No Penalties for “Late” COBRA Notice Provided During COBRA-19 Outbreak Period

A former employee sued her employer for violating the COBRA notice requirements and failing to enroll her in COBRA coverage under its group health plan. Following her termination in March 2020, the employee allegedly called the employer repeatedly about COBRA enrollment and sent a $3,600 check for COBRA coverage, despite not having received an election notice. The employee claimed that the employer was unresponsive and that it denied receiving her check, so she contacted the DOL for assistance. She then received an election notice in November 2020, prompting her to send another $1,800 along with her enrollment form. The employer denied receiving the enrollment form and payment, but in February 2021, the plan’s insurer sent confirmation to the employee showing that she was enrolled in COBRA effective April 1, 2020, that the employer had paid her initial premiums, and that she was required to continue premium payments to maintain coverage. The employee denied receiving this correspondence. Her coverage was suspended, effective May 31, 2020, for failure to pay premiums. She sued in March 2021, seeking damages for the employer’s failure to provide a timely election notice and an injunction requiring the employer to enroll her in COBRA coverage.

The court ruled in the employer’s favor without a trial. Explaining that the employer’s time frame for providing an election notice was extended during the COVID-19 outbreak period (see our Checkpoint article), the court determined that the election notice provided in November 2020 was timely based on the employee’s March 2020 termination. Further, the court dismissed the employee’s claim for “failure to enroll” as moot, stating that she could not pursue an injunction mandating enrollment because the evidence showed that she was already enrolled. Once she paid her premiums, the court explained, the employee could submit claims for reimbursement.

EBIA Comment: This is one of the first COBRA decisions we have seen that addresses the application of the COVID-19 outbreak period extensions. While there were many disputed facts, the employer was clearly within the extended time frame for providing a COBRA election notice. It is unclear whether the employee was still within her one-year extended window for electing and paying for COBRA, but the issue was apparently not raised. For qualifying events that occurred early in the pandemic, the one-year extension period has come to an end. However, because the outbreak period has not yet ended, employers and their advisors should continue to be mindful of the deadline extensions applicable for current qualified beneficiaries (see our Checkpoint article). For more information, see EBIA’s COBRA manual at Sections VI.C (“Special Issues: COBRA and COVID-19: COBRA Notices”) and VI.D (“Special Issues: COBRA and COVID-19: COBRA Election and Premium Payment Deadlines”).

Contributing Editors: EBIA Staff.