The Supreme Court unanimously decided on 6/8/98 that, under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), employees may not be denied continuation health care coverage where they are already covered under another other group health care plan. Under COBRA, the employer may cancel continuation coverage when an employee "first becomes, after the date of the election [of continuation coverage], . . . covered under any group health plan (as an employee or otherwise), which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary."
In this case, the plaintiff, James Geissal, was employed by the defendant Moore Medical Corporation and covered under its group health plan. Geissal was also covered by a group health plan provided by his wife's employer. After Moore fired Geissal, he exercised his right under COBRA to receive continuation coverage, but Moore canceled that coverage when it learned of Geissal's pre-existing coverage through his wife's employer.
The Supreme Court, in an opinion by Justice Souter, ruled that Moore could not deny coverage to Geissal. The Court held that COBRA denies continuation coverage only if the employee acquires coverage from another plan – i.e., the employee "first becomes" covered – after "the date of the election." Since Geissal was already covered by his wife's plan before he chose to receive continuation coverage, Moore could not cancel his continuation coverage on that basis.
In so ruling, the Court rejected Moore's position that COBRA coverage may be terminated unless there is a "significant gap" between the coverage offered by the employer’s plan and the other health plan. The Court found no statutory basis for such an argument and ruled that decisions about whether there were "significant gaps" between health care plans would be a difficult and policy-bound determination that Congress could not have intended.