by Stephen Mehaffey 

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Too often employers outsource the provision of COBRA notices to a third party and never review the content in the notice being provided to their employees. As a string of Florida cases[1] reveals, this inaction can result in an employer needing to pay a six- or seven-digit damage award.

In most of these cases, a COBRA notice was provided to a covered person experiencing a qualifying event. However, the notice missed key details required by the COBRA regulations, such as the name and contact information of the plan administrator or the address for the remittance of payments. While this missing content is also called for in the Department of Labor’s model notices, these fields are often unknown or overlooked and therefore omitted.

Since the law provides for a statutory penalty and legal fees in these situations, the former employee can sue their employer for minor deficiencies in the COBRA notice. The penalty is $110 per person, per day, for a maximum of two people. While this amount may not sound like a lot, consider a class of 100 people who lost their coverage in a reduction in force two years ago and whose notices were deficient.

$110 x 365 days x 2 years x 100 qualified beneficiaries = $800,300 in penalties

The above calculation shows just how quickly the penalties can add up. This does not include any additional legal fee award.

Simply using the model notices is often not enough when they are incomplete or not provided timely. Furthermore, the notice should be modified if the employer sponsors a health FSA or has other special situations, such as an EAP. In order for an employer to proactively protect themselves against a COBRA claim, the employer should know what notices are needed, the content of such notices, and the administrative practices required to comply with the regulations. If you are unfamiliar with the COBRA requirements or you would like us to review your notices and administrative practices, please contact us.

[1]Vazquez v. Marriott Int’l Inc., M.D. Fla., 8:17-cv-00116(complaint filed 1/17/17); Jamie Bryant v. Wal-Mart Stores Inc. S.D. Fla., 1:16-cv-24818; Gilbert vs. SunTrust Banks, Inc., Case No: 9:15-80415-Civ-Brannon (S.D. Fla., Feb. 16, 2016).