01-000024 Morris Shelkofsky vs. Department Of Management Services, Division Of State Group Insurance Status: Closed Recommended Order on Monday, March 19, 2001.

Summary: Petitioner paid Consolidated Omnibus Budget Reconciliation Act premiums. Subsequently, he became permanently eligible for military health care and demanded return of his premiums. Held: he was not entitled to a refund.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MORRIS SHELKOFSKY, )

)

Petitioner, )

)

vs. ) Case No. 01-0024

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF STATE )

GROUP INSURANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in

Tallahassee, Florida, on March 1, 2001, before Harry L. Hooper,

Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Petitioner : Morris Shelkofsky, Esquire

3721 Crawfordville Road, No. 17

Tallahassee, Florida 32310-7074

For Respondent : Julia Forrester, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

STATEMENT OF THE ISSUE

Whe ther Petitioner is entitled to receive a refund of

insurance premiums paid to Respondent.

PRELIMINARY STATEMENT

Petitioner paid $517.96 to the Division of State Group

Insurance, Department of Management Services(Division), in

July 2000, and again in August 2000. These payments were health

insurance premiums remitted to the Division in return for

coverage under the Consolidated Omnibus Budget Reconciliation

Act of 1985 which, inter alia , provides for the continuation of

health insurance for terminated employees, in certain

circumstances. This program is applicable to state employees

and is referred to as COBRA.

Subsequently, on or about August 24, 2000, Petitioner

telephonically requested a refund of the premiums paid. The

telephone call was followed by a faxed written request which was

also dated August 24, 2000. This request was formally denied in

a letter dated September 29, 2000, which was signed by Ria

Brown, a benefits administrator with the Division. In a letter

dated September 29, 2000, Petitioner demanded a formal hearing.

At the hearing, Petitioner called four witnesses and

testified in his own behalf. Petitioner offered four exhibits

which were admitted into evidence. Respondent called one

witness. Both parties timely submitted Proposed Recommended

Orders which were considered in the preparation of this

Recommended Order.

References to Florida Statutes are to Florida Statutes

(1999) unless stated otherwise.

FINDINGS OF FACT

1. The Division administers health plans, including COBRA,

for the benefit of employees of the State of Florida.

2. Petitioner was an employee of the State of Florida from

1991 until February 11, 2000, which was his last day on the

payroll of the Office of the Attorney General.

3. On May 27, 1998, Petitioner was placed on the Temporary

Disability Retired List by the U. S. Air Force. He was

presented an identification card reflecting his rank as colonel.

His identification card reflects that he was eligible for

medical insurance.

4. As a retired military person Petitioner was eligible

for treatment at a military medical facility or through TRICARE.

TRICARE is a comprehensive health insurance program for military

personnel. TRICARE may be a primary provider or a secondary

provider of health benefits. During his active employment with

the state, however, the TRICARE coverage was secondary. This

means that the state paid any claims to the extent of its policy

limits and the remaining amount of any claim would be processed

and paid in accordance with TRICARE coverage.

5. Petitioner was aware that placement on the Temporary

Disability Retired List was, as the name implied, a temporary

situation. It was his expectation that subsequent to being

placed on the list, the U. S. Air Force would determine either

that he was disabled to the extent that he would receive

disability retirement, and thus continue to be eligible for

TRICARE, or that he would be denied disability retirement and

would have to arrange for other medical insurance, or do

without.

6. During Petitioner's employment with the Florida

Department of Legal Affairs, he was covered by the State Group

Health Self Insurance Plan. On February 11, 2000, when

Petitioner terminated his employment with the Florida Department

of Legal Affairs, he was seeking to have the State of Florida

declare him disabled.

7. Pursuant to law, Petitioner's entitlement to the

benefits of the State Group Health Self Insurance Plan continued

until March 31, 2001. Without taking action to secure health

insurance, Petitioner would have only TRICARE as an insurer.

However, if the state determined him to have become disabled

while employed by the state, he would be covered by the State

Group Health Self Insurance Plan, retroactively.

8. On May 11, 2000, the Florida Division of Retirement

denied Petitioner's application for in-line-of-duty disability

retirement benefits. The effect of this determination was to

terminate the possibility of coverage under the State Group

Health Self Insurance Plan with the reduced premiums available

to a person on disability retirement.

9. The Florida Department of Legal Affairs failed to

immediately notify the Division that Petitioner had terminated

his employment. As a result, the Division did not send

Petitioner a Notice of Continuation Coverage Eligibility until

immediately after to May 11, 2000.

10. The notice informed Petitioner of his right to have

family continuation coverage in return for a premium of $517.96.

It further informed him that he had until July 11, 2000, to

elect coverage which would be retroactive to April 1, 2000.

11. A second Notice of Continuation Coverage Eligibility,

dated May 22, 2000, was sent to Petitioner. This notice

similarly informed Petitioner of his right to have family

continuation coverage in return for a premium of $517.96 but

informed him that he had until July 22, 2000, to elect coverage

which would be retroactive to April 1, 2000.

12. The second page of the Notice of Continuation Coverage

Eligibility informed Petitioner, inter alia , that coverage would

be available for 18 months for voluntary or involuntary

termination, 29 months for certain disabled qualified

beneficiaries, and 36 months for all other qualifying events.

13. The second page also informed Petitioner that coverage

might end on the occurrence of several events. The event

asserted to be pertinent to this case is the date the insured

becomes covered by another group health plan which does not

contain any limitation or exclusion with respect to a pre-

existing condition.

14. Petitioner filed a "Continuation of Coverage

Enrollment" form dated July 21, 2000. This form noted that the

date of the event that precipitated eligibility for coverage was

February 11, 2000. Petitioner wrote on the form in his own

hand, "I am permanently and totally disabled; I and my

dependents am covered under TRICARE at present."

15. At the bottom of the "Continuation of Coverage

Enrollment" form, the Division authorized coverage dating back

to April 1, 2000.

16. Petitioner sent the Division a check in the amount of

$517.96 to cover the initial premium. The date on the check was

July 21, 2000. Sometime prior to August 24, 2000, he sent the

Division another premium payment in the amount of $517.96.

17. At the time Petitioner filed the "Continuation of

Coverage Enrollment" form and submitted the premiums, he was

covered by the regular military medical system, because he was

considered to be retired by the U.S. Air Force. However, since

the question of his disability with the U.S. Air Force had not

been decided, he was aware of the possibility that his military

health coverage could end at any time. By maintaining a COBRA

policy, he was insuring that he would not find himself in a

posture where he had neither COBRA nor TRICARE.

18. On August 16, 2000, the U.S. Air Force determined that

Petitioner was disabled and was entitled to the medical care

provided by law for retired service persons, which includes

TRICARE, presumably, for life.

19. It was at this point Petitioner demanded the return of

the premium he paid. Petitioner's theory for the refund is that

he was, under the law, ineligible for COBRA coverage during the

two months that he paid a premium with respect to it.

20. On September 29, 2000, in a letter signed by Ria

Brown, Benefits Administrator, the Division reiterated its

refusal to refund the premiums and noted that Petitioner was

covered under COBRA for the period April 1, 2000, through

May 31, 2000. The letter informed Petitioner that, "Based on

the information in your letter, you are eligible and entitled

for TRICARE Standard coverage, but you did not indicate that you

are actually enrolled."

21. Ms. Brown also advised the following:

Coverage at time of COBRA event : Section

4980(f)(2)(B)(iv) provides that a qualified

beneficiary's right to COBRA continuation coverage may

be terminated when the qualified beneficiary "first

becomes," after the date of the COBRA election,

covered under another group health plan (subject to

certain additional conditions) or entitled to Medicare

benefits.

The final regulations provide that an employer

may cut off the right to COBRA continuation coverage

based upon other group health plan coverage or

entitlement to Medicare benefits only if the qualified

beneficiary first becomes covered under the other

group health plan coverage or entitled to the Medicare

benefits after the date of the COBRA election.

22. Petitioner asserted in a reply, also dated

September 29, 2000, that contrary to Ms. Brown's assertion, he

was actually enrolled in TRICARE Standard during the operative

period.

23. In a letter dated October 3, 2000, Merrill Moody, the

Division Director, informed Petitioner that his claim for refund

was being denied because he had a contractual relationship with

the Division and that he got the product for which he paid--

health insurance coverage for April and May, 2000. Mr. Moody

also pointed out that the Division was required under law to

allow active employees and their covered dependents, to

participate in COBRA, notwithstanding their participation in

other programs.

CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter presented

herein, pursuant to Section 120.57(1), Florida Statutes.

25. Petitioner has the burden of proving his entitlement

to a refund by a preponderance of the evidence. Section

120.57(1)(j), Florida Statutes.

26. Title 10, U.S.C. Section 1074 provides for

comprehensive medical coverage for persons retired from the

military. Medical care may be obtained at a military medical

facility or through the military insurance program called

TRICARE. Because Petitioner was on the temporary disability

retired list of the U.S. Air Force, Petitioner was covered by a

comprehensive military health program from May 27, 1998, until

the time his disability status was resolved.

27. Title 10, U.S.C. Section 1210 provides that service

members on the temporary disability retired list must submit to

periodic physical examinations. If it is determined that a

disability is permanent, and is at least 30 percent under the

standard schedule of rating disabilities in use by the

Department of Veterans Affairs, then the member will be put on

the permanent retired list. This determination was made in the

case of Petitioner on August 16, 2000. Accordingly, Petitioner

from that date onward is covered under TRICARE.

28. COBRA coverage is couched in terms which are directory

toward the employer. It provides generally that an employer who

provides a group health plan for the benefit of its employees,

must continue to provide benefits identical to the plan, to

employees no longer employed by the employer as the result of a

"qualifying event." Title 29, U.S.C. Section 1161.

29. The employer is directed to provide coverage from the

period beginning on the date of the qualifying event and ending

not earlier than the maximum required period; the end of the

employer's plan; the failure of a participant to pay a premium;

or the participant's entitlement to group health plan coverage

or Medicare entitlement, or termination of extended coverage for

disability. Title 29, U.S.C. Section 1162.

30. Title 29, U.S.C. Section 1162(2), with regard to group

health plan coverage, provides that 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:

* * *

(D ) Group health plan coverage or medicare

entitlement

The date on which the qualified beneficiary first becomes,

after the date of the election--

(i ) covered under any other group health plan

(as an employee or otherwise) which does not contain

any exclusion or limitation with respect to any

preexisting condition of such beneficiary (other than

such an exclusion or limitation which does not apply

to [or is satisfied by] such beneficiary by reason of

chapter 100 of Title 26, part 7 of this subtitle, or

title XXVII of the Public Health Service Act [42

U.S.C.A. § 300gg, et . seq .]), or

(ii ) in the case of a qualified beneficiary

other than a qualified beneficiary described in

section 1167(3)(C) of this title, entitled to benefits

under title XVIII of the Social Security Act [42

U.S.C.A. § 1395 et . seq .]

31. It is the aforementioned language which is summarized

on the reverse of the "Continuation of Coverage Enrollment" form

which stated that coverage might end on, ". . . the date the

insured becomes covered by another group health plan which does

not contain any limitation or exclusion with respect to a pre-

existing condition." Petitioner concluded that this meant that

he was ineligible ab initio for COBRA coverage because he was

covered by TRICARE at the time of the qualifying event.

However, during the COBRA coverage period, Petitioner could not

"become covered" by TRICARE because he was already covered by

TRICARE on the date of the qualifying event.

32. Continuation coverage of health insurance under COBRA

is required to be provided to employees upon their termination

of employment, even if at the time of termination they have

other health insurance coverage. The employer may terminate

COBRA coverage if the employee subsequently obtains health

insurance from another employer. Geissal v. Moore Medical

Laboratories , 524 U.S. 74 ; 118 L. Ed.2d 64(1998).

33. The State of Florida is required to offer COBRA

coverage to military reservists. So long as servicemen elect

COBRA continuation coverage, and pay appropriate premiums, they

are entitled to it for the period allowed by law. A person

covered under military health care is not ineligible to receive

COBRA. Internal Revenue Service Notice 90-58, "Continuation of

Employer Health Coverage for Activated Reservists and Their

Families" dated September 7, 1990.

34. Petitioner elected COBRA continuation coverage and

paid premiums for two months. He did not become ineligible to

receive COBRA during the period in question. He received that

for which he paid, and therefore, is not entitled to a refund of

$1035.92.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law, it

is

RECOMMENDED:

That the Division of State Group Insurance enter a final

order denying Petitioner's request for a refund of $1035.92.

DONE AND ENTERED this 19th day of March, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

HARRY L. HOOPER

Administrativ e Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488- 9675 SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of A dministrative Hearings

this 19th day of March, 2001.

COPIES FURNISHED :

Julia Forrester, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Morris Shelkofsky

3721 Crawfordville Road, No. 17

Tallahassee, Florida 32310-7074

Cynthia Henderson, Secretary

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

Bruce Hoffmann, General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.