An Illinois federal district court, in Earl v. Jewel Food Stores, Inc., has concluded that an employer failed to show it made a good faith effort to provide a COBRA election notice to a terminated employee.
Law. Under COBRA, when a qualifying event occurs, such as termination of employment, an employer must notify its group health plan administrator within 30 days of the occurrence of the qualifying event. Once the plan administrator is notified, the administrator must notify the employee of his or her COBRA continuation rights within 14 days. When the employer is the plan administrator, it has 44 days to complete this process.
Courts generally recognize that a “good faith” effort to send an election notice to an employee satisfies an employer’s COBRA obligations. However, employers bear the burden of demonstrating that this good faith effort was made. An employer’s obligation may be satisfied by sending the required notice by first class mail, including certified mail. An employer’s obligation may also be satisfied with evidence from the plan administrator of adequate standard office procedures for generating and mailing COBRA notices, plus evidence showing that the procedures were consistently followed in a given individual’s case.
Background. In Earl, the employee was terminated for violating the employer’s attendance policy. While the employer asserted that it had subsequently mailed a COBRA election notice to the employee, the employee did not receive the notice. The employee later sued the employer, claiming that it had violated COBRA’s notice requirements. The employer asked the court to dismiss the claim without trial (i.e., grant summary judgment).
Both the employer and employee agreed that the employee’s termination was a COBRA qualifying event, and that the employee did not receive a COBRA notice from the employer. Accordingly, the question before the court was whether the employer made a good faith effort to provide a COBRA election notice to the employee.
District Court. Initially reviewing the matter, the district court rejected the employer’s assertion that the employee had improperly attempted to shift the burden of proof of good faith onto the employer. The court explained that ERISA plan administrators must show that a COBRA election notice had been provided, even though proof of receipt is not required.
To show its good faith efforts in sending the employee a COBRA election notice, the employer provided: (i) the COBRA notice itself, which was addressed to the employee’s home address; and (ii) a Certificate of Mailing which was an internal document stating that a “Qualifying Event Letter” may have been sent to the employee at his last known address.
Based on this evidence alone, the court determined that the employer had failed to show that it made a good faith effort to provide the employee with a COBRA election notice. According to the court, the employer provided no evidence: (i) of sending the COBRA notice by certified or first class mail; (ii) regarding the employer’s standard procedures for generating or mailing COBRA notices; and (iii) regarding whether the employer’s COBRA mailing procedures were followed as to this employee. Finally, the court rejected the employer’s argument that even if the employee had received the COBRA notice, he did not need COBRA and could not have afforded to pay for COBRA coverage.
Therefore, the district court denied the employer’s request to dismiss the employee’s claim.