A California District Court, in Regents of the Univ. of Ca. v. Stidham Trucking, Inc., has ruled that while a COBRA election period may be tolled during a period of incapacity, being incapacitated for a period of time does not entitled the qualified beneficiary to a new 60-day election period.
Facts. An employee voluntarily terminated his employment and was in an accident several weeks later. He was hospitalized for 10 days and claimed to be incapacitated for the entire period of his hospital stay. He assigned his insurance rights to the hospital where he had stayed. Two years later, the hospital sued the employee’s former employer, claiming that because of his incapacity, the employee had not received his legally-required, 60-day COBRA election period and demanded that he be given a new 60-day election period.
Law. A qualified beneficiary must be given a COBRA election period that cannot end before the later of:
- Sixty days after the date coverage would otherwise terminate because of the qualifying event; or
- Sixty days after the date the qualified beneficiary is notified of the right to elect continuation coverage.
COBRA is silent on the question of whether the 60-day election period continues to run during a period when the qualified beneficiary is incapacitated.
Court Decision. The court recognized that an incapacity could deprive the qualified beneficiary of the opportunity to have at least 60 days during which to make an election. Tolling the election period during the time that the beneficiary is incapacitated, or until the representative is appointed, would effectuate the objectives of COBRA to allow the qualified beneficiary (or his representative) at least 60 days in which to make an informed election, and allow the qualified beneficiary to elect retroactive coverage after the need for medical care arises within that election period.
However, the court ruled that “the [60-day] clock stops running when extraordinary circumstances first arise, but the clock resumes running once the extraordinary circumstances have ended.”
In this case, that meant that the qualified beneficiary’s election period was, at most 70 days. The plaintiff was not entitled to a new 60-day election period. In addition, the court said that since the hospital only attempted to elect COBRA continuation two years after the employee received his COBRA notice, its claim was rejected, regardless of whether the employee had initially been incapacitated.
Employer Takeaway. Employers should make sure that their COBRA administrators and/or their insurers are aware that most courts agree that the COBRA election period is suspended if a qualified beneficiary is incapacitated and unable, either personally or through an authorized representative, to make a valid COBRA election.