Not giving workers proper notice of their COBRA rights can have potentially expensive consequences for employers—including having to pay an employee’s uncovered medical bills, attorneys’ fees and penalties. But what happens if you do everything right—and yet the employee never receives the COBRA notice you sent out? A federal appeals court decision looks at this problem.
Notice Sent Certified, Lost By Post Office
Sprint Corp. terminated Monty Degruise’s employment on Feb. 4, 1998. Seven days later, Sprint mailed him a notice about his right to elect continuing health care coverage under COBRA. The notice was sent by certified mail with return receipt requested. Degruise was out of town when the post office attempted to deliver the letter on Feb. 17 and 22. The mail carrier left a notification in Degruise’s mailbox that a certified letter was waiting for him at the post office.
When Degruise returned and went to the post office, postal workers couldn’t locate the letter. They advised him to come back a few days later. Degruise did, but the letter still couldn’t be found. And Degruise had no way of knowing who sent the letter or what it contained. The post office found the letter on March 1 and returned it to Sprint, indicating that Degruise never claimed it.
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Medical Claims Denied
Soon after Degruise left Sprint, he began a new job. But before his new health insurance took effect, he needed medical treatment. He filed claims for this treatment with his new health insurer, but they were denied.
Degruise sued Sprint, charging he didn’t receive notice from Sprint as he should have about his right to health care continuation coverage under COBRA. If he had been able to exercise his right to continue his original medical coverage under COBRA, Degruise argued, his treatment would have been covered by that insurance. He claimed he incurred significant out-of-pocket medical expenses. Sprint argued that it fulfilled its COBRA duties when it sent the notice via certified mail.
Good-Faith Effort Required
The federal Fifth Circuit Court of Appeals threw out Degruise’s case, ruling that COBRA requires only a good-faith effort to comply with notification provisions. Good faith, said the court, can be demonstrated in a variety of ways, such as by hand-delivering the letter or sending it by first-class mail. In this case, Sprint went the extra mile by sending the notice certified, and thus met the good-faith requirement. That Sprint later discovered that the letter wasn’t delivered didn’t affect the outcome. Sprint didn’t know why the letter was undelivered and wasn’t responsible for the delivery problem.
Notice Recommendations
Here are some guidelines for avoiding COBRA notice problems:
- Put notice in writing. A written notice can protect you from claims that you didn’t provide the notice or you gave erroneous information. To help ensure delivery, send the notice by certified mail. It’s also wise to take the extra precaution of mailing the notice by first-class mail at the same time it’s sent certified. The court in the Sprint case pointed out that the whole dispute could have been avoided had Sprint taken this extra step.
- Follow up. If the employee hasn’t responded near the end of the COBRA election period, it’s a good idea to send out a reminder notice.
- Include spouse and beneficiaries. You are required to send separate COBRA notices to the employee’s spouse and other beneficiaries. If several beneficiaries live at the same address, you can send their election notices in one envelope, but you must put each person’s name on the envelope. And you can either include a separate notice for each beneficiary or just one notice that clearly identifies each qualified beneficiary and their separate right to elect COBRA continuation coverage.