Opinion Number ( 1996 )

Dear Mr. Pizza:

You have requested an opinion of the Attorney General, in your capacity as the attorney for the Assumption Parish Hospital Service District No. 1 of the Parish of Assumption (District). Your question pertains to the continuation of health insurance on employees of the District who may be terminated as a result of its sale to a nonprofit hospital.

You state that the District offers a group health self-insurance plan to its employees. The District administers the plan and utilizes the service of a third party as the plan supervisor.

The District has entered into an agreement with a nonprofit hospital whereby substantially all of the District's assets will be purchased if approved by the voters at the election held on November 5, 1996. The purchaser will continue to operate the emergency room at the District's facility and may hire some of the current employees to staff its operation. However, when the sale is consummated, the District will cease doing business in an active fashion and will terminate the remaining personnel.

You further state that the District intends to terminate all of its employee benefit plans, including the group health insurance plan described above, once the sale is consummated. You specifically ask whether the termination of the District's group health insurance policy is subject to the health insurance continuation provisions of R.S. 22:215.13.

Initially, you note that provision in the District's insurance plan relating to termination provides:

"Plan termination. The employer may terminate the Plan at any time. Upon termination, the rights of participants to benefits are limited to claims incurred and due up to the date of termination. Any termination of the Plan will be communicated to participants."

R.S. 22:215.13 affords employees and/or members covered under group health and accident insurance plans the opportunity to continue and/or convert their coverage, once they are terminated. Section 215.13(G)(4) specifically provides:

"G. Continuation of insurance under the group policy for any person shall terminate on the earliest of the following dates:

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(4) The date on which the group policy is terminated or, in the case of a multiple employer plan, the date his employer terminates participation under the group master policy. When this occurs the employee or member shall have a conversion privilege if the date of termination precedes that on which his actual continuation of insurance under that policy would have terminated. The insurer that insured the group prior to the date of termination shall make a converted policy available to the employee or member."

In answer to your question, we are of the opinion that the above quoted statutory provision is not applicable to employees of the District. In support of our position we refer you to Section 215.13 (D) which provides, in pertinent part, the following:

"D. Continuation shall not be available for any person . . . who is eligible for continuation under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1987 (COBRA)."

Based on the information you have furnished this office and our telephone conversation of last week, it is my understanding that the District employs in excess of twenty employees/members insured under its plan. Accordingly, said members are eligible for a continuation of their health insurance under COBRA, thereby preempting the coverage afforded under Section 215.13.

Should you desire any information relating to the benefits under COBRA, you may contact Mr. Jay Mervis, U.S. Department of Health and Human Services, Program Support Center, at (202) 205-0396.

Should you have any additional questions concerning this matter, please do not hesitate to contact us. With kindest regards, I am

Yours very truly,

RICHARD P. IEYOUB ATTORNEY GENERAL

By _________________________________ ROBERT E. HARROUN, III Assistant Attorney General

RPI/Rob, III/cla