A New Jersey federal district court has ruled in a case involving an employer’s alleged failure to notify a former employee of her COBRA rights or promptly process her request for continued health coverage. The case is Davis v. World Ins. Assocs., LLC, 2023 WL 2665727 (D.N.J. 2023).

Davis filed an employment discrimination lawsuit against her former employer. Her claims included allegations concerning the adequacy of the COBRA notices that her former employer provided her upon separation from employment. Specifically, the employer-provided Davis with a severance agreement, which stated that the employee would “receive a COBRA . . . Election Notice . . . at [her] home address within the next 14 Business Days.”

The agreement further stated that the COBRA Election Notice would include information about the former employee’s COBRA coverage and alternative options.The employer moved to dismiss Davis’s COBRA-related claim, arguing that the severance agreement was sufficient to comply with the notice requirements of COBRA. Davis contended that although the severance agreement gave the initial notice of her rights under COBRA, it failed to indicate whether the employee received the additional information about COBRA or if the employer had timely processed the employee’s request for continued coverage. The court agreed and denied the employer’s motion to dismiss, finding that the claim should proceed to trial.While the outcome of this case is unclear, the court’s ruling on the motion to dismiss is an important reminder that employee severance agreements cannot substitute for complete COBRA compliance.

Employers certainly can coordinate their severance agreements and COBRA notifications. Still, they must ensure that they provide all required notifications as required by federal law, including timely notification to the plan administrator of the COBRA qualifying event and provision of an election notice to the employee and related qualified beneficiaries.

Source: Hall Benefits Law

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