A terminated worker sued her employer and the TPA of its self-insured well being plan for failing to supply a COBRA election discover to her last-known handle and for failing to supply requested plan paperwork. Shortly after her termination, the employer had mailed a letter to the worker’s present handle notifying her that her medical health insurance had lapsed and that she would obtain COBRA info individually. On the identical day, the employer mailed to the present handle an election discover for dental protection—however not medical protection—as a result of its TPA was contractually answerable for offering notices for the medical plan. The TPA subsequently mailed an election discover to the worker’s former handle in a distinct metropolis. (In accordance with the TPA, the employer had by no means notified it of an handle change.) The discover was returned undelivered to the TPA, which notified neither the worker nor the employer. A number of months later, the worker inquired in regards to the lacking well being plan election discover and requested plan paperwork describing her COBRA advantages. Receiving no response, the worker sued, in search of statutory penalties, fee of accrued medical payments and premiums, and legal professional’s charges. All events sought judgment with out a trial.
The court docket rejected the employer’s argument that it had complied with its statutory responsibility as a result of it had delegated to its TPA the duty to mail COBRA notices. Stating that the delegation didn’t absolve the employer of legal responsibility, the court docket allowed the case to proceed to trial for the willpower of whether or not the employer tried in good religion to inform the worker of her COBRA rights (e.g., by taking steps to make sure that the TPA had entry to the worker’s present handle). The court docket additionally superior the worker’s declare in opposition to the employer for failing to provide plan paperwork upon request. In distinction, the court docket dominated in favor of the TPA, discovering that it had no statutory legal responsibility or fiduciary accountability towards the worker—despite the fact that it might have breached its contractual settlement with the employer.
EBIA Remark: This case is a reminder of the significance of building and following procedures for well timed offering COBRA notices to certified beneficiaries utilizing a technique calculated to make sure receipt. Because the court docket identified, a plan administrator needn’t be certain that a professional beneficiary truly receives the required discover. Somewhat, it want solely make religion effort to supply the discover, reminiscent of via hand-delivery, first-class mail to the last-known handle, or digital supply underneath sure situations. For plans that interact TPAs to deal with COBRA duties, it’s particularly necessary to take care of a system for sharing info reminiscent of staff’ present addresses. For extra info, see EBIA’s COBRA handbook at Sections XVIII.C.3 (“Plan Administrator Stays Answerable for Discover Obligations”), XVIII.J (“Sending the Election Discover and Proving It Was Despatched”), and XXXI.D (“COBRA Third-Occasion Administration”). See additionally EBIA’s Self-Insured Well being Plans handbook at Part XXIII.B (“Contracting With Service Suppliers”).
Contributing Editors: EBIA Workers.
