Benefits and Compensation

COBRA Extension Notice Needed Despite Awareness of Disability

Group health plan terms clearly explained that the plan administrator had to be notified of a disability determination within 60 days in order to trigger an 11-month COBRA extension; therefore, the plan administrator was justified in denying the extension when notice was received five months after the determination was issued, a federal district court in Ohio ruled. Significantly, the court found that the plan administrator’s early, general knowledge of the disability was not sufficient to trigger the extension when the plan terms required actual notice within a certain time frame. The case is Rayle v. Wood County Hospital, 2013 WL 1654898 (N.D. Ohio, April 16, 2013).

Susan Rayle was an employee of Wood County Hospital. Both she and her spouse Max were covered under WCH’s group health plan. WCH was the plan administrator and had sole discretion to interpret the plan and decide any eligibility questions. As such, under ERISA its decisions are considered legally binding unless they are found to be arbitrary and capricious.

Rayle went on disability leave, and ultimately took a “disability retirement” in early 2011. She also applied to the Social Security Administration for social security disability benefits, and was approved on July 10, 2011. Although the Rayles notified a plan service provider of the SSA determination, they did not notify WCH, even though they had previously informed WCH that Rayle was applying for social security benefits.

Upon Rayle’s termination of employment, her husband elected 18 months of COBRA coverage. Generally, certain disabled individuals may qualify for an 11-month extension if they: (1) are determined, under the Social Security Act, to have been disabled at any time during the first 60 days of COBRA coverage; and (2) notify the plan administrator of the determination within 60 days of the determination and before the end of the original 18-month COBRA coverage period.

The WCH plan was specific about this requirement. In 2012, the Rayles contacted WCH about the disability extension. WCH informed them they were ineligible because the Rayles did not notify WCH of Rayle’s disability within 60 days of SSA’s July 10, 2011, determination.

The Rayles then sued WCH, seeking a declaratory judgment that either a de novo review standard applied, or that WCH’s denial violated that arbitrary and capricious standard. WCH sought a dismissal of the claims.

The court did find that the arbitrary and capricious standard applied because the plan terms gave WCH discretionary authority.  In applying that standard to the denial, the court cited legal precedent to note that WCH’s decision will stand as long as a reasoned explanation is provided for making it. The court concluded that WCH did offer a reasoned explanation in pointing out that the Rayles did not notify WCH, as the plan administrator, of SSA’s disability determination within 60 days, as per the specific plan terms.

The Rayles made several arguments on how WCH had sufficient notice of the disability to process the COBRA extension on a timely basis, focusing on the general knowledge that WCH had that Ray was disabled. However, the court found those arguments unpersuasive, based upon the clear plan language.

More details on this case can be found in Mandated Health Benefits — the COBRA Guide, at