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Court dismisses most employee COBRA notice claims

Virginia Lawyers Weekly//September 20, 2023

Scales of justice in courtroom

Court dismisses most employee COBRA notice claims

Virginia Lawyers Weekly//September 20, 2023//

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Recent years have seen a rise in class action lawsuits claiming that a company’s COBRA notice was inadequate and failed to meet Department of Labor (DOL) regulatory requirements.

These lawsuits generally claim that the COBRA election notices either failed to include all the required information or that they deviated in a meaningful way from the model notice provided by the DOL.

Courts have been reluctant to dismiss these claims in summary, meaning defendants face the costly prospect of settlement or defense. A recent class action lawsuit brought against Walgreen Co., while settled mostly in the defendant’s favor, demonstrates the issue.

Two COBRA notices

In the case of Bryant v. Walgreen Co., the plaintiffs were terminated in February 2019, March 2020, and June 2020. After termination, the employees received two notices regarding their COBRA coverage option.

In their lawsuit in the U.S. District Court for the Northern District of Illinois, the plaintiffs alleged that Walgreens failed to meet the regulatory requirements by sending two notices instead of one. Further, they alleged that Walgreens’ first notice was insufficient as it failed to:

  • Provide an address to submit payments.
  • Identify the plan administrator.
  • Explain how to enroll in COBRA and include a physical election form.
  • Provide the correct election date.
  • Provide a notice written in a manner calculated to be understood by the average plan participant.

The plaintiffs further alleged that Walgreens’ second notice only resolved one of the above issues and that the two-letter approach confused them. As a result, the employees were unable to enroll and did not have coverage for their medical expenses.

In its ruling in August, the court dismissed all but the election date claim connected to one employee terminated in June 2020 who was eligible for an extension due to the COVID-19 outbreak.

Regarding the other claims, the court held that COBRA regulations, while referencing “notice” in the singular, do not preclude an employer from sending multiple notices to meet the requirements. Further, the court held that the employees did not adequately explain how the provided phone number was an inadequate explanation of their rights or how the notice was written in such a way that they couldn’t understand it. Additionally, the court noted that even though the DOL’s model notice includes a physical election form, the regulations themselves do not include that as a stipulation.

Pay attention to COBRA notice requirements

Class action lawsuits regarding COBRA notices have become increasingly common.

Many of those lawsuits end in settlements before making it to court, but either way the process is costly. Companies subject to COBRA requirements should take care to follow them carefully and ensure that any relevant service providers do so as well. Timely and accurate notices can help companies avoid this type of litigation.

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