In Casillas-Guardiola v. Bayer Puerto Rico, the U.S. District Court for the District of Puerto Rico ruled that a terminated employee who claimed she did not receive a COBRA election notice was not entitled to penalties because the employer documented that the proper notice had been mailed.
Law. COBRA requires employers to notify employees of their right to continue healthcare coverage following termination of employment. Specifically, an employer is required to notify its plan administrator within 30 days of an employee’s termination, and the administrator is required to provide a COBRA election notice to the employee within 14 days after receiving the employer’s notification, i.e., a total of 44 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 timely 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. An employee, whose employment had been terminated, sued her former employer, claiming that, among other things, she had not received her required COBRA election notice. The employer responded by saying that it was not responsible for the notice because it had hired an agent to send out required COBRA notices. It also provided evidence that the COBRA election notice had been sent to the employee’s last known address.
Court Ruling. The court immediately rejected the employer’s first argument, saying that the duty of notification ultimately lies with the employer, which was also the plan administrator, even if a third-party company is designated to disseminate COBRA notices, because the employer cannot unilaterally delegate its fiduciary duty to a party that has no discretionary authority and is not a fiduciary.
However, the court ruled in favor of the employer on its second defense, noting that, “[W]hen an employer mails a COBRA notice to a covered employee’s last known address, the notice is reasonably calculated to reach the recipient and the employer is deemed to be in good faith compliance with COBRA’s notification requirements.”
As proof of the mailing, the employer’s personnel administrator signed two sworn affidavits saying that the agent mailed the COBRA notification to the employee. In addition, the employer submitted its “COBRA Mailing Kit” which includes, among other mailings, its COBRA notification forms and, in this case, noted the date on which the election notice in question was generated.
Because the employee did not come forward with any evidence to the contrary and “merely insists that she never received the COBRA notice,” the court ruled in favor of the employer.