EBIA Weekly Newsletter

Incorrectly Abbreviated Town Name Did Not Render COBRA Notice Invalid

   May 26, 2016

A federal appeals court has affirmed the dismissal of a terminated employee’s claim against her former employer (in its role as health plan administrator) for failure to properly send a COBRA election notice. The employee claimed that she had not received the notice, which included a correct ZIP code but an incorrectly abbreviated town name. However, she conceded that she had received at least 18 pieces of other mail with the town name similarly abbreviated. Nevertheless, she argued that, because the notice was incorrectly addressed, the employer had not complied with COBRA’s notice requirements. The employer argued that it had fulfilled its obligation by timely sending a notice to the employee’s last-known address. As evidence, the employer provided a copy of the notice, a detailed description of the COBRA notice procedures followed by the employer and its TPA, and documentation that the procedures had been followed in this instance. It attributed the shortening of the town name to a character limit in the computer system’s “town” field. Finding that the employer had satisfied its duties under COBRA, the trial court dismissed the claim (see our Checkpoint article), and the employee appealed.

The appellate court agreed that the employer had met its obligations, reasoning that COBRA requires plan administrators to provide notices to terminating employees but does not indicate exactly how those notices must be given. Citing decisions from other circuits, the court held that COBRA does not require that notices actually be received. Rather, an administrator that has sent a notice by means “reasonably calculated” to reach the recipient has made a sufficient good faith effort to comply with the statute. The court concluded that the employer in this case had met that standard and that the employee’s arguments were unpersuasive.

EBIA Comment: In explaining its decision, the court repeatedly referenced the employer’s well-documented COBRA notice procedures and tracking systems. The employer’s ability to demonstrate good faith compliance undoubtedly contributed to the favorable outcome. Employers should ensure that their COBRA notice procedures (and those of their TPAs) are comprehensive, up-to-date, and consistently followed. For more information, see EBIA’s COBRA manual at Section XVIII.J (“Sending the Election Notice and Proving It Was Sent”). You may also be interested in our recorded webinar “COBRA Basic Training: Practical Compliance Strategies(recorded on 2/24/2016).

Contributing Editors: EBIA Staff.