COBRA Notice Mailed to Address in Employee’s Insurance File Meets Good Faith Standard

A terminated employee sued his former employer for failing to provide a COBRA election notice, alleging that the employer knowingly sent the notice to the wrong address. The employee had provided a mailing address to the plan’s insurer upon initial enrollment in the plan, and that address had been used successfully for plan-related mailings including insurance cards and explanations of benefits. The address had also been provided to the plan’s COBRA administrator. But the employee owned a second property on the same street, the address for which was included in his employment file, and it was undisputed that the CEO of the company had previously visited the employee at that address. Upon the employee’s termination, the employer followed established procedures to trigger the mailing of a COBRA notice to the address in the insurer’s file; the notice was not returned to sender.

Three months after termination, the employee sued, claiming that he had not received a COBRA notice. (At that time, the employer emailed a notice to the employer’s counsel, and the employee elected to continue coverage under COBRA.) The employee argued that the company’s CEO was bitter toward him because of their prior business engagements, providing a motive for him to intentionally send the employee’s notice to the wrong address. The employer asserted that employees sometimes used different mailing addresses for health insurance matters than for employment purposes and argued that the employee had never changed his address in the health insurance system. Citing several factors, the court concluded that the employer had met its obligations to provide the notice in a manner reasonably calculated to reach the employee—the employer followed established procedures in issuing the notice to the address on file with the insurer; the notice was not returned to sender; and the employee continued to own (and his mother lived in) the residence to which the notice was mailed. The court further held that good faith did not require the CEO to remember his prior visit to the employer’s home or to make a corresponding change to the employee’s recorded address. Accordingly, the court ruled for the employer without a trial.

EBIA Comment: This case highlights the importance of maintaining current and accurate address information for employees and qualified beneficiaries and reminds employers and TPAs with multiple record systems to ensure that addresses are consistent across all systems. As a further safeguard, employers may wish to ask departing employees to confirm their current addresses in writing and then forward those addresses to the entity responsible for providing COBRA notices. Finally, employers should consider developing specific change of address procedures and communicating them in writing to employees and qualified beneficiaries. For more information, see EBIA’s COBRA manual at Sections XVIII.J (“Sending the Election Notice and Proving It Was Sent”) and III.B.4 (“Good Faith Compliance Standard”). You may also be interested in our webinar “Learning the Ropes: An Introduction to COBRA Continuation Coverage” (recorded 7/31/2019).

Contributing Editors: EBIA Staff.