Abdelmassih v. Mitra QSR KNE LLC, 2018 WL 1083857 (E.D. Pa. 2018)
A former employee sued his employer—and the company’s owners in their individual capacities—for (among other things) failing to provide a COBRA election notice upon termination of employment. The court allowed the claim to proceed against the employer but dismissed the claim against the owners, explaining that only the ERISA plan administrator is liable for statutory penalties based on a COBRA notice failure. The court noted that the company’s benefits brochure provided the name of the health insurer and directed employees to contact the employer’s human resources department to provide notice of a COBRA qualifying event. The brochure did not list the owners as contacts, and the employee presented no evidence that the owners were designated as ERISA plan administrators. The court concluded, therefore, that the owners could not be held personally liable for any failure to notify the employee of his COBRA rights.
EBIA Comment: ERISA specifies that statutory penalties of up to $110 per day may be assessed against plan administrators for failing to provide required COBRA notices. Under ERISA, the plan administrator is the person designated by the terms of the plan document, or, if an administrator is not designated, the plan sponsor. In a single employer plan, the plan sponsor is the employer, so, generally, if the plan document does not specify a plan administrator, the plan administrator is the employer. Although plan administrators may be held personally liable for failing to provide COBRA notices, individual employees of the employer will not be liable unless they are named as plan administrators in the plan document. And, when the employer is a corporation, owners generally are not liable for the corporation’s obligations unless the “corporate veil” is pierced. For more information, see EBIA’s COBRA manual at Sections XVIII.C (“Plan Administrator Must Provide Election Notice and Notice of Unavailability”) and XXV.C.1.g (“Only Plan Administrator Is Liable for Statutory Penalties”). You may also be interested in our upcoming webinar “Learning the Ropes: An Introduction to COBRA Continuation Coverage” (live on 7/19/2018).
Contributing Editors: EBIA Staff.