Improperly Worded COBRA Notices
Read The Case
A federal court ruled an employer was liable for sending an insufficient COBRA notification form. (Emilien v. Stull Technologies, Third Circuit, 2003.)
Marie Emilien was employed by Stull Technologies Corp., a manufacturer of injection-molded closures. Marie was diagnosed with HIV and tuberculosis in 1996. On October 21, 1998, Marie was stricken while she was at work and was rushed to the hospital. Although Marie returned home after her hospitalization, she was never able to return to work.
On October 30, 1998, Stull prepared a letter to Marie which it informed her that Stull had “separated” her employment as of October 21, 1998 (the date she was stricken). The October 30th letter also attempted to discharge Stull’s duty to notify Marie that her medical insurance was ending and she would have to complete and return COBRA election forms if she wished to retain medical insurance protection.
The Court found that the notification of COBRA conversion coverage contained in the October 30th letter was inadequate. Specifically, the Court focused on the fact that the letter did not define the term “Qualifying Event.” The Court noted that “it is highly unlikely that a lay person would understand the meaning of the term ‘Qualifying Event’ without an explanation of the term.”
Stull, thus, failed to “explain the circumstances which may result in disqualification or denial of loss of benefits” and do so “in a manner that is calculated to be understood by the average plan participant” as required by COBRA. Accordingly, the Court held that Stull was liable for Marie’s healthcare costs.
This case reminds employers to ensure that COBRA Notices explain the circumstances which may result in disqualification or denial of loss of benefits and do so in a manner that is calculated to be understood by the average plan participant. The Department of Labor’s 2004 Final Regulations clarified some of notice requirements of COBRA.
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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