Postcards are designed to provide a brief message, but it will be interesting to learn if such brevity is sufficient to adequately notify an individual of COBRA continuation coverage rights — particularly when the law identifies at least 14 content requirements for COBRA election notices.
In a recent court case, an employer/plan administrator faced with a class action lawsuit alleging COBRA notice violations was unable to eliminate 771 individuals from the class because the court raised questions about the sufficiency of language in postcards used as COBRA election notices, as well as the adequacy of the company’s notice procedures.
Here’s the background of Pierce v. Visteon Corp. Between June 29, 2000 and May 31, 2002, Ford acted as the benefits administrator for all employees of Visteon Corp., a former Ford subsidiary. Ford’s role included sending information to Visteon’s COBRA administrator.
A group of former Visteon employees and/or their beneficiaries filed a class action lawsuit contending that they did not receive COBRA notices on a timely basis. The class consists of approximately 1,600 class members. Visteon sought a motion for partial summary judgment regarding, among other things, the claims of 771 class members, arguing that they were sent COBRA notices on a timely basis.
To meet its burden of proof that as plan administrator it made a good-faith effort to comply with COBRA, Visteon provided a declaration explaining the company’s notice procedures during the period at issue, which included: (1) mailing a “postcard” advising the employee of his or her COBRA rights along with the last paycheck; and (2) making a “contemporaneous entry” in its record keeping system indicating whether the employee received a notice regarding general medical or dental benefits, or both. The postcard instructed the employee to contact the COBRA coordinator for more information and warned that it was the only notice the employee would receive. Representative examples of the postcards were attached as exhibits, as well as a chart indicating which contemporaneous notations were made when each postcard was mailed.
The U.S. district court of the Southern District of Indiana noted that the following evidence is important in determining whether COBRA’s good faith standard: (1) a description of the standard notice procedures that also shows they were consistently followed; and (2) a showing that the COBRA notice mailing system was reliable and was followed in the relevant instance.
In denying Visteon’s motion, the court found problematic that no evidence was proffered that “the proper notices were actually mailed to the proper parties” and the chart only referred to medical or dental benefits — not vision and/or health care spending accounts. Of key interest, the court added that:
[A]lthough each card did contain language stating that the COBRA coverage that the recipient was eligible for was based upon his or her existing coverage and family status, that alone is not sufficient to “adequately inform the beneficiary of the COBRA coverage he [or she] is entitled to receive … and the money owed to maintain this coverage.” See Geissal v. Moore Med. Corp., 338 F.3d 926, 934 (8th Cir. 2003).
Subsequent to the Geissal case mentioned above, final COBRA notice regulations from the U.S. Department of Labor (DOL) specify 14 separate requirements for election (or qualifying event) notices. DOL’s model election notice and form runs almost seven pages long — far from postcard length!
Accordingly, how the court addresses the notice sufficiency issue in further proceedings will be worth watching. Mandated Health Benefits — The COBRA Guide will be tracking this issue. The Guide also includes a checklist (see below) to help plan sponsors and administrators ensure that their COBRA qualifying event notices include the necessary information.