In deciding Bryant v. Walgreen Co., the U.S. District Court for the Northern District of Illinois addressed several important aspects of the COBRA notification requirements.
Law. Employers must generally provide COBRA election notices to former employees and other qualified beneficiaries within 44 days of a qualifying event. (COBRA qualifying events include loss of coverage due to: termination of employment; reduction in hours; death of the employee; divorce or separation from the employee; the employee’s becoming covered by Medicare; and, ceasing to be a dependent child under the plan’s terms.) Failure to provide the COBRA election notice within this time period can subject employers to a penalty of up to $110 per day, at the discretion of the court, as well as the cost of medical expenses incurred by the qualified beneficiary.
Facts. Two employees who terminated employment had been participants in their employer’s group health plan. The employer initially sent the employees a COBRA enrollment notice and followed up by sending a second COBRA continuation coverage notice with additional information.
The employees did not elect COBRA coverage but later sued the employer for $110 per day or retroactive coverage, claiming that the employer had violated the COBRA notification requirements.
Among other things, the employees claimed that the employer had violated COBRA’s notification requirements by sending two notices instead of a single notice. The employees further asserted that the employer’s two COBRA notices were deficient because they failed to: (1) provide the address to which payments should be sent; (2) explain how to enroll in COBRA and include a physical election form; and (3) provide the correct election date.
District Court. In reviewing the matter, the court explained that while COBRA requires the administrator to “notify” qualified beneficiaries of their COBRA rights, it does not limit this notification to a single notice. As long as an administrator timely notifies a beneficiary of their COBRA rights, it has complied with the requirements of the statute. Moreover, since the address to which the former employees were required to send COBRA payments was included in the second COBRA notice, the court ruled that the employer had fulfilled its notice obligation.
The court further observed that although the employer’s COBRA notices did not include a physical election form, each notice directed the former employees to a general phone number, operated by a third-party, that individuals could call with questions about anything benefit-related. The court stated that while the DOL’s model COBRA notice includes a physical election form, the COBRA regulations do not require a physical form, only “[a]n explanation of the plan’s procedures for electing continuation coverage.” Accordingly, the court dismissed this complaint, ruling that the employees had not provided “any suggestion of how or why calling the phone number leads to an inadequate explanation.”
However, the court agreed with the employees that the notices contained an incorrect election deadline because they did not take into account the notice and election extensions prescribed under the COVID emergency rules. (See the Health and Welfare Alert of 2/16/23.)
Therefore, the court dismissed all of the employees’ claims except for those related to the COVID extension rules.