4.4—Right to Health Insurance Reinstatement after Military Service.
Does “Health Insurance” Include Income Replacement Insurance?
By Captain Samuel F. Wright, JAGC, USN (Ret.)
Lee v. Allied Pilots Association, 2009 U.S. Dist. LEXIS 59794 (Northern District of Texas; July 14, 2009).
A recent decision of the United States District Court for the Northern District of Texas points to a loophole in the Servicemembers Civil Relief Act (SCRA). ROA will push to fill this loophole either through case law development or (more likely) through legislation.
ROA member Kenneth J. Lee earned his commission and his wings while serving on active duty in the late 1970s and early 1980s. He left active duty in 1984 and affiliated with the Marine Corps Reserve (USMCR). He went to work for American Airlines (AA) as a pilot in 1985 and remained continuously employed until January 2004, when the USMCR recalled him to active duty and deployed him to Iraq. He left active duty in May 2005 and returned to work for AA.
Airline pilots generally expect to keep flying until their 60th birthdays or later, and they plan for retirement accordingly. Under rules of the Federal Aviation Administration (FAA), a pilot’s health is regularly evaluated, and health conditions can cut short an individual’s flying career. Pilots seek insurance to cover the contingency of inability to fly until age 60 because of health reasons. AA provides its pilots an income replacement plan, but that plan only covers about half of the income that a pilot would lose if disability cuts short his or her flying career. The Allied Pilots Association (APA) is the union for AA pilots. It established an income replacement policy for its members. Payments under the APA plan, when added to payments under the AA plan, at least come close to replacing a disabled pilot’s income loss.
In early 2000, Mr. Lee applied to join the APA income replacement plan. His application was accepted, and his effective date of coverage was April 1, 2000. He paid substantial monthly premiums for this coverage, and he continued paying the premiums after he was called to active duty in January 2004. The APA plan provides for termination of a member’s coverage under certain conditions, and one of those conditions is that the coverage is to be terminated 12 months after the individual goes on a military leave of absence (MLOA) from his or her AA employment. In accordance with the plan, the APA terminated Mr. Lee’s coverage in January 2005, 12 months after his MLOA began and five months before it ended.
When Mr. Lee returned to work in May 2005, he promptly applied for reinstatement of his health insurance and income replacement insurance through AA and the APA. His employer promptly reemployed him and restored all of his employer-provided insurance coverage, but the APA refused to reinstate his APA income replacement insurance coverage with the original effective date of April 1, 2000. Instead, the APA gave him a new policy with an effective date of coverage of August 1, 2005. Before the end of that month, Mr. Lee suffered a health event that disqualified him from flying, and the disqualification is likely to be permanent.
After waiting through the 14-month “exclusion period,” Mr. Lee applied for payments under the APA income replacement policy. The union denied his claim, based on a rule that benefits are not to be paid for a health condition that manifests itself within the first six months after the effective date of coverage. If the APA had reinstated his coverage with the original 2000 effective date, Mr. Lee’s claim for benefits would not have been denied.
In 1917, after the United States entered World War I, Congress enacted the Soldiers’ and Sailors’ Civil Relief Act (SSCRA). The original SSCRA expired after the end of that war. Congress reenacted the law for World War II and made it permanent after that war. In August 1990, Iraq invaded and occupied Kuwait. President George H.W. Bush drew “a line in the sand” and deployed military forces to defend Saudi Arabia and to liberate Kuwait. As part of his military response to the crisis, President Bush mobilized National Guard and Reserve units. This was the first substantial call-up of the Reserve Components (RC) since the Korean War.
The RC mobilization for the first Gulf war caused ROA and other military associations and the Congress to reexamine the laws enacted for RC mobilization, including the SSCRA and the Veterans’ Reemployment Rights (VRR) law. Many of the servicemembers mobilized expressed concern about their civilian health insurance arrangements. When called to the colors, their civilian insurance policies often lapsed or were canceled. They wanted assurance that their policies would be reinstated after they returned from service, without waiting periods and without exclusions of “pre-existing conditions.”
In 1991, Congress responded to these concerns and amended both the VRR law and the SSCRA, and made the amendments retroactive to Aug. 1, 1990. The VRR provision applied to health insurance through the individual’s civilian job, and the SSCRA provision applied to health insurance other than through the individual’s civilian job. In 1994, Congress enacted the Uniformed Services Employment and Reemployment Rights Act (USERRA), a comprehensive rewrite of the VRR law. In 2003, Congress enacted the Servicemembers Civil Relief Act (SCRA), a comprehensive rewrite of the SSCRA. Both of these new laws carried over the 1991 health insurance provisions without significant change.
I discuss the SCRA health insurance provision in Law Review 118 (March 2004). All previous Law Review articles are available at www.roa.org/law_review. The relevant SCRA provision reads as follows: “A servicemember who, by reason of military service … is entitled to the rights and protections of this Act shall also be entitled upon termination or release from such service to reinstatement of any health insurance
that—(1) was in effect on the day before such service commenced; and (2) was terminated effective on a date during the period of such service.” 50 U.S.C. App. 594(a) (emphasis supplied).
There was no dispute that Colonel (now Brigadier General) Lee was entitled to the protections of the SCRA, that his APA income replacement insurance was in effect on the day before he entered active duty in January 2004, and that the insurance coverage was terminated while he was on active duty. The big question in this case is whether the APA’s income replacement insurance qualifies as “health insurance” for purposes of this section. A substantial sum of money turns on that question.
The SCRA defines nine terms used in the law, but “health insurance” is not one of the defined terms. When a statute uses a term but does not define it, courts often turn to dictionaries to determine the commonly understood meaning of the term, because Congress presumably intended the term to be construed in accordance with its meaning in the English language as of the date of enactment of the provision in question. General Lee’s attorneys referred the court to multiple dictionary definitions of the term “health insurance.” Most of the available definitions include insurance to compensate for income lost due to illness as well as insurance that pays for medical care necessitated by illness.
In a 12-page decision released on July 14, 2009, Judge Terry R. Means rejected General Lee’s argument (relying on dictionary definitions) and accepted the APA’s argument (relying on definitions of “health insurance” in other federal statutes). Judge Means wrote: “The term health insurance has, however, taken on a legal meaning, making resort to lay dictionaries irrelevant. As noted by Defendants, health insurance is defined in several statutes and regulations and its meaning has been addressed in several cases. … And the Court’s job here is to ascertain the legal meaning of the term health insurance, not what the term means within the medical or insurance industry. Where Congress uses a term that has accumulated a legal meaning, it is presumed to know and adopt such meaning.”
If Colonel Lee had not been called to active duty from January 2004 to May 2005, he would have qualified for the income replacement payments under the APA policy after he was medically disqualified from flying in late August 2005. Because he was called to the colors, he loses out on these payments. It is not fair, and this is exactly the sort of unjust result that Congress enacted section 594(a) to prevent. The legislative fix is simple and self-evident. ROA will propose that the words “or income replacement insurance” be added after “health insurance” in section 594(a). Enactment of such an amendment would not help General Lee, but it would prevent future such injustices.
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