Tuesday, August 12, 2014

Nasty COBRA Fine Issued Even Though Employer Paid Participant's Outstanding Medical Bills

A great reminder of just how important your COBRA administration is.  This is from Fox Rothschild, LLP.:
This case should serve as a warning that the obligation to provide COBRA notices is not simply about providing coverage or making coverage available. Simply paying unreimbursed expenses does not cure the statutorily defined harm. The notice requirement exists to make sure the notices are timely issued and not tied to any actual loss. So employers should not assume that the remedy for COBRA violations is limited to simply covering unpaid expenses. The notice requirements carry their own risk and should be strictly followed to avoid those separate penalties. ...

[T]he Court award[ed] damages to the employee and her children at the rate of $110 a day for the employee and $20 a day for each of her children. Even though the employee’s bills were paid, the Court reasoned that payment of the expenses did not actually cure the failure. The notice obligation is separate from the coverage. Since the children had no actual harm (that is no medical expenses), they received the lower award, but still receive some recovery. All told, the employer was ordered to pay more than $25,000 in penalties.