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TPA’s Recordkeeping Demonstrates Employer Met COBRA Notice Requirements

On Behalf of | Dec 20, 2017 |

The Eleventh Circuit Court of Appeals, in DeBene v. Bay Care Health System, Inc., determined that an employer had met its COBRA notification requirements based solely on ample evidence of its established procedures for providing COBRA notices.

Law. COBRA requires employers to notify employees of their right to continue healthcare coverage following termination. Specifically, an employer is required to notify its plan administrator within thirty days of an employee’s termination, and the administrator is required to provide a COBRA notice to the employee within fourteen days after receiving the employer’s notification. (A total of forty-four days if the employer is also the plan administrator.) COBRA provides the employee with a private right of action to sue an employer if the employer fails to provide a COBRA notice to the employee. COBRA regulations require employers to use measures reasonably calculated to ensure actual receipt of COBRA election materials by plan participants.

Facts. In DeBene, the plaintiff worked for the employer from 2004 through 2014. Unbeknownst to the employer, the plaintiff also worked for two software firms that provided programs to the employer during this time period. When it discovered the conflict, the employer terminated the plaintiff for violating its conflict of interest policy.

Following his termination, the plaintiff contacted the employer after he did not receive a COBRA continuation notice. A senior benefit specialist at the employer erroneously told the plaintiff that he was not eligible for COBRA because he had been terminated for gross misconduct. After the plaintiff contacted the employer’s health plan administrator and the Department of Labor, the employer sent him a COBRA election package and extended his election period.

The plaintiff sued the employer, claiming that he never received the COBRA election package, and the employer responded that its actions constituted compliance with COBRA even if its COBRA election package was never received by the plaintiff. The employer had contracted with a third party administrator (“TPA”) to provide COBRA notices, and it provided all of its benefit data files, including termination of employment information, to the TPA.

Eleventh Circuit. At trial, the employer presented evidence to confirm that once the TPA received information from the employer, it was uploaded into its computer system and a COBRA election notice is automatically generated. Additional evidence showed that once the COBRA notice was generated, an employee of the TPA would mail the notice via first-class mail to the terminated employee’s last known address.   In particular, the TPA was able to provide an internal report confirming that other recipients of COBRA notices that were sent out that day successfully elected coverage.

In response, the court noted that, under COBRA regulations, sending a notice via first-class mail is sufficient for a plan administrator to meet the requirement to “use measures reasonably calculated to ensure actual receipt of the material by plan participants.” As a result, based on the TPA’s report confirming successful election of coverage by other employees who received notices mailed that same day, the court concluded that the employer had met its obligations under COBRA, regardless of whether this particular individual had actually received his COBRA notice.

DeBene v. Bay Care Health System, Inc. is available at: