Eighth Circuit Rules Oral Notice Sufficient for COBRA.
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In Chestnut v. Montgomery, 197 D.L.R. A-1 (8th Cir. 10/8/02), the court ruled that an employer satisfied the requirements of COBRA by giving an employee oral notice of the right to continue group health coverage under COBRA following termination of employment.
Geraldine Chestnut, a deli manager at Montgomery's grocery store left her job and declined COBRA under the store's group health plan. Instead, she applied for an individual major medical policy. Mrs. Chestnut was denied coverage under the medical plan but failed to read the notice of this fact. Four months later she suffered a heart attack and incurred $25,196.70 in uninsured medical expenses.
She sued Montgomery contending since she had never been given written notice of her COBRA rights when she quit, the store was liable for her expenses.
Mrs. Chestnut testified that the day she gave notice of resignation, she asked her supervisor if she could keep her health policy and he responded, "They won't let you." The supervisor testified that after consulting with the company's insurance agent, he advised Mrs. Chestnut she could continue her health insurance for eighteen months at her expense, but she could not continue indefinitely.
The company insurance agent testified he met with plaintiff at her farm, to discuss her insurance options. He informed plaintiff that she could continue her present coverage for eighteen months, or she could purchase an individual health policy offering similar coverage. He advised Plaintiff that the individual policy was considerably less expensive, but did explain that with pre-existing medical conditions, the new carrier could decline to insure her.
Plaintiff sued the employer grocery store, contending that they violated COBRA by failing to give her notice of her right to continued health coverage. The Eighth Circuit found that plaintiff's conversations with her supervisor and the insurance agent constituted legally sufficient notice.
The court held that COBRA requires written notice when a group plan commences, but only provides that the administrator of the health plan "shall notify" in the case of a qualifying event. When a qualifying event occurs, the covered employee has already received an initial written notice of the right to continuation coverage. The second notice is merely a reminder of the right. Congress could easily have required the second notice to also be in writing, but it did not.
The court did rule, however, that COBRA notice was not provided to the spouse, Donald Chestnut. And while the court exercised it’s discretion in not providing damages to the plaintiff, this case underscores the importance of sending all notices via first class mail (with proof of mailing) to the individuals’ last known address.
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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