After his discharge, Geissal elected to continue coverage under Moore's health plan under the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). He paid the necessary premium payments for 6 months. In January of 1994, however, Moore informed Geissal that he was not eligible to COBRA benefits because on the date of his election of COBRA continuation coverage, he was already covered by another health insurance play, i.e., the Aetna plan through his wife's employer.

Geissal sued Moore claiming, among other things, that the company violated COBRA by discontinuing Geissal's COBRA coverage. A magistrate judge ruled in favor of the employer that Geissal was not eligible for COBRA continuation benefits due to the fact that he was already covered under his wife's health plan. The Court of Appeals for the Eighth Circuit upheld the magistrate's decision. The U.S. Supreme Court agreed to review the case.

The Supreme Court overturned the court of appeals, ruling that Geissal was entitled to COBRA benefits despite his coverage under another health plan. The Court reasoned that although the COBRA statute provides that an employer may terminate COBRA coverage if an employee "first . . . becomes, after the date of election, covered under any other group health plan," this provision does not apply in a situation such as Geissal's where the employee is already covered by another plan on the date of election.

The Court rejected Moore's arguments that it should not matter when the employee became covered by another plan, and that COBRA is intended merely to maintain the status quo as of the date of the qualifying event (i.e., in this case, termination of employment). The Court said the COBRA statute does not speak in terms of maintaining the status quo as of the qualifying event. Rather, the Court found the statute plainly stated only that termination is authorized if the beneficiary "first becomes" covered by another plan after the "date of election," only if the new plan does not contain an exclusion or limitation for any pre- existing condition of the beneficiary.

The Court also rejected the company's argument that its interpretation of COBRA would allow continuation coverage to be provided, even where there is coverage by another plan, if there was a "significant gap" between the company's health plan and the other plan covering the employee. The Court said there was no statutory support for this interpretation, and that it would require courts to make judgments about the adequacy of medical insurance coverage. Congress would have to provide a clear mandate to foist this type of decision-making on the judiciary, the Court said.

(Geissal v. Moore Medical Corp., No. 97-689, 1998 U.S.LEXIS 3732 (June 8, 1998). 24 pages.)