The opinion of the court was delivered by: Sarokin, District Judge.
Plaintiff, a mental incompetent, seeks to reinstate certain
health plan benefits which lapsed due to her failure to make
payments during her incompetency. Defendants contend that the
federal statutes which apply in this matter make no provision
or allowance for such extensions due to incapacity, and thus
coverage cannot be reinstated once there has been a default in
premiums no matter what the cause. Thus, not only do
defendants refuse to voluntarily remedy this harsh result, but
they contend that they cannot be compelled to do so.
The court is satisfied that where a person entitled to
coverage has evidenced an intent to continue such coverage by
making timely premium payments, and becomes physically or
mentally incapacitated from knowing of the obligation or
paying or arranging for payments of the premium, then such
person is entitled to reinstate such coverage by paying the
amount due within a reasonable time after the disability ends
or a representative is appointed to act for such person.
Principles of equity and common decency suggest that a person
should not be deprived of desired and needed coverage when
incapacitated from continuing it.
Defendants suggest that such a rule would permit persons to
seek the same result if an injury reduced or terminated their
earning ability. But no such collateral consequence is
involved or intended here. The disability which gives rise to
this ruling deprived plaintiff of knowing of her obligation
and meeting it. Those circumstances warrant a reasonable
opportunity to cure the default and reinstate the coverage.
Indeed, one might hope that the involuntary circumstances
which caused the plaintiff to default would have prompted the
voluntary reinstatement of her benefits.
Before the court is defendants' joint motion for summary
judgment. As mentioned above, plaintiff, Karen Sirkin, is a
mental incompetent. Plaintiff's legal guardian, Jeffrey
Albies, prosecutes this action to recover benefits under Ms.
Sirkin's Health plan pursuant to ERISA, 29 U.S.C. § 1001, et
seq., and COBRA, 29 U.S.C. § 1161, et seq. Ms. Sirkin had been
an employee of defendant The Katherine Gibbs School, Inc.,
until July 22, 1990. As an employee of The Katherine Gibbs
School, plaintiff participated in co-defendant Phillips
Colleges, Inc.'s Medical Benefits Plan, which coverage
continued until July 15, 1990. (For a summary of the Plan
description, see Martin Aff't, Exh. A.) Co-defendant
Fox-Everett, Inc. administers the Plan. Martin Aff't, ¶¶ 3-5.
On or about September 14, 1990, Fox notified plaintiff that
she had until October 4, 1990, to pay the next required
premium and to bring her balance up to date. Id. at ¶ 9, Exh.
C. Fox also advised that plaintiff's coverage would lapse if
she failed to make timely payment. Plaintiff did not make
payment as of October 4, 1990, and Phillips retroactively
terminated her coverage as of August 16, 1990. Id. at ¶ 11. On
October 9, 1990, plaintiff was admitted to the Bergan Pines
County Hospital, where she remained for several months
On January 16, 1991, the Hon. Arthur J. Lessemann of the
Superior Court of New Jersey, Bergan County, Chancery
Division, Probate Part adjudged plaintiff mentally incompetent
and appointed Joseph Albies as plaintiff's legal guardian.
Albies Aff't, ¶ 2, Exh. A. According to the separate
evaluations of psychiatrists Stanley Waldinger, M.D., Morton
Fridman, M.D., and Richard Winters, M.D., plaintiff has been
unable to attend to her own affairs since August or early
September of 1990. Id. at Exhs. B-D.*fn2 Based on several
physical and psychological examinations, as well as a CT scan,
Ms. Sirkin's three examining physicians concurred that Ms.
Sirkin suffered from cerebral atrophy and memory impairment.
She could not calculate dates or numerical equations, and she
apparently forgot her second marriage and daughter. See Albies
Aff't, Exh. C-D.
As a direct result of Ms. Sirkin's condition, Mr. Albies did
not become aware of the October 4, 1990 due date for
plaintiff's insurance premium until after plaintiff was
admitted to the hospital on October 9, and he was not
empowered to make the payment until his January 16, 1991
appointment as plaintiff's legal guardian. Albies Aff't, ¶¶
6-10. However, Mr. Albies had initiated contact with Phillips
as early as November 2, 1990 and had asked Phillips to
reinstate plaintiff's COBRA coverage retroactively. Thus ensued
a series of correspondence between Mr. Albies' lawyer and
Phillips. See Albies Aff't, ¶ 17, Exh. F. On or about March 7,
1991, Mr. Albies tendered to Phillips a check for $1,952.02 as
payment for the period in which plaintiff had failed to pay her
health coverage premiums. Cplt. ¶ 15. The evidence suggests
(and defendants do not dispute) that Mr. Albies responded
promptly and expeditiously in his efforts to bring Ms. Sirkin's
Phillips has refused to accept the payment and to reinstate
Plan coverage for plaintiff. Thus, plaintiff brings this
action to recover benefits due and/or enforce the terms of the
Plan.*fn3 Defendants counter that neither ERISA nor COBRA
requires employers to accept late payments caused by mental
incompetency of the plan participant.