EBIA Weekly Newsletter

Former Employee Challenges Provision of COBRA Notice to Last-Known Address

   March 10, 2016

Newton v. Prator, 2016 WL 698170 (W.D. La. 2016)

As part of a wrongful termination suit, a former employee sued his employer for not providing a COBRA election notice, alleging that the employer violated COBRA by knowingly sending the wrong address to a third-party administrator (TPA). The employee had submitted a change of address form shortly after his termination and alleged that he had also notified the employer of the new address four years earlier. As evidence, he provided earlier mailings from the health insurance company and a W-4 withholding certificate showing his updated address. Regardless, the employer instructed the TPA to send the COBRA election notice to the employee’s previous address. Arguing that COBRA only requires an employer to timely send notice to the employee’s last-known address—not to ensure actual delivery—the employer contended that it had sent the TPA notice of the employee’s termination along with his last-known address within the required 30-day period.

The court acknowledged that COBRA requires only that an employer operate in good faith, sending the election notice by means “reasonably calculated” to reach plan participants. It further acknowledged that sending an election notice by first-class mail to the employee’s last-known address constitutes good faith. The court continued, however, that an employer does not act in good faith if it sends the notice to an address at which it knows the employee no longer lives. Concluding that there was a genuine dispute as to whether the employer operated in good faith, the court allowed the case to proceed to trial.

EBIA Comment: This case highlights the importance of maintaining current and accurate address information for employees and qualified beneficiaries that is consistent across all systems. As a safeguard, employers should substantiate addresses on a regular basis, ask departing employees to confirm their current addresses in writing, and immediately forward address changes to the entity responsible for providing COBRA notices. Importantly, employers should consider developing specific change-of-address procedures and communicating them in writing to employees and qualified beneficiaries. This will help protect employers against claims that they had knowledge of address changes through avenues other than the one specified in the procedures. For more information, see EBIA’s COBRA manual at Sections XVII.D (“Reasonable Notice Procedures”), XVIII.I.4 (“Address Used for Election Notice Must Be Substantiated”), and XVIII.J (“Sending the Election Notice and Proving It Was Sent”).

Contributing Editors: EBIA Staff.