Benefits and Compensation

Court Approves $1M Settlement in COBRA Class Action Lawsuit

A federal district court gave preliminary approval to a $1 million settlement agreement that would resolve a class action lawsuit alleging that an employer/plan administrator, in farming out its employees to clients, violated COBRA’s initial and election notice rules, as well as its  premium subsidy rules. The settlement would consist of a $375,000 payout to nearly 70 class members, as well as a separate payout of nearly $625,000 for attorney’s fees and other costs. The plaintiffs’ law firm contends that each class member could receive approximately $5,000, thus possibly making this “the largest average per person recovery in any reported COBRA class action.” The case is Slipchenko v. Brunel Energy, Inc., Case 4:11-cv-10465 (S.D. Tex., Sept. 30, 2014).

On Aug. 25, 2014, the parties reached the $375,000 settlement, which includes a class  expected to consist of no more than 66 persons (36 plan participants and 30 plan beneficiaries).  The employer also would make a $624,999 payment to resolve any claims for attorney’s fees and other legal expenses.

In reaching the agreement, the parties noted that:

In light of the uncertainty of litigation and the potential substantial delay before Plaintiffs’ claims would be resolved, the Parties believe that the Proposed Settlement is fair, reasonable, and adequate to the Settlement Class as a whole, that this Settlement Agreement provides substantial benefits to the proposed Settlement Class, and that the Proposed Settlement is in the best interests of the Settlement Class.

Class members will have until Dec. 12, 2014, to review the settlement terms and file any objections with the court. On or before Jan. 5, 2015, the plaintiffs will file a motion for final approval of the settlement. A fairness hearing is set for Jan. 20, 2015.

Case Is Unique, Law Firm Says

Only a few other COBRA class actions have been successfully certified as a class, the plaintiffs’ law firm — Campbell, Harrison & Dagley, LLP — said in a Sept. 16 motion in support of the settlement:

  • Pierce v. Visteon Corp., under which class members were awarded $2,500 each; and
  • Hornsby v. Macon County Greyhound Park, where a $350,000 settlement was reached in regards to more than 1,600 class members (who received an average award of $200).

In contrast, the firm noted that the $375,000 in Slipchenko for a class consisting of “69 members” would result in an average per person recovery of more than $5,000 per person, which would make it unique as a class action but average when compared to individual cases.

A  detailed explanation of the case can be found here, on hr.complianceexpert.com.