A U.S. federal court has preliminarily approved a $1 million settlement in the class action lawsuit Blessinger v. Wells Fargo & Co., where former employees accused Wells Fargo of issuing a COBRA notice that was intimidating and misleading.
The employees claimed that the notice contained threats of civil and criminal penalties for providing incomplete information and referenced a $50 IRS penalty for each incorrect tax identification number. Consequently, they claimed that they chose to forego COBRA coverage, resulting in the loss of healthcare coverage and incurred medical expenses.
The settlement requires Wells Fargo to deposit $1 million into a fund to cover expenses, attorney's fees, and provide up to $20 to each of the roughly 50,000 affected plan beneficiaries.
Employers should take note that the U.S. Department of Labor's model COBRA notice does not mention civil or criminal penalties for incomplete information. While customization of notices is allowed, it's important to avoid including misleading information and ensure clarity for all plan participants.
By understanding the details of the proposed settlement and the class action lawsuit's background, employers can appreciate the importance of crafting COBRA notices that are accurate, transparent, and easily comprehensible to all employees. For information about BAS’ affordable, easy to use COBRA service through Cobra Control Services, LLC, contact your account manager or email solutions@basusa.com.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
