EMPLOYER COBRA NOTICES DRAWING A LOT OF ATTENTION IN CLASS ACTION LITIGATION
The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers of 20 or more employees. When employees leave their jobs, covered employers are required to send notices to former employees of their right to continue coverage under the company's health plan for a limited period. Employers that send deficient notices of COBRA rights may incur penalties of up to $110.00 per day for each affected individual, plus extended exposure under the company's health care plan. The law requires that the notices be written "in a manner calculated to be understood by the average plan participant," and sent in a timely manner.
Recently there has been a surprisingly large number of class actions filed against employers for failing to meet the COBRA notice requirements. In one recent case, for example, workers are seeking to certify a class action for at least 40 people who received COBRA notices after the statutory deadline, and another group of about 2,000 people whose COBRA notices may have been legally deficient. Carnegie v. First Fleet, Inc. Of Tenn., M.D. Fla., Motion for Class Certification 10/29/18. This particular case claims that not only were the notices sent late, but they did not include the information necessary to enroll in coverage. Recently, companies such as Capgemini North America, Cushman & Wakefield, and SunTrust Bank have settled similar issues for hundreds of thousands of dollars each. There is currently another case contending that more than 90% of the employer's housekeeping employees could read only Spanish and thus could not understand the English-only COBRA notices sent by the employer, and a class has been certified of more than 15,000 people in this case. Vazquez v. Marriott Int'l, Inc., M.D. Fla., Motion for summary judgment 10/26/18. In the latter case, Marriott contends there is no legal duty to provide a COBRA notice in any language other than English. In still another case, a judge ordered an employee to pay a $50-a-day fine, attorney's fees and the medical expenses incurred by the plaintiff due to the lack of a proper COBRA notice. Morehouse v. Steak N Shake, Inc., S.D. Ohio 11/6/18.
Employers can get lackadaisical in administering their COBRA notice obligations and so hopefully these recent developments will be "wake-up call" that such notices need attention.