Bryant v. Walgreen Co., 2023 WL 5580415 (N.D. Ill. 2023)
A group of terminated employees filed a class action lawsuit against their employer, alleging that it had not adequately notified them of their right to continue health coverage under COBRA. The employees claimed that the employer failed to comply with COBRA regulations because it sent two notices—one entitled “COBRA Enrollment Notice” and the other entitled “Important Information About Your COBRA Continuation Coverage”—rather than a single notice based on the DOL’s model. The employees further claimed that the notices were deficient in that they failed to (1) provide the address for sending COBRA premium payments; (2) identify the plan administrator; (3) explain how to enroll and include a physical election form; (4) provide the correct election deadline; and (5) be written in a manner calculated to be understood by the average plan participant. The employees asked the court for statutory penalties of $110 per day from the date of the employer’s violation or, alternatively, an award of benefits under the employer’s health plan. The employer asked the court to dismiss the case without a trial, arguing that the employees had waited too long to file suit and that, together, the two notices met COBRA’s requirements.
The court first held that the lawsuit was timely in that the limitations period for filing suit (determined here based on analogous state contract law) did not begin to run until the employees knew or should have known that their notification rights were violated. Next, the court held that, even though the COBRA regulations refer to “notice” in the singular, nothing prohibits an employer from providing multiple notices that together meet the notice content requirements. The court further held that the employees had not adequately explained how the combined notices failed to meet those requirements. For example, the notices included a phone number rather than an election form with specific instructions, but the court found the employees’ allegation too conclusory, with “no suggestion” of why calling the phone number would lead to an inadequate explanation of COBRA rights. The court dismissed all but one claim—an allegation that the notices provided an inaccurate election deadline for one employee whose qualifying event occurred during the COVID-19 outbreak period.
EBIA Comment: Class action lawsuits challenging the adequacy of COBRA notices have become increasingly common in recent years, and other courts have not been so quick to dismiss similar allegations. We understand that many of these lawsuits have ended in settlement, but they are costly, no matter the outcome. Plan administrators seeking to avoid this type of litigation should have procedures in place that ensure timely and accurate provision of notices. For more information, see EBIA’s COBRA manual at Sections XVIII.D (“What Information Must the Election Notice Contain?”) and XXV (“Consequences of Failing to Comply With COBRA”).
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