COBRA Notice Lawsuits Increasing

1.5 minute read

There has been a recent rise in lawsuits from former employees alleging deficient COBRA (Consolidated Omnibus Budget Reconciliation Act) election notices. Most have been class action lawsuits targeted to large employers, resulting in significant penalties and attorneys’ fee awards for successful ex-employees.

Employers’ difficulty in complying with COBRA notice requirements plus class action lawsuits seem to be causing the increase in litigation. COBRA notice lawsuits are claiming that the employers’ election notices are inaccurate, confusing, or threatening. Many lawsuits have targeted COBRA notices that fail to include:

• The mailing address for payments
• The actual election form to elect coverage
• The plan administrator’s identity
• An explanation of how to enroll

The U.S. Department of Labor revised its model COBRA election notice in 2020, but many employers use third-party vendors to provide notices to former employers. These vendors typically provide their own notices that may not strictly adhere to the DOL’s model notice. Examples include the vendor omitting the plan administrator’s name to avoid confusion, as former employees would mail payments to the vendor, not the plan administrator. Also, not all DOL model notice information may be known by the employers at the time they must provide the notice, so the vendor omits it. Even though vendors prepare and send most notices, COBRA notice litigation is directed at the employer.

Employers should consider reviewing their COBRA notices to ensure compliance, identify potential liabilities, and avoid litigation. Download the bulletin for more details.