Carolina Care Plan, Inc. v. Auddie Brown Auto Sales of Florence, Inc., Case No.: 2006-CP-21-292 – Court of Common Pleas for Horry County – Robert E. Hoskins

In this case, I defended Auddie Brown Auto Sales of Florence, Inc. in an action brought against them by their former health insurer, Carolina Care Plan (CCP). It is not very often that I represent defendants any more, but I will do so when I find the cause compelling. In this case, my client, an automobile dealership located in Florence, South Carolina, established an ERISA governed health benefits plan for its eligible employees. The plan was insured by CCP.

One of my client’s employees became covered under the plan and remained covered as an active employee until she ceased working entirely for my client in June of 2004. Thereafter, the individual continued coverage for exactly 18 months under the federal law known as COBRA (which is a part of ERISA). However, although my client continued the individual’s coverage under COBRA, the insurer, CCP, was not made aware that the client was no longer actively employed or that her coverage status had changed to that of COBRA continuation coverage. Because of that, the insurer asserted that it should not have to pay for approximately $650,000.00 in medical bills that were incurred to treat the individual between June of 2004 and December of 2005. The insurer filed suit in state court alleging the state law causes of action of negligence and breach of contract against my client. I removed the case to federal court asserting that ERISA applied and that ERISA preempted all state law claims. The federal district court judge ruled that, on the face of the complaint filed by CCP that the state law causes of action were not preempted. (Click here to see the district court order ruling against my client on the ERISA preemption issue and remanding the case back to state court.) Once we were back in state court, we tried the case on its merits and after a day long non-jury trial the state court judge, the Honorable Michael Nettles, ruled with my client and held that, in light of all of the evidence, ERISA did preempt the state law causes of action and, even if it did not, CCP was not entitled to any recovery on its state law causes of action. (Click here to see the circuit court order.) After issuance of Judge Nettles’ order, the case was featured on the nationally prominent health insurance site, www.healthplanlaw.com. (Here is the link to read the write up on the case: http://healthplanlaw.com/?p=654)

The case was appealed to the South Carolina Court of Appeals on July 28, 2008.  The appeal is pending.