesser fee award than a prevailing

party who merely defends its victory” unsuccessfully.

Schafer, 83 F.3d at 1012.

Considering that Geissal achieved her sole, limited

victory, by judgment of liability before the Supreme

Court, the appropriate shifted fee is fifty percent of the

lodestar amount, or $217,369.70.

An appropriate order is issued herewith.

Signed this 29" day of March, 2002.

DAVID D. NOCE

UNITED STATES MAGISTRATE JUDGE

APPPENDIX A

DATE HOURS DATE HOURS DATE HOURS

02.01.95 58 T1798 25 12.28.98 Oo

02.02.95 .25 07.21.98 2.00 01.16.99 st3)

06.18.96 2.83 09.22.98 .25 03.25.99 mi

08.19.96 142 10.01.98 .25 04.06.99 00

07.31.97 .25 10.12.98 42 04.21.99 08

02.18.98 .25

04.22.98 1.00

05.01.98 3.83

05.02.98 .25

05.15.98 1.50

06.10.98 1.00

06.19.98 .17

APPENDIX B

DATE HOURS

10.25.94 4.00

07.11.95 .25

09.16.96 .25

11.01.96 .58

49a

11.02.98

11.03.98

11.06.98

11.10.98

11.24.98

12.09.98

1.00

05.03.99

05.12.99

05.20.99

09.15.00

02.18.01

TOTAL

HOURS

DATE HOURS DATE

10.05.97 2.08

10.09.97 2.00

10.10.97 2.50

10.14.97 2.50

09.22.98

10.12.98

11.10.98

11.24.98

TOTAL

HOURS

1.00

.20

6.00

31.33

HOURS

1.75

17.16

APPENDIX C

DATE HOURS DATE HOURS

07.26.95

08.19.95

08.31.95

09.01.95

09.12.95

09.15.95

09.16.95

10.26.95

10.27.95

03.20.96

06.13.97

06.14.97

07.02.97

07.10.97

.20

1.00

50a

09.15.97

09.23.97

10.17.97

11.03.97

11.10.97

11.14.97

11.26.97

12.11.97

01.20.98

01.27.98

02.03.98

02.07.98

02.09.98

02.11.98

3.00

1.50

2.00

ts)

2.00

1.25

RI)

DATE HOURS

02.25.98

02.27.98

03.03.98

03.18.98

03.23.98

03.24.98

04.03.98

04.10.98

04.11.98

04.14.98

04.15.98

05.01.98

06.08.98

06.09.98

2.00

4.00

5.67

3.83

1.00

5la

09.05.97 42 02.16.98 .58 08.20.98 6.75

08.21.98 1.75 11.09.98 42 11.09.98 42

12.24.98 33 04.21.99 50 04.21.99 33

TOTAL

HouRS “6-66

FOOTNOTES

' That subsection provides that are employer may

cancel COBRA continuation coverage as of "[t] the date

on which the qualified beneficiary first becomes, after

the date of the election . . . covered under any other

group health plan (as an employee or otherwise)... ."

See 29 U.C:S. § 1162(2)(D)(i) .

* Geissal did not seek reimbursement from TWA/Aetna

for expenses he incurred on a trip to Greece to obtain

immunotherapy in a last effort to cure his cancer.

° This section provides that a participant or beneficiary

may bring a civil suit "(A) to enjoin any act or practice

which violates any provision of this subchapter or the

terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violation or (ii) to

enforce any provisions of this subchapter or the terms o

the plan." See 29 U.S.C. § 1132(a)(8).

* This section provides that a participant or beneficiary

may bring a civil suit "to recover benefits due to him |

under the terms of his plan, to enforce his rights under

the terms of the plan, or to clarify his rights to future

52a

benefits under the terns of the plan." See 29 U.S.C. §

1132(a)(1)(B).

° TW A/Aetna covered much of Geissal's expenses.

6 The court notes that the written affidavit submitted

by attorney Greidinger was inadvertently not signed.

” Reduced rate far ton-legal work. See supra.

* This section allows for the recovery of the following

costs:

(1) Fee of the clerk and marshal;

(2) Fees of the court reporter for all or any part of

the stenographic transcript necessarily obtained for use

in the case;

(3) Fees and disbursements for printing and

witnesses;

(4) Fees for exemplification and copies of papers

necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title;

(6) Compensation of court appointed experts,

compensation of interpreters, and salaries, fees,

expenses, and costs of special interpretation services.

° Geissal agrees with Moore that $342.46 relating to a

bankruptcy proceeding in Kentucky are _ not

compensable costs, they having been inadvertently

included in her claim.

' The original 12 Hensley factors were: (1) the time

and labor required; (2) the novelty and difficulty of the

questions; (3) the skill requisite to perform the legal

service properly; (4) the preclusion of employment by

53a

the attorney due to acceptance of the case; (5) the

customary fee; (6) whether the fee is fixed or

contingent; (7) time limitations imposed by the client or

the circumstances; (8) the amount involved and the

results obtained; (9) the experience, reputation, and

ability of the attorneys; (10) the "undesirability" of the

case; (11) the nature and length of the professional

relationship with the client; and (12) awards in similar

cases. Hensley, 461 U.S. at 430 n.3.

These factors were subsequently refined by the

Supreme Court in Blum v. Stenson. 465 U.S. 886, 898-

901(1984) (novelty or complexity of the issues should

not be considered at the second step, and quality of

representation and results obtained are ordinarily

subsumed in the lodestar determination and in most

cases should not be considered in the second step), and

City of Burlington v. Dague, 505 U.S. 557, 566-67.(1992)

(contingency nature of a fee cannot be considered as a

factor bearing on the amount of attorney’s fees).

54a

NO. 4:94 CV 1263 DDN

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF MISSOURI,

EASTERN DIVISION

BONNIE L. GEISSAL,

Plaintiff,

MOORE MEDICAL CORP., GROUP BENEFIT

PLAN OF MOORE MEDICAL CORP., AND

HERBERT WALTER nl,

Defendants.

March 29, 2001, Decided

March 29, 2001, Filed

COUNSEL: For MOORE MEDICAL CORP.,

defendant: Daniel J. Schwartz, GREENSFELDER

AND HEMKER, St. Louis, MO.

For GROUP BENEFIT PLAN OF MOORE

MEDICAL CORP., HERBERT WALKER,

defendants: Edward M. Goldenhersh, Vice-President,

Daniel J. Sewartz, GREENSFELDER AND

HEMKER, St. Louis, MO.

For BONNIE L. GEISSAL, plaintiff: S. Sheldon

Weinhaus, Partner, WEINHAUS AND DOBSON, St.

Louis, MO.

JUDGES: David D. Noce, UNITED STATES

MAGISTRATE JUDGE.

55a

OPINIONBY: David D. Noce

OPINION:

MEMORANDUM

This action is before the court upon defendants' motion

for partial summary judgment on Count I of plaintiff's

complaint, specifically on the issue of damages (Doc.

No. 139), and plaintiff's cross-motion for summary

judgment on appropriate equitable relief (Doc. No. 139).

The parties have consented to the exercise of authority

by the undersigned United States Magistrate Judge

pursuant to 28 U.S.C. § 636(c). ;

Plaintiff James Geissal commenced this action in June

1994, alleging four counts under the Employee

Retirement Income Security Act ("ERISA"), amended

by the Comprehensive Omnibus Budget Reconciliation

Act of 1986 ("COBRA"). Defendants are plaintiff's

former employer, Moore Medical Corporation

("Moore"). Group Benefit Plan of Moore Medical

Corporation, and Herbert Walter, the Plan

Administrator.

Plaintiff alleged four counts for relief. Count I alleged

that defendants violated COBRA by failing to provide

him with continuation coverage after Moore terminated

his employment. Count II alleged that Moore was

estopped from denying him COBRA coverage because

plaintiff relied on its initial representation that he was

entitled to COBRA coverage. Count III alleges that

defendants waived any differing construction or

interpretation of plan provisions. Count IV alleges that

Herbert Walter, the Plan Administrator, failed to

56a

provide requested documents in violation of 29 U.S.C. §

1024(b)(4).

Plaintiff hes moved for partial summary judgment. In

March 1996, this court denied plaintiff's motion for

artial summary judgment and sua sponte granted

partial summary judgment for defendants. n2 Geissal v.

Moore Medical Corp., 927 F. Supp. 352, 361 (S.D. Mo.

1996). The Eighth Circuit affirmed on interlocutory

appeal. Geissal v. Medical Corp., 114 F.3d 1458 (8th Cir.

1997). However, the United States Supreme Court

vacated the opinion of the Eighth Circuit and remanded

the case. Geissal v. Moore Medical Corp., 524 U.S. 74,

141 L. Ed. 2d 64, 118 S. Ct. 1869 (1998).

Plaintiff then moved for reconsideration of the courts

ruling on plaintiff's earlier motion for partial summary

judgment. In March 1999, the court granted plaintiffs

motion and determined that defendant Moore Medical

Corporation was obligated to provide COBRA coverage

to James Geissal, but that plaintiff's entitlement to

other relief would have to await the conclusion of any

trial or other factfinding conducted by the court. See

Order and Memorandum, filed March 23, 1999 (Doc. No.

83) . In September 1999, the court ordered the parties

to file cross-motions for partial summary judgment on

certain liability issues. See Order, filed Sept. 23, 1999

(Doe. No. 119).

The Court must grant summary judgment if the

pleadings, admissions, stipulations, depositions and

affidavits demonstrate that no genuine issue of material

fact exists and the moving party is entitled to judgment

as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp.

v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct.

57a

2548 (1986); Board of Educ., Island Trees Union Free

School Dist. No. 26 v. Pico, 457 U.S. 853, 863, 73 L. Ed.

2d 435, 102 S. Ct. 2799 (1982) (plurality opinion). The

moving party must initially demonstrate the absence of

an issue for trial. Celotex, 477 U.S. at 323. Any doubt

as to the existence of a matevial fact must be resolved

in favor of the party opposing the motion. Pico, 457

USS. at 863.

Once a motion is properly made and supported, the non-

moving party may not rest upon the allegations in the

pleadings but must instead demonstrate the existence

of admissible evidence of specific facts showing that

there is a genuine issue of material fact for trial. Fed. R.

Civ. P. 56(e); Buford V. Tremayne, 747 F.2d 445, 447

(8th Cir. 1984). Although the court views the facts in

the light most favorable to the non-moving party, "in

order to defeat a motion for summary judgment, the

non-movant cannot simply create a factual dispute;

rather, there must be genuine dispute over those facts

that could actually affect the outcome of the lawsuit."

Webb v. Lawrence County, 144 F.3d 1131, 1135 (8th

Cir. 1998).

For the convenience of the parties, the court will

restate the undisputed facts which the court set forth in

its March 23, 1999 ruling:

"1. On July 16, 1993, Moore Medical Corporation

terminated James Geissal from employment. At the

time of his termination, Geissal was 62 years old and

had cancer. During his employment at Moore, Geissa!

was a participant in a health benefits plan, the Group

Benefit Plan of Moore Medical Corp., sponsored by

Moore for its employees.

58a

"2. Moore Medical Corp. is an employer and the plan

sponsor within the meaning of 29 U.S.C. § 1102(5) and

(16)(B), of defendant Group Benefit Plan of Moore

Medical Corp. (the Plan). The Plan is an employee

welfare benefit plan as defined in 29 U.S.C. § 1002(1).

Defendant Group Benefit Plan of Moore Medical Corp.

provides for the payment and reimbursement to plan

participants of various medical expenses and is a group

health plan as defined in 29 U.S.C. § 1167(1)

"3. While Geissal was employed at Moore, his wife,

Bonnie, was employed by Trans World Airlines (TWA).

By reason of Bonnie Geissal's employment at TWA,

James Geissal was a covered dependent eligible for

coverage under the health insurance policy issued by

Aetna Life Insurance Company. Aetna was the health

provider or third-party administrator under the TWA

plan provided by TWA for its employees. Geissal's

coverage through his wife's plan preceded Geissal's

termination by Moore.

"4. Upon Geissal's termination at Moore Medical,

Geissal received a notice of his right under COBRA to

continue health insurance coverage under Moore's

benefit plan. He accepted Moore's offer and elected to

continue receiving group health coverage under

Moore's Plan. He began making premium payments,

which the defendants accepted. Approximately six

months after his termination, by letter dated January

27, 1994, defendants informed Geissal that they had

determined he was not entitled to COBRA coverage

because he was already covered under a group policy

with Aetna. Geissal was told that the premiums he had

already paid would be returned and that those who

59a

provided him with medical care during that period

would not be paid by the Plan.

"5. Moore's plan had an annual deductible of $ 150. It

also provided for a lifetime maximum amount of

benefits. TWA's plan through Aetna had an annual

deductible of $ 500 per year per person and also

provided a lifetime maximum amount of benefits.

"6. At the time Geissal was terminated, he requested

and received a service letter pursuant to Missouri

Revised Statute § 290.140. At the time he was

terminated, he considered whether he should consult an

attorney to investigate what rights and claims he might

have against Moore because he felt he had been unfairly

terminated. Geissal decided not to do so, because his

main concern was that he have full and adequate health

insurance. Moore representatives encouraged him to

make the COBRA election, which did much to assuage

his feelings about his discharge. At about this time, and

shortly after the issuance of the service letter, the Plan

or its reinsurer were making large payments for

medical care provided to Geissal prior to his

termination. Because he was offered the COBRA

continuation coverage, Geissal did not look for another

insurance carrier."

Order and Memorandum, at 2-3.

Arguments in Support of Both Parties' Motions

In support of their motion for partial summary

judgment, defendants argue that plaintiff's damages

are limited to Geissal's unreimbursed out-of-pocket

medical expenses that would have been covered under

60a

the Moore Plan had he been provided with COBRA

continuation coverage, less deductibles and premium

payments due Moore for such coverage. Defendants

argue that the reason for this is that TWA/Aetna

covered much of plaintiffs expenses. Any claim that

TWA/Aetna may have had on Geissal's estate is barred

by the applicable statute of limitations.

Therefore, to allow plaintiff to recover for benefits paid

by TWA/Aetna that TWA/Aetna is not able to then

recover from plaintiff would present a windfall to the

plaintiff, which is prohibited.

Defendants claim that Mr. Geissal's unreimbursed out-

of-pocket medical expenses, which would have been

eovered under the Moore Plan, were $ 2,614.08.

Defendants then claim that the amount of deductibles,

copayments and premium payments that Geissal would

have been required to pay for COBRA continuation

coverage under the Moore Plan would have been $

2,973.18. Therefore, defendants argue, because the sum

of the continuation coverage premiums and deductibles

exceeds plaintiffs unreimbursed out-of-pocket medical

expenses by $ 359.10, plaintiff suffered no damages and

that summary judgment should be granted in favor of

defendants on the issue of damages.

In her combined memorandum, plaintiff argues that

defendants have been unjustly enriched by the failure

of the Moore Plan to provide benefits to Mr. Geissal.

Therefore, plaintiff argues, she is entitled to "other

appropriate equitable relief," as provided by 29 U.S.C. §

1132(a)(8), in the form of restitution.

6la

Plaintiff disputes defendant's argument _ that

TWA/Aetna -would be unable to recover any money

| from Geissal's estate. She argues that because ERISA

| preempts Missouri law, nothing in Missouri law could

| stop TWA/Aetna from bringing an ERISA action

| against the estate for the enforcement of an equitable

lien or the creation of a constructive trust, or from

intervening in the present action. Plaintiff also points

out that Aetna/TWA uses only the services of doctors,

labs and hospitals who agree to provide discounts to

TWA/Aetna. On the other hand, plaintiff argues, had

the Moore Plan covered the benefits, the providers

would have been able to charge their full price for the

medical services rendered.

Plaintiff claims there is no valid reason to exclude the

medical expenses_of Mr. Geissal in Greece because the

Moore Plan provided for the funding of alternative

medical treatment, considered on a case by case basis.

n3 Plaintiff finally argues that Mr. Geissal was entitled

to an extension of COBRA benefits beyond January 17,

1995, and that she is entitled to reimbursement of

amounts not paid by either plan.

In defendants' memorandum in response to plaintiff's

cross-motion for summary judgment and in reply to

plaintiff's response to defendants' motion for partial

summary judgment, defendants argue that plaintiff is

not entitled to relief under § 1132(a)(3) because she has

a claim for benefits available under § 1132(a)(1)(B).

Defendants further argue that in order to obtain relief

under § 1132(a)(3), plaintiff must first establish a breach

of fiduciary duty and that she has failed to do so.

Finally, defendants argue that plaintiff's requested

62a

relief is not equitable relief and that she is not entitled

to the amount claimed.

Finally, plaintiff argues in her reply that defendants

may not raise the fiduciary responsibility issue for the

first time in their reply. Nevertheless, plaintiff argues

that restitution and other equitable relief are available

as remedies under ERISA and COBRA absent proof of

breach of fiduciary duty. Plaintiff also argues that her

claims are for equitable restitution and do not amount

to claims for legal damages.

Discussion

The civil enforcement provision of ERISA, 29 U.S.C. §

1132, provides, in relevant part:

(a) Persons empowered to bring a civil action

A civil action may be brought-

(1) by a participant or beneficiary-

(A) for the relief provided for in subsection (c) of this

section, or

(B) to recover benefits due to him under the terms of

his plan, to enforce his rights under the terms of the

plan, or to clarify his rights to future benefits under the

terms of the plan;

* * *

(3) by a participant, beneficiary, or fiduciary

63a

(A) to enjoin any act or practice which violates any

provision of this subchapter or the terms of the plan, or

(B) to obtain other appropriate equitable relief (i) to

redress such violations or (ii) to enforce any provisions

of this subchapter or the terms of the plan.

29 U.S.C. § 1182(a).

In Count I of her complaint, plaintiff pleaded the

following:

WHEREFORE, plaintiff prays for compensatory

damages and for prejudgment interest on past due

benefits, for such further injunctive and equitable relief

as may be appropriate in the circumstances, for

penalties allowable under 29 U.S.C. § 1182(c), for his

| costs and expenses including a reasonable attorney's

| fee, for punitive damages if found to be appropriate,

| and for such other and further relief as may be meet

and just in the premises.

Complaint, filed June 30, 1994 (Doc. No. 1), at 6. Both

parties recognize that compensatory damages are not

available under § 1182(a)(8). See Kuhl v. Lincoln

National Health Plan of Kansas City, 999 F.2d 298, 304-

05 (8th Cir. 1993), cert. denied, 510 U.S. 1045, 126 L. Ed.

2d 661, 114 S. Ct. 694 (1994). However, plaintiff argues

that she is entitled to "other appropriate equitable

relief" available under § 1132(a)(3). Specifically, as

noted above, she seeks restitution.

The United States Supreme Court has noted the

| following: The statute authorizes "appropriate"

| equitable relief. We should expect that courts, in

64a

fashioning "appropriate" equitable relief, will keep in

mind the "special nature and purpose of employee

benefit plans," and will respect the "policy choices

reflected in the inclusion of certain remedies and the

exclusion of others." Thus, we should expect that where

Congress elsewhere provided adequate relief for a

beneficiary's injury, there will likely be no need for

further equitable relief, in which case such relief

normally would not be "appropriate."

Varity Corporation v. Howe, 516 U.S. 489, 515, 134 L.

Ed. 2d 180, 116 S. Ct. 1065 (1996) (quoting Pilot Life

Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 95 L. Ed. 2d 39, 107

S. Ct. 1549 (1987)) (other citations omitted). The Eighth

Circuit, interpreting Howe held that "where a plaintiff

is ‘provided adequate relief by [the] right to bring a

claim for benefits under ...§ 1132(a) (1) (B),' the

plaintiff does not have a cause of action to seek the

same remedy under § 1132(a) (3) (B)." Conley v. Pitney

Bowes, 176 F.3d 1044, 1047 (8th Cir. 1999) (quoting

Wald v. Southwestern Bell Corp. Customcare Medical

Plan, 83 F.3d 1002, 1006 (8th Cir. 1996)), cert. denied

528 U.S. 1136 (2000). See also Hall v. LHACO. Inc., 140

F.3d 1190, 1197 (8th Cir. 1998).

The Supreme Court in the case at bar noted and held

the following:

The issue in this case is whether 29 U.S.C. § 1162(2)

(D) (e) allows an employer to deny COBRA

continuation coverage to a qualified beneficiary who is

covered under another group health plan at the time he

makes his COBRA election. We hold that it does not.

65a

Geissal, 524 U.S. at 76. Therefore, the court held that

defendants were obligated to provide plaintiff with

coverage under COBRA.

However, other courts have held that when a

beneficiary has died, benefits under the plan are no

longer recoverable under § 1132(a)(1). See Turner v.

Fallon Community Health Plan, 127 F.3d 196, 198 (1st

Cir. 1997), cert. denied 523 U.S. 1072, 140 L. Ed. 2d

666, 118 S. Ct. 1512 (1998). Turner specifically held that

"the relief expressly provided [under § 1132(a) (1) (B)]

is to secure benefits under the plan rather than

damages for a breach of the plan." Id. Another court has

noted the following:

Mr. Foster is not the participant or beneficiary, so he

may not personally bring an ERISA suit. As the

representative for his wife's estate, he may bring a suit

on her behalf. However, the only recovery allowed by [§

1132(a) (1) (B)] is a recovery of plan benefits. Due to

Mrg. Foster's death, an award of benefits is not

available.

Foster v. Blue Cross and Blue Shield of Michigan, 969

F. Supp. 1020, 1029 (E. D. Mich. 1997). Therefore, §

1132(a) (1) does not provide plaintiff with an adequate

remedy, and the court must consider the propriety of

other appropriate equitable relief under § 1132(a) (8).

The Eighth Circuit has succinctly delineated the

difference between equitable restitution and

compensatory restitution as follows:

Though we sometimes speak of restitution in generic

terms, restitution may be either equitable or

66a

compensatory. The basic distinction between equitable

restitution and compensation focuses on the genesis of

the award sought by plaintiff. A restitutionary award

focuses on the defendant's wrongfully obtained gain

while a compensatory award focuses on the plaintiff's

loss at the defendant's hands. Restitution seeks to

punish the wrongdoer by taking his ill-gotten gains,

thus, removing his incentive to perform the wrongful

act again. Compensatory damages on the other hand

focus on the plaintiff's losses and seek to recover in

money the value of the harm done to him.

Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 944

(8th Cir. 1999) (citations and footnote omitted). As

noted above, plaintiff argues that defendants were

unjustly enriched by its failure to pay for plaintiff's

medical expenses and that the providers were unable to

charge their full rates because TWA/Aetna required

them to accept lower rates.

The Ninth Circuit has considered a case similar to the

one at bar. In Bast v. Prudential Ins. Co. of America,

150 F.3d 1003 (9th Cir. 1998), cert. denied 528 U.S. 870,

145 L. Ed. 2d 144, 120 S. Ct. 170 (1999), Rhonda Bast

was diagnosed with breast cancer. Her oncologist

recommended that she undergo an autologous bone

marrow transplant procedure. Id. at 1005. Her

insurance company, Prudential, initially denied

coverage for the procedure in December 1991, but later

reconsidered and said that it would provide coverage in

February 1992. Id. at 1006. However, by this time,

Bast's cancer had spread and it was too late for her to

undergo the procedure. Id. Her health declined and she

died in January 1993. Id.

67a

Her husband and minor son filed a federal complaint

alleging state law claims and ERISA claims. Id. The

district court held that plaintiffs' state law claims were

preempted by ERISA and there was no remedy

available under ERISA for the ERISA claims. Id. The

plaintiffs argued that they should be allowed to recover

the equitable remedy of restitution under § 1132(a)(8)

as other appropriate equitable relief. Id. at 1010. The

court of appeals held as follows:

The district court concluded that to grant restitution to

the Basts would be equivalent to awarding them money

damages, and such an award would not be an equitable

remedy. The court stated:

In this case, where the only conceivable remedy that I

could foresee would be the cost of the procedure which

the plaintiff was not given at a time when it would have

hopefully provided some relief for her, is the same as

really a legal recovery of cost .. . I see no other possible

theory of restitution that would be "appropriate" in the

sense of it being different than a legal remedy.

We agree.

Id.

The court concludes that the reasoning of the Ninth

Circuit in Bast is relevant and persuasive. An award of

restitution in this case would be the equivalent of

awarding compensatory damages. This would be |

contrary to Supreme Court precedent which dictates

that "section 1132(a) (3) recovery is limited to classic

equitable remedies such as injunctive, restitutionary, or

mandamus relief, and does not extend to compensatory

68a

damages." Kerr, 184 F.3d at 948 (citing Mertens v.

Hewitt Assocs., 508 U.S. 248. 256-58, 124 L. Ed. 2d 161,

113 S. Ct.- 2063 (19938)). See also, Rogers v. Hartford

Life and Accident Ins. Co., 167 F.3d 933, 944 (5th Cir.

1999) ("other appropriate equitable relief" available in §

1132(a) (3) did not include "make-whole relief" in the

form of medical expenses); Allinder v. Inter-City Prods. -

Corp., 152 F.3d 544, 552 (6th Cir. 1998) (compensatory

damages resulting from a breach of trust not

recoverable under § 1132(a) (3) following Mertens),

cert. denied 525 U.S. 1178, 143 L. Ed. 2d 110, 119 S. Ct.

1115 (1999). -

Equitable relief, such as in the form of an injunction

requiring the Moore Plan to reinstate James Geissal as

a beneficiary, would have been entirely appropriate

while Mr. Geissal was alive and within the 18 month

time frame of COBRA. See, e.g., Howe v. Varity Corp.

36 F.3d 746, 756-57 (8th Cir. 1994) (plaintiffs wrongfully

induced to' leave one company for another and lost

benefits when the other company failed were entitled to

an injunction restoring them to the previous plan and

payments of money they would have received had they

never left the previous plan), aff'd, 516 U.S. 489, 134 L.

Ed. 2d 130, 116 S. Ct. 1065 (1996). Indeed, plaintiff

acknowledged that this was a major concern at the time

of the filing of this lawsuit and one of the main reasons

Mr. Geissal moved early for partial summary judgment.

Pl. Combined Memo., filed August 4, 2000 (Doc. No.

139) at 1, n.1.

The court recognizes that this essentially leaves

plaintiff without relief against the Moore Plan. Several

courts have noted this problem and the gap in ERISA

remedies as a result of the preemption of state

69a

remedies. See Bast, 150 F.3d at 1010 ("Although forcing

the Basts to assert their claims only under ERISA may

leave them without a viable remedy, this is an

unfortunate consequence of the compromise Congress

made in drafting ERISA"); Turner, 127 F.3d at 200-01

("Appellant, recognizing that the statutory and case law

compels the district court's grant of summary judgment

to appellee, addresses entreaties to us which, if

appropriate at all, are appropriate to the legislative

branch. Periodic accusations to the contrary

notwithstanding, the courts are not legislative bodies.")

(Hill, J., concurring); Andrews-Clarke v. Travelers Ins.

Co., 984 F. Supp. 49, 65 (D. Mass 1997) ("Although the

alleged conduct of Travelers and Greenspring in this

case is extraordinarily troubling, even more disturbing

to this Court is the failure of Congress to amend a

statute that, due to the changing realities of the modern

health care system, has gone conspicuously awry from

its original intent"); cf. Prudential Ins. Co. of Am. v.

National Park Med. Center, Inc., 154 F.3d 812, 830 (8th

Cir. 1998) (On the issue of preemption, "it is for

Congress, not the courts, to reassess ERISA in light of

modern insurance practices and the national debate

over health care").

Therefore, plaintiff's cross-motion for summary

judgment for appropriate equitable relief (Doc. No. 139)

will be denied. Defendants' motion for partial summary

judgment on Count I of plaintiff's complaint, specifically

on the issue of damages (Doc. No. 139) will be granted.

Both parties agree that Counts II and III are moot. See

Def. Memo. in Support, filed August 4, 2000 (Doc. No.

139), at 5 n.4; Pl. Motion to Reconsider, filed August 31,

1998 (Doc. No. 57), at 7.

70a

Therefore, the only issues remaining before this court

are those alleged in Count IV, chiefly plaintiff's

entitlement to penalties as a result of defendant

Walter's failure to provide plaintiff with requested

documents in violation of 29 U.S.C. § 1024(b) (4), and

attorney's fees. Plaintiff adverted to these issues in her

memorandum, in footnotes 2 and 3, filed August 4, 2000.

The court will consider those issues according to a

schedule ordered by the court.

An appropriate order is issued herewith.

David D. Nove

UNITED STATES MAGISTRATE JUDGE

Signed this 29th day of March, 2001.

ORDER

In accordance with the Memorandum filed herewith,

IT IS HEREBY ORDERED that defendants' motion

for partial summary judgment on Count I on the issue

of damages (Doc. No. 139) is granted.

IT IS FURTHER ORDERED that plaintiff's cross-

motion for summary judgment for appropriate

equitabie relief (Doc. No. 139) is denied.

IT IS FURTHER ORDERED that plaintiff may file a

motion for the award of a penalty and fees within thirty

days of this date.

David D. Noce

UNITED STATES MAGISTRATE JUDGE

Signed this 29th day of March, 2001.

FOOTNOTES

nl This defendant's surname has been spelled "Walker"

in the pleadings. However, the correct spelling is

"Walter." See Affidavit of Herbert Walter, filed May 7,

1999. The style of the case is therefore corrected.

n2 While summary judgment was pending, James

Geissal died, and Bonnie Geissal, his wife and the

personal representative of his estate, replaced him as

plaintiff.

n3 Near the end of Mr. Geissal's life, the Geissal's

traveled to Greece to obtain immunotherapy in a last

effort to save his life.

72a

No. 02-2255No. 02-2256

UNITED STATES COURT OF APPEALS FOR THE

EIGHTH CIRCUIT

Bonnie L. Geissal, as personal representative of the

Estate ef James W. Geissal,

Appellant/Cross-Appellee,

VS.

Moore Medical Corporation, et al.,

Appe!lees/Cross-Appellants.

September 12, 2003, Decided

OPINION:

Order Denying Petition for Rehearing and for

Rehearing En Banc

The petition for rehearing en banc is denied. The

petition for rehearing by the panel is also denied.

_ September 12, 2003

73a

No. 2-2255

UNITED STATES COURT OF APPEALS FOR THE

EIGHTH CIRCUIT

Bonnie L. Geissal,

Appellant,

VS.

Moore Medical Corporation, et al.,

Appellees.

Appeal from the United States District Court for the

Eastern District of Missouri

4:94 CV 1263 DDN

Appellant's application for fees on appeal is granted in

part. Appellant is awarded the mount of $5,000.00 in

attorney fees.

Appellant shall recover from appellees the sum of

$1,015.94 as taxable costs on appeal.

Appellees' motion for attorneys fees on appeal is

denied.

The clerk of the United States District Court is

directed to place these fees and costs in the previously

issued mandate.

(5232-010199)

September 19, 2003

Order Entered at the Direction of the Court

Clerk, U.S. Court of Appeals, Eighth Circuit

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.