State ex rel. Orlofske v. City of Wheeling

Citations: 212 W. Va. 538; 575 S.E.2d 148; 29 Employee Benefits Cas. (BNA) 1656; 2002 W. Va. LEXIS 190Docket: No. 30456

Court: West Virginia Supreme Court; November 7, 2002; West Virginia; State Supreme Court

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The City of Wheeling appeals a Circuit Court decision that granted Sharon Orlofske and others a writ of mandamus, compelling the City to accept her premiums for lifetime health insurance coverage under its benefits plan. The City argues that its obligation to accept these premiums is limited by federal and state law to a maximum of thirty-six months, as outlined in the Federal Consolidated Omnibus Budget Reconciliation Act (COBRA). Ms. Orlofske, whose husband was a retired firefighter, filed the petition after the City notified her that her coverage would only last thirty-six months following her husband's death in 1998.

The Circuit Court, however, ruled in favor of Ms. Orlofske on May 15, 2001, leading the City to appeal. The City contended that federal law preempted state law, limiting its obligation, and raised issues regarding the availability of mandamus relief and the circuit court's subject matter jurisdiction.

The appellate court reviews the case de novo, particularly regarding the grant of mandamus relief and the question of subject matter jurisdiction, confirming that these are legal questions subject to plenary review. The court ultimately affirms the circuit court's ruling.

Ms. Orlofske's claims are supported by W. Va. Code § 8-12-8, which allows municipalities to provide health insurance coverage to the spouses and dependents of deceased retirees who previously received insurance from the City. These beneficiaries can maintain their insurance by paying the full premium. The City contends that this statute is either preempted by federal law or should be interpreted in accordance with federal law. 

The relevant federal law includes the Consolidated Budget Reconciliation Act of 1985 (COBRA), which amended the Employee Retirement Income Security Act (ERISA) and the Public Health Service Act (PHSA) to mandate that health plan sponsors notify qualified beneficiaries about their right to continue coverage for up to thirty-six months following a "qualifying event." Notably, ERISA does not govern “governmental plans,” meaning that state and municipal governments must provide COBRA continuation coverage under the PHSA.

The City challenges the circuit court's subject matter jurisdiction, arguing it lacks authority to hear cases involving federal preemption. However, there is no supporting authority for this claim. The United States Constitution establishes that state courts possess concurrent jurisdiction with federal courts over federal issues, including preemption matters. Precedent indicates that state courts can and should resolve federal preemption defenses when presented. Consequently, West Virginia state courts are determined to have jurisdiction over such defenses.

W. Va. Code § 8-12-8 is upheld as valid and not preempted by federal law. Preemption under the Supremacy Clause assumes that Congress does not intend to displace state law unless there is compelling evidence to the contrary. The court rejects the City's argument that COBRA amendments, similar to ERISA and PHSA provisions on continuing coverage, induce ERISA preemption into the PHSA. Under 29 U.S.C. § 1003(b)(1), ERISA does not apply to governmental employee benefits plans, and thus the City's reliance on ERISA preemption is incorrect. Federal preemption can be either express or implied; however, the PHSA lacks an express preemption provision and does not contain exclusive language. Reports from Congress regarding the PHSA do not indicate any intent for preemption. The court finds no conflict between W. Va. Code § 8-12-8 and the PHSA’s aim of ensuring continuing health insurance coverage for government employees. The PHSA allows states to provide coverage that is more generous than its minimum requirements, as long as it does not fall below those standards.

W. Va. Code § 8-12-8 mandates lifetime insurance coverage for retirees’ survivors or dependents, explicitly ensuring coverage for a minimum of thirty-six months. The statute grants municipalities the authority to secure group insurance policies for regular employees (excluding temporary and provisional workers), including their spouses and dependents. The insurance can encompass various types of coverage, including life, health, and medical services, subject to approval by the state’s insurance commissioner regarding terms and benefits.

Municipalities can pay all or part of the premium costs and can deduct employee contributions from salaries if the full premium is not covered by the municipality. Upon retirement, employees may retain coverage for themselves and their dependents by paying the entire premium. Surviving spouses and dependents of deceased members may also continue their coverage under the same conditions. If a municipality switches insurance carriers, it must ensure that all retirees and their dependents are guaranteed coverage at the same cost as regular employees of similar age, without loss of benefits.

The legislative history of the PHSA supports this interpretation, indicating that state laws imposing more extensive coverage requirements than federal rules coexist without conflict. Specifically, if state laws provide greater rights than the federal health care continuation rules, the state law will prevail in those respects, confirming that state laws more generous than the PHSA are not preempted.

The continuation coverage provisions of the Public Health Service Act (PHSA) do not preempt West Virginia Code § 8-12-8, which mandates lifetime health insurance coverage for the spouses and dependents of deceased municipal employees. This statute requires municipalities to provide coverage without imposing any temporal limits, allowing these individuals to continue their insurance by paying the full premium. The court clarified that it cannot interpret the statute beyond its clear language, rejecting the City's argument that a 1986 amendment intended to limit coverage to thirty-six months, coinciding with the passage of COBRA. The court asserts that legislative intent cannot be retroactively attributed to the West Virginia Legislature regarding federal laws enacted after state provisions. Consequently, municipalities must offer continued coverage without a specified timeframe for deceased employees' spouses and dependents. The court also dismissed concerns raised by the City regarding potential harm to municipalities, emphasizing its role in strictly adhering to statutory interpretation.

Judicial review does not extend to evaluating legislative policy choices in areas that do not involve fundamental rights or suspect classifications, as established in State ex rel. Blankenship v. Richardson. Courts are not permitted to alter statutes under the guise of interpretation and will only negate the meaning of clear statutes in rare circumstances, which were not present in this case. The City argued against mandamus relief, claiming it was not obligated to accept premium payments for Ms. Orlofske’s health insurance beyond the federally mandated thirty-six months under COBRA. However, the court found no federal preemption of W. Va. Code § 8-12-8, which is straightforward and allows for mandamus to compel the City to accept payments if properly made by Ms. Orlofske. The Circuit Court's decision is affirmed, and the City did not raise any objections regarding the writ of mandamus procedure, resulting in waiver of those issues on appeal.

A plan for employees established by the U.S. government, state governments, or their agencies is defined under 29 U.S.C. 1002. A "qualifying event" for covered employees includes: the death of the employee, termination or reduction of hours (excluding gross misconduct), divorce or legal separation, entitlement to Social Security benefits, and a dependent child no longer meeting dependency requirements as per 42 U.S.C. 300bb-3. The H.R. Rep. No. 101-247 includes a preemption savings clause but is subordinate to ERISA's strong preemption provisions. The Ninth Circuit's ruling indicates that the PHSA does not preempt W. Va. Code 8-12-8, countering the City’s reliance on the Moran case, which lacked a thorough analysis distinguishing PHSA from ERISA. The City conceded that W. Va. Code 8-12-8 has no time limitations and previous rulings have indicated its intent to protect retirees from rate increases. Although courts typically adhere closely to statutory language, ambiguity may allow for broader interpretation in exceptional cases. The availability of mandamus relief hinges on three criteria: a clear legal right for the petitioner, a legal duty for the respondent, and the absence of another adequate remedy. Legislative action remains within the Legislature's prerogative to amend W. Va. Code 8-12-8, as affirmed in State Farm Mut. Auto. Ins. v. Norman.