Tuesday, February 3, 2015

COBRA Violations Result in $1 Million Class Action Judgement Against Employer/Administrator

Too often I witness potential clients and students gloss over COBRA compliance in the selection of a brokerage. That is a huge mistake as COBRA violations can mount quickly. And more often that not, employers are shocked at the errors made by brokers and/or administrators.   

In this case, the employer, Brunel: 
  • failed to provide its employees with notice of their right to elect COBRA coverage when they first began participating in the plan; 
  • failed to provide notice of their right to continue coverage when their employment was terminated, which the plaintiffs argue was an event qualifying them for continued COBRA coverage; and 
  • under ARRA failed to offer a premium reduction to eligible individuals and failed to notify employees of their eligibility for premium reduction.  
COBRA requires an employer to notify an eligible employee twice: 
  • first, when the employee begins participating in a group health plan; and 
  • second, when the employee notifies the employer that a qualifying event has occurred. 
ARRA provided eligible individuals with a right to reduced premium payments for healthcare coverage they receive through COBRA.  ARRA also required an employer to notify an eligible employee of this right when he or she is notified of the right to elect continued coverage under COBRA after a qualifying event. 

  • $375,000 payout to nearly 70 class members (about $5,000 each); 
  • a $12,000 service award to the class representatives; and 
  • nearly $625,000 for attorney’s fees and other costs.
The caseSlipchenko v. Brunel Energy, Inc., 2015 WL 338358 (S.D. Tex., Jan. 23, 2015).