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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 19 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418


New York Office

Tel: (716) 650-5987

Fax: (716) 633-0301

333 International Drive

Suite B-4

Williamsville, NY 14221


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104







September 6, 2012 

 State and Federal Law Alert




Employer Liable for Extending Health Care Coverage Without Insurer Approval




An employer that unilaterally extended coverage in its self funded plan for a former employee who was placed on disability was not entitled to stop-loss coverage from its insurer either for the extended coverage or for the COBRA coverage that would normally have taken effect as of the date the employee was terminated.


In the case of Clarcor, Inc. v. Madison National Life Insurance Company, Inc., an employee became disabled and went on 12 weeks of FMLA leave. When the FMLA leave period ended, the employee was placed on short term disability leave for six months. At the end of the six month period, the employer offered her COBRA coverage.


The employer had a self funded group health plan with stop loss insurance for expenses exceeding $250,000. The disabled employee incurred medical expenses that went far beyond that figure. When the employer attempted to be reimbursed by the stop loss insurer, the carrier refused to do so. It stated that it would only cover "eligible expenses" for covered individuals and that under the plan provisions this only included expenses of employees "who are regularly scheduled to work a minimum of 40 hours per week." The insurer said that because the employee was on short term disability, she did not meet this 40 hour per week requirement.


The Sixth Circuit Court of Appeals agreed with the insurer, stating that "the plain and unambiguous terms of the Plan demonstrate that [the employee] was not eligible for Plan coverage following the commencement of her short term disability leave."


The employer then argued that if the employee had been recognized as ineligible for coverage when on disability, and the employer had properly administered the plan, she would have been offered COBRA at the time she went on disability. Therefore, even if the plan had been properly administrated, the stop loss insurer would still have been liable for its portion of the former employee's claims during the COBRA continuation period.


Often a court will resolve this type of issue by placing the parties in the financial position they would have been in if they had followed the law and proper contract provisions. However, in this case, the Sixth Circuit refused to do so, stating that it had no authority to grant relief to the employer "based on a fictional, timely offer of COBRA coverage." Therefore, the employer was denied any stop loss coverage for the employee after her employment was considered terminated.




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