A recent court settlement in Alabama stresses the importance of proper COBRA notice procedures and documentation.
In Hornsby v. Macon County Greyhound Park, Inc., employees banded together in a class action lawsuit claiming that the employer did not provide adequate COBRA election or premium subsidy information after their involuntary termination of employment. The class alleged that the employer provided notices only to employees who requested them, the notices that were provided did not include the ARRA subsidy information that was required at the time, the employer knowingly failed to notify terminated employees of their COBRA rights, the employer did not pay the required premium subsidy, and the employer collected money for COBRA but did not properly submit the premiums to the insurer.
The suit ended in a settlement with the employer and plan administrator not admitting wrongdoing. However, the employer had to pay 1.3 million dollars to settle the case, with the fees split between payments to class members and payments for administrative costs and legal fees.
This case is just another reminder that employers should make sure they have proper COBRA notice distribution procedures, and those procedures follow COBRA’s legal requirements. Benefit Allocation System’s Cobra Control Services can help employers with documented COBRA processing. For more information contact info@cobracontrol.com.
