Benefits and Compensation

Verbal COBRA Notice Is Sufficient, Says Court in Ruling for Employer

In a decision that overlooked key COBRA guidance, a federal district court ruled that an employer/plan administrator fulfilled its notice obligation by verbally providing a notice of COBRA rights and accepting premium payments — which apparently the qualified beneficiary had to pay a few days after her employment termination. In dismissing a COBRA notice claim, the court deemed the verbal notice sufficient because “the statute does not specify the form the notice must take.” However, this reasoning did not consider federal regulations that describe the form and structure of COBRA notices. It also did not consider that an employer is required to give a qualified beneficiary at least a 60-day election period and at least 45 days from the election date to pay the initial COBRA premium.

While working for S 37 Management, Inc., Elisha Madonia requested a reasonable accommodation under the Americans with Disabilities Act but was refused. She was terminated on Oct. 22, 2013. A few days later she was given a proposed separation agreement and release under which her COBRA premiums and other benefits would be paid in exchange for a release for all her employment-related claims.

Madonia alleged that she was told that she “could only continue insurance coverage if a check for the premium was immediately tendered,” and denied receiving a COBRA election notice. Apparently, she did not sign the agreement.

Madonia sued S 37 and DiMucci for various federal and state-law claims, including a COBRA notice claim. S 37 and DiMucci sought dismissal of the claim, alleging that Madonia never lost her insurance coverage and further noting that when she was fired, they offered and she accepted the right to continue her coverage. Madonia contended that she did so because she was told that she would lose her benefits if she didn’t maintain her coverage by paying the premium.

The court held that S 37 and DiMucci “have the better of the argument,” for two reasons. First, it explained that one of the qualifying events that triggers the need to give a COBRA notice is termination of employment that results in a loss of coverage. The court presumed there was no loss of coverage, and as such there was no triggering event. Second, the COBRA “statute does not specify the form the notice must take.” As a result, it was sufficient that the employer verbally notified Madonia of her COBRA rights and accepted her premium payments.

Although the employer won dismissal, the legal reasoning used by the court ignored final COBRA notice regulations from the U.S. Department of Labor, as well as the statutory language and IRS final COBRA regulations, which provide for defined time periods for both the COBRA election and initial premium payment.

More details on the case, Madonia v. S 37 Management, Inc., can be found at