Harris v. UnitedHealth Grp., Inc., 2024 WL 2734974 (N.D. Tex. 2024)
In a dispute over insurance benefits, an employer was sued by a deceased employee’s spouse. When the employee had retired due to a terminal illness, the employer sent a combined packet containing a COBRA election notice and a life insurance conversion notice. The employee initially elected COBRA but later stopped paying premiums when she decided to discontinue treatment. She did not complete and return the life insurance conversion notice. In addition to bringing various state-law claims, the spouse (who had been the beneficiary under the employee’s life insurance policy) sued under ERISA and COBRA, alleging that the combined packet was not written in a manner calculated to be understood by the average plan participant, “especially [one] suffering from a massive brain tumor.” He further argued that, given the employee’s condition, the employer had a moral and legal duty to be sure the employee understood the information and to provide individualized advice to the spouse about how to maximize his benefit options.
The court disagreed, holding that the employer had timely satisfied its notice obligations in good faith and that there was no heightened obligation due to the employee’s medical condition. Rather, the “average plan participant” test is an objective standard that does not require an inquiry into the subjective perception of individual participants. Also holding that the spouse’s state-law claims were preempted by ERISA, the court dismissed the case, concluding that benefits had been rightfully terminated when the employee discontinued COBRA payments and failed to execute the life insurance conversion form.
EBIA Comment: Several courts have determined that in appropriate circumstances, the COBRA election period can be tolled (suspended) when a qualified beneficiary is incapacitated during the election period (see our article), but there was no allegation here that the employee was incapacitated during that period. In fact, the employee elected COBRA and only later decided to stop making premium payments. We think the bigger issue in this case is the potential for confusion when enclosing information about multiple benefits in the same packet—especially when the information calls for actions with different deadlines. While there may be no legal prohibition against packaging the COBRA election notice with other materials, employers and administrators may wish to err on the side of caution to ensure there is no inadvertent loss of benefits. For more information, see EBIA’s COBRA manual at Sections XVIII.D (“What Information Must the Election Notice Contain”) and XIX.D (“Tolling the Election Period”). See also EBIA’s ERISA Compliance manual at Section XXVIII.F (“ERISA Fiduciary Duties and Participant Disclosure”).
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