By Gwen Cofield
Governmental employers and the benefit plans they sponsor are generally exempt from the Employee Retirement Income Security Act’s (ERISA) Consolidated Omnibus Budget Reconciliation Act (COBRA) provisions but are still required to offer COBRA coverage to qualified beneficiaries under the Public Health Service Act (PHSA).
Although the COBRA requirements are similar under ERISA and the PHSA, one material difference is that the PHSA has no statutory notice penalties, and aggrieved individuals are limited to appropriate equitable relief. Despite the limited relief, governmental employers still should adopt procedures to ensure that COBRA notices are sent on a timely basis, as demonstrated by maintaining adequate records.
A former employee filed a lawsuit against its employer, a public university, under ERISA and the Internal Revenue Code, alleging that she did not receive her COBRA election notice. The lawsuit was filed nearly 4 years after the former employee’s termination, but she asserted that any statute of limitations should be tolled because she did not learn of the university’s failure to send the notice until a deposition in a wrongful termination lawsuit that occurred 3 years after the termination.
The university argued that her claims should be dismissed because (1) the COBRA provisions under ERISA and the Code do not apply to governmental employers; and (2) her claim should be barred by the statute of limitations. The court agreed that neither ERISA nor the Code apply to the former employer’s claims, but under liberal pleading rules, allowed the claims to proceed as if they were brought under the PHSA.
Additionally, the court held that the statute of limitations (3 years, in this case) did not bar the action because the period did not start until the former employee learned of the COBRA notice failure. The case is Pankey v. Mississippi State University, 2016 WL 3648268 (N.D. Miss., 2016).
