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November 20, 1991


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 thereafter.

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 balance current.

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.

At a July 2, 1991 scheduling conference, Magistrate Judge Hedges stayed all discovery and directed defendants to file dispositive motions on the "duty of [a] former employer to pay COBRA premiums or excuse late payments." See Def. ...

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