STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMJAD SHAMIM, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2797

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF STATE EMPLOYEES' ) INSURANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, on August 16, 1990, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Amjad Shamim

816 Northwest 45th Street Pompano Beach, Florida 33064

For Respondent: Augustus D. Aikens, Jr., Esquire

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

STATEMENT OF THE ISSUE

The issue is whether the Petitioner, Amjad Shamim, is eligible for continuation coverage of health insurance and reimbursement, under the State of Florida Employees Group Insurance Plan, for medical care expenses he incurred after he left state employment.

PRELIMINARY STATEMENT

On February 28, 1990, the Director of the Division of State Employee Insurance denied Mr. Shamim's request for continued State Health Insurance coverage after he had left state employment. Mr. Shamim submitted a petition for a formal administrative hearing contesting the Department's action. The agency requested assignment of the case to the Division of Administrative Hearings. A partial transcript of the hearing was filed. The parties filed proposed findings of fact and conclusions of law. Some of the facts Mr. Shamim relies on were not proven at the hearing, and those factual assertions have not been considered. Rulings on proposed findings are made in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Mr. Shamim became a full-time employee of the Department of Health and Rehabilitative Services (HRS) in September, 1986, and worked at the Palm Beach County Health Department.

   
   

2. Effective August 1, 1987, Mr. Shamim was insured with family coverage under the State of Florida, Employee Group Health Insurance Program. His enrollment continued until his insurance termination effective date of January 1, 1989.

   
   

3. On November 15, 1988, Mr. Shamim met with Martina L. Walker, Personnel Technician I for HRS at the Palm Beach County Health Department, in connection with his decision to leave the Department's employ on November 18, 1988. At that meeting he executed the documents required by HRS to discontinue his health insurance coverage.

   
   

4. As part of that November 15, 1988, conference, Martina Walker informed Mr. Shamim of his rights to continued health insurance coverage after his termination of employment. Mr. Shamim advised Ms. Walker that he no longer needed the State coverage because his new employer offered a health insurance plan to its employees. Ms. Walker, nonetheless, cautioned Mr. Shamim that any pre-existing conditions are usually not covered by new employer policies. Ms. Walker's notification of Mr. Shamim's right to continued health insurance coverage for up to 18 months was not in writing.

   
   

5. Mrs. Walker never told Mr. Shamim orally the specifics of continuation coverage, i.e., that he had 60 days to elect continuation coverage from the coverage effective date of January 1, 1989, that his application and premium were required to be postmarked by March 1, 1989; or that he could continue his family coverage for 18 months at monthly premium of $273.01 per month.

   
   

6. In addition to disclosures when an employee leaves, all employees of the Palm Beach County Health Department are advised of their opportunity to elect continuation coverage under the State Plan at the time of their employment, by means of a notice furnished by HRS. Mr. Shamim received a general notice of benefits, including the availability of post employment continuation coverage, at the time of his employment.

   
   

7. The termination form completed by Ms. Walker was processed routinely, and caused the Division of State Employee Insurance to mail Mr. Shamim written notification by first class mail of the availability of continuation coverage in a letter dated December 1, 1988. Due to the appearance of the handwritten address on the notice mailed to Mr. Shamim, it is more likely than not that this notice failed to arrive at Mr. Shamim's home address. The portion of the address for the apartment number could be read as D201 or 2201, which would account for misdirection of the notice in the mail.

   
   

8. Mr. Shamim's claim that he did not receive the notification is accepted. Had the notice been properly addressed and had he received it, Mr. Shamim would have had the opportunity to decide whether to exercise his legal right to continue his health insurance.

   
   

9. On January 27, 1989, Mr. Shamim had surgery to his hand. He had been treated for that condition while he was employed with the Palm Beach County Health Department. Because it was deemed to be a pre-existing condition, the expense he incurred of almost $4,000 was not covered under the health insurance

   policy of his new employer. There is no evidence of the length of time the pre- existing condition exclusion in the policy offered by Mr. Shamim's new employer lasts.

   
   

10. Mr. Shamim first notified HRS of his desire for post termination health insurance coverage on September 19, 1989. A second request was made on November 7, 1989. Finding no success with HRS, Mr. Shamim contacted the Respondent on December 29, 1989.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.1

    
    

12. Section 110.123(5), Florida Statutes, assigns to the Secretary of the Department of Administration the responsibility for administering the state group insurance program. Subject to legislative approval, the Department determines benefits and the required contributions for employee group insurance programs, including health insurance.

    
    

13. The federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) was signed into law on April 7, 1986. Title X of that act, Public Law 99-272, amends three statutes, the Public Health Service Act of 1944, the Internal Revenue Code, and Title I of the Employee Retirement Security Act of 1974 (ERISA). The amendments require that group health plans offered by covered employers allow employees the opportunity to elect to continue health care insurance coverage in certain situations where coverage otherwise would end.

    The Internal Revenue Service, Department of Labor and Department of Health and Human Services all were assigned regulatory authority to implement the act.

    Title X of COBRA includes a new Title XXII as part of the Public Health Service Act, which is almost identical to the amendments governing continuation coverage for employees of private employers made to the Internal Revenue Code. The amendments to the Public Health Service Act of 1944 require state or local governments that receive funds under the Public Health Service Act, [58 Stat.

    682, codified at 42 U.S.C. Sections 201 et. seq.], to offer insured employees and their dependents the opportunity to elect to continue their insurance coverage for a specified period beyond a "qualifying event," which includes termination of employment. 42 U.S.C. Sections 300bb-1(a) and 300bb-3(2). The statute requires that employees be notified of their right to continuation coverage when they are first covered by group insurance, 42 U.S.C. Section 300bb-6(1), and when they terminate employment 42 U.S.C. Section 300bb-6(2).

    
    

14. Under this act, Mr. Shamim's health insurance could have been extended for 18 months. See 42 U.S.C. Section 300bb-2(2)(A). The group health plan's administrator is required to notify each covered employee and spouse of the employee (if any) of the right to continue health insurance coverage. 42 U.S.C. 300bb-6(4).

    
    

15. The Public Health Service of the Department of Health and Human Services has adopted no final rules implementing the COBRA continuation of coverage requirements for state and local governments. The Conference Report for COBRA states that "pending the promulgation of regulations, [public] employers are required to operate in good faith compliance with a reasonable interpretation of these substantive rules, notice requirements, etc." House Report 453, 99th Cong., 1st Sess. (December 18, 1985) at 563. That same report disclosed Congress' intention that rules of the Department of Health and Human Services on continued insurance coverage for state and local government

    employees conform to regulations of the IRS and Department of Labor. The Public Health Service published in the Federal Register on January 7, 1987, a notice adopting the interim disclosure and reporting requirements issued by the Department of Labor in ERISA Technical Release No. 86-2 as the position of the Secretary of Health and Human Services. 52 Fed. Reg. 604-606 (January 7, 1987). Pertinent portions of that notice say:

    
    

    This Department [HHS] will consider that the use of the model notice appended to this notice will demonstrate good faith compliance

    with a reasonable interpretation of the general notice requirement in Title X of COBRA and Section 2206 of the Public Health Service Act [42 U.S.C. Section 300bb-6] in the absence of regulations in this area. . . .

    * * * The Department will also consider that an

    employer or plan administrator has made a good faith effort at compliance in the absence of regulations if this notice is furnished to each covered employee and his or her spouse (if any) by first class mail to the covered employee's last known address. 52 Fed. Reg. at 605.

    
    

16. The employing state agency must notify the Plan Administrator (i.e., the Department of Administration, Division of State Employee Insurance) of terminating employees within 30 days of the termination, which is a qualifying event. The Plan Administrator then has 14 days to give the employee notice of the right to elect continuation coverage for group health insurance. 42 U.S.C. Section 300bb-6(2),(4). This was not done for Mr. Shamim. While the oral notification by Ms. Walker and the notice he received when first employed may have, as a practical matter, given Mr. Shamim notice of his right to elect continuation coverage, the statute and implementing interim policies require that "the plan administrator shall notify" the employee in writing after termination. Due to mis-addressing of the envelope, this did not happen. See,

    42 U.S.C. Section 300bb-6(4), 52 Fed. Reg. 605. Mr. Shamim thus lost the opportunity given to him statutorily to reconsider whether to continue his coverage. The statutory requirement for notice on multiple occasions leads to the conclusion that prior notice of the right to continuation coverage, given when an insured is first employed, does not substitute for later, written notice of the availability of continuation coverage when an employee leaves employment.

    
    

17. The evidence in this case is convincing that Mr. Shamim was not actually notified in writing of his rights to continuation coverage by the Plan Administrator after the qualifying event of his termination of his employment.

    
    

18. The question arises whether Mr. Shamim is entitled to continuation coverage and reimbursement for his medical bills under the state of Florida's Employees' Group Self-Health Insurance Plan after his coverage terminated on January 1, 1989. Because Mr. Shamim is attempting to demonstrate his entitlement to reimbursement (the Department certainly is not asserting this fact) he has the burden of proof.

    
    

19. Mr. Shamim has proven his entitlement to continuation coverage because he did not receive the required written disclosures of his opportunity to obtain continuation coverage. He claims he would have purchased coverage, and therefore he should be required to pay the premium for the insurance he would

have purchased to provide his family coverage for preexisting conditions. This record does not disclose the length of the pre-existing condition exclusion period in the new employer's policy, but it should be readily available. The claim for Mr. Shamim should be honored, subject to regularly applicable deductibles, co-payments or policy conditions. Mr. Shamim should pay $273.01 per month for the number of months the new employer's policy excluded coverage for pre-existing conditions, up to 18 months. Any claims for benefits due during that periods should also be honored. 42 U.S.C. Section 300bb-7.

Accordingly, it is recommended the Department of Administration reinstate Mr. Shamim's health insurance, collect the outstanding premiums due, and accept the subject claim for processing.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered accepting the request of Mr.

Shamim for continuation coverage, accepting his premiums and processing his claim.

DONE and ENTERED this 11th day of November, 1990, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 11th day of November, 1990.

ENDNOTES

1/ Apparently the U.S. District Court also has jurisdiction over disputes such as these. 42 U.S.C. Section 300bb-7.

APPENDIX TO RECOMMENDED ORDER

Rulings on the proposals by Mr. Shamim:

No rulings can be made on the proposed findings contained in the memorandum dated September 8, 1990, from Mr. Shamim, because they generally argue matters outside the record made at the final hearing.

Rulings on the proposals by the Department of Administration:

1. Adopted in Finding 1.

2. Adopted in Finding 2.

3. Adopted in Finding 3.

4. Adopted in Finding 4.

5. Rejected for the reasons stated in Finding 7.

6. Rejected. See, Finding 8.

7. Rejected. See, Findings 7 and 8.

8. Adopted in Finding 6.

9. Adopted in Finding 9.

10. Adopted in finding 10.

COPIES FURNISHED:

Augustus D. Aikens, Jr., Esquire Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

Amjad Shamim

816 Northwest 45th Street Pompano Beach, Florida 33064

Aletta Shutes, Secretary Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-002797

Orders for Case No: 90-002797