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Sarah Fama v. Design Assistance Corporation

September 30, 2011

SARAH FAMA, PLAINTIFF,
v.
DESIGN ASSISTANCE CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

Plaintiff, Sarah Fama, brought suit against Defendants, Design Assistance Corporation, the Plan Administrator for the Design Assistance Corporation AmeriHealth Group Medical Plan, and the Design Assistance Corporation AmeriHealth Group Medical Plan (collectively, "Defendants"), alleging that Defendants violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and, likewise, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 29 U.S.C. § 1161 et seq., by not timely notifying Fama of her right to elect COBRA continuation coverage. Fama moves for summary judgment. Defendants cross-move for summary judgment.

For the following reasons, Fama's Motion for Summary Judgment is granted in part. Further, Defendants' Cross-motion for Summary Judgment is denied in part. The parties are granted leave to submit supplemental briefs with respect to the remaining issues highlighted by this Opinion and as further explained infra.

I. JURISDICTION

This Court has jurisdiction over Plaintiff's federal claim pursuant to 28 U.S.C. § 1331.

II. BACKGROUND

According to Fama's complaint, Design Assistance Corporation ("DAC") "is in the business of designing and manufacturing training aides, mockups, simulators, cutaways and demonstration equipment relating to industrial maintenance skills." (Compl., ¶ 5). Glenn Woerner, DAC's President and sole board member, describes DAC as "a small New Jersey Corporation in the business of designing three dimensional training aids for other companies." (Def. Cross-mot., Woerner Aff.). In or around April 2008, Fama began working as an administrative/personal assistant for DAC. Within several months, Fama became a participant and beneficiary in a group health insurance plan, the AmeriHealth Group Medical Plan. On September 30, 2008, however, Fama's employment with DAC terminated.*fn1

Despite her termination in September 2008, Fama did not receive any notice of her right to continue her insurance coverage under COBRA. In a letter dated May 28, 2009, Fama's former counsel sent a letter to DAC informing the company of its failure to provide COBRA notice, and requesting that notice be sent and Fama "be made whole so as to avoid any gaps in her benefit coverage." (Pl. Mot., Hildebrand's Aff., Exh. F). Subsequently, in a letter dated June 9, 2009, Woerner explained that Fama was not entitled to receive any information concerning her insurance coverage because, inter alia, she abandoned her job and thus was terminated for cause. Moreover, Woerner stated that despite DAC's efforts to cancel Fama's insurance coverage on October 15, 2008, "due to an administrative error, our faxed notice was not acknowledged until March 2009 and the cancellation was made effective January 1, 2009." (Pl. Mot., Fama's Aff., Exh. A).

Nevertheless, in a letter dated June 30, 2009, Kelly Daroshefski, DAC's controller and the person within DAC who often handles employee insurance, requested Cherry Hill Benefits, the company that had assisted DAC with its insurance account, to "reinstate the medical coverage for Sarah Fama . . . retroactively, 1/1/09 in order to have no lapse in coverage." (Def. Cross-mot., Daroshefski Aff., Exh. B). Fama's health insurance benefits eventually were reinstated retroactively to January 1, 2009.*fn2 Then, on September 3, 2009, Fama received notification from DAC of her right to continue her medical coverage under COBRA. In between the time of her termination and receipt of the COBRA notice, Fama incurred medical expenses in the amount of $656.22 that her medical plan would have covered. In addition, Fama applied for treatment as an "assistance eligible individual" pursuant to the American Recovery and Reinvestment Act of 2009 ("ARRA"). DAC denied her request, but the United States Department of Labor determined that she was eligible for a premium reduction to the cost of her COBRA benefits under the ARRA.

In April 2010, Fama filed suit against Defendants, alleging that they violated ERISA by failing to timely notify her of the right to elect COBRA continuation coverage. She seeks statutory penalties, reimbursements, and attorney's fees and costs in relief. In February 2011, Fama moved for summary judgment on her claim against Defendants. About two months later, Defendants cross-moved for summary judgment against Fama's claim.

III. DISCUSSION

A. Standard for Summary Judgment

Summary judgment is appropriate where the Court is satisfied that "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56.

An issue is "genuine" if it is supported by evidence such that a reasonable jury could return a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if, under the governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the nonmoving party's evidence "is to be believed and all justifiable ...


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