Lifecare Hospitals, Inc. v. Health Plus of Louisiana, Inc. 5th Cir., No. 04-30422
(7/20/05)
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The Fifth Circuit Court of Appeals held that a health plan participant may elect to receive Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation benefits after the 60 day minimum election period specified in COBRA if plan documents are silent with respect to the maximum length of the election period.
In this case, James Sloan, a critically ill employee, was fired by his employer Custom-Bilt Cabinet & Supply, Inc. As a result, his group health insurance coverage was terminated by his employer's insurer.
Four months after the firing the employee mailed a COBRA election form to the insurer, seeking to extend his coverage and to pay premiums for the previous four months of long-term hospital care. The insurer refused to reimburse the former employee's medical expenses, claiming that the employee failed to timely elect to extend his insurance coverage. The hospital sued the employer and insurer, seeking payment for the employee's long-term hospital care.
The 5th Circuit held that the insurer must reimburse the hospital, reasoning that the employee could and did validly elect COBRA coverage at any time within the 18-month period allotted by the plan for continuation coverage, since the COBRA statute is silent on the maximum length of an election period and since the plan documents specified no maximum length on the COBRA election period.
The court reasoned that this result comported with COBRA's goal of protecting employees from loss of insurance coverage.
Plan administrators should note that COBRA’s regulations require a minimum of a 60-day election period, but do not prohibit allowing a longer election period. Employers should review plan documents to confirm that the 60-day election period is expressly stated.
The employer should maintain and follow COBRA procedures, including maintaining an up-to-date COBRA Procedures Manual and COBRA Notices in order to insure COBRA compliance.
©2007 CobraAid
CobraAid is not engaged in the rendering of legal advice. This article should not be considered legal advice. The information contained in this article is subject to change and should be used for information purposes only. If legal advice is needed, seek competent counsel.
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