Geissal v. Moore Medical Corp.

Background

James Geissal, an employee of Moore Medical Corporation who was suffering from cancer, was fired and told he could elect COBRA continuation coverage under Moore’s group health plan. He elected COBRA and paid premiums for six months. Moore later informed him he was not entitled to COBRA because, at the time of his election, Geissal was also covered under his wife’s group plan through her employer (TWA) and Aetna. Geissal sued, alleging Moore violated COBRA, misled him, and waived any right to deny benefits; a magistrate and the Eighth Circuit sided with Moore. The Supreme Court granted review to resolve conflicting federal appeals court rulings.

Reasoning

The Court addressed whether the statute allows an employer to end COBRA coverage when the beneficiary was already covered by another group health plan at the time of the COBRA election. The Court read the statute’s phrase “first becomes, after the date of the election, covered under any other group health plan” to mean that termination is authorized only when the beneficiary first becomes covered after the election. Because Geissal had been covered by the wife’s plan before he elected COBRA, he did not “first become” covered after the election, so Moore could not terminate his COBRA rights under that provision. The Court rejected arguments about the timing of primary coverage and the so-called “significant gap” approach.

Real world impact

The decision prevents employers from using this statutory clause to deny COBRA when an employee already had other group coverage at election; COBRA rights remain unless the other plan explicitly excludes coverage for the beneficiary’s preexisting condition. The case is sent back to the lower court for further proceedings consistent with this interpretation.