Failure to Provide COBRA Notice May Not Result in Penalties

by Davis Brown Law Firm
Contact

Occasionally employers who act as the plan sponsor of a group health plan discover that they have neglected to send a “COBRA notice” to an employee who has been terminated.  Recent Federal Court decisions within the Eighth Circuit provide guidance on what to do when this oversight is discovered.

In 1986, Congress enacted the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), which amended the Employee Retirement Income Security Act (“ERISA”).  Part of COBRA requires that covered group health plans “provide . . . that each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled, under the plan, to elect, within the election period, continuation coverage under the plan.”  29 U.S.C. § 1161(a).  This notice is commonly referred to as a “COBRA notice.” 

The Eighth Circuit in Interstate Bakeries Corp, 704 F.3d 528 (8th Cir. 2013), and the Federal District Court for the Northern District of Iowa in Cole v. Trinity Health Corp., 2014 WL 222724 (Jan. 21, 2014), recently granted summary judgment in favor of the employers despite their failure to send timely COBRA notices.  In both cases, the Courts found that the value of free health care provided to the employee during the oversight period, as well as good faith by the employer, negated any reason to impose the potential, but discretionary, statutory penalty of $110 per day of noncompliance.

  • In Interstate Bakeries, the employee’s health insurance was retroactively cancelled after it was discovered that the employee had not been officially terminated when laid off two years earlier. When the COBRA violation was raised, the employer reinstated the employee’s coverage, providing free coverage, and allowed the employee to remain covered until eligible for Medicare benefits.
  • In Cole, the employee’s health insurance was also retroactively cancelled after it was discovered that the employee had not been officially terminated after exhausting disability leave.  However, the employer had continued to pay the full premium, including the employee’s share, which resulted in free coverage for a significant amount of time.  In addition, when the COBRA violation issue was raised, the employer provided the employee with a letter acknowledging the failure in order to help the employee retroactively join her husband’s employer-sponsored plan.

Avoiding retroactive cancellation of health insurance will often help employers avoid problems with COBRA notices.  However, if coverage is retroactively cancelled, the employer may be able to either reinstate the coverage or help the employee find other available coverage.  

The main take-away from this line of cases is to try to assist any employee or former employee when a mistake in providing a COBRA notice is discovered.  Damages for a COBRA notice violation are discretionary and an employer’s good faith can impact a Judge’s discretion.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Davis Brown Law Firm | Attorney Advertising

Written by:

Davis Brown Law Firm
Contact
more
less

Davis Brown Law Firm on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!