Benefits and Compensation

Employer Faces Class-Action Lawsuit Because of Vague Language in COBRA Notice

In addition to making sure Consolidated Omnibus Budget Reconciliation Act (COBRA) election notices are sent to qualified beneficiaries on a timely basis, employers and plan administrators should ensure that the notices’ content satisfies the COBRA regulations. They should consider using the model COBRA election notice published by the U.S. Department of Labor (DOL), which considers use of that model notice to be good-faith compliance with COBRA’s notice requirements.COBRA

An employer/plan administrator is facing a class-action lawsuit regarding three COBRA claims alleging that its election notice (1) was not specific enough about the date that COBRA coverage is to end, (2) did not specifically state where to send premium payments, and (3) could not be understood by the average plan participant.

The employer was only able to get the last claim dismissed because a federal district court in Florida found that a 68-year-old who “cannot read English very well” is not an average plan participant. However, the other claims continue because the qualified beneficiary raised plausible arguments about the alleged notice deficiencies. The case is Valdivieso v. Cushman & Wakefield, Inc., 2017 U.S. Dist. LEXIS 75574 (M.D. Fla. May 18, 2017).

Facts of the Case

Cushman & Wakefield, Inc. terminated “Roberto’s” employment and provided Roberto with a COBRA election notice. Roberto, who can read English but speaks Spanish as a native language, filed a class-action lawsuit for COBRA notice claims contending deficiencies existed in how the notice was generally written and how it described the length of the COBRA coverage period and the premium remittal process. Cushman & Wakefield sought to have the claims dismissed.

Understanding by the Average Plan Participant

Roberto alleged that Cushman & Wakefield violated the regulatory requirement that a COBRA notice be written in a manner calculated to be understood by the average plan participant. Here, Roberto alleged that Cushman & Wakefield failed to take into consideration the fact that these particular qualified beneficiaries—Roberto and his spouse—are 68 and 61 years old before providing a notice typed in one of the smallest font sizes available in a second language.

The court noted that although Roberto might not have understood the notice, the complaint suggested that he—a 68-year old who cannot read English very well—is not an average plan participant. As such, insufficient facts supported the conclusory statement that an “average” plan participant cannot understand the notice, the court held in rejecting Roberto’s claim.

Understanding When Coverage Ends

Roberto also alleged that Cushman & Wakefield violated the regulatory requirement of explaining the maximum period for which continuation coverage will be available as well as the continuation coverage termination date.

Specifically, Roberto argued that (1) Cushman & Wakefield failed to include in the notice the specific date coverage will end, and (2) Roberto cannot determine whether this monthly coverage would end at the beginning or the end of the 18th month and whether it would end on the day that was exactly 18 months in the future. The notice stated that coverage may generally last for up to 18 months, and Cushman & Wakefield contended that the notice need not specify the day on which coverage ends.

The court noted that Roberto stated a plausible claim because the regulation’s inclusion of the phrase “termination date” suggests that the employer must identify the day on which coverage ends. Cushman & Wakefield cited Scott v. Suncoast Beverage Sales, Ltd., 295 F.3d 1223(11th Cir. 2002), in suggesting that it made a good-faith attempt to comply with COBRA’s notice requirements, and in doing so, its COBRA obligation was met because the notice enabled Roberto to make an informed decision whether to elect coverage. The court rejected that reasoning because the good-faith defense predated DOL’s 2004 COBRA notice regulations.

Understanding Where Payment Is Sent

Finally, Roberto alleged that the notice failed to mention the address to which he must send payment. Rather, the notice stated that monthly invoices will provide a remittance address and “[a]dditional information about payment will be provided to you after the election form is received.”

Cushman & Wakefield argued that its notice complies with DOL’s model notice. Cushman & Wakefield’s notice states:

If you choose to elect COBRA coverage, you do not have to send any premium payment(s) with the COBRA Coverage Election Form. Additional information about payment will be provided to you after you make your election.

The court noted that although DOL’s model notice does include that language, it also includes the following:

Your first payment and all periodic payments for continuation coverage should be sent to:

[enter appropriate payment address]

That language was not in Cushman & Wakefield’s notice; therefore the court held that Roberto stated a plausible claim.

Failure to Exhaust Administrative Remedies

Cushman & Wakefield requested dismissal because Roberto purportedly failed to exhaust administrative remedies or failed to prove that exhaustion would be futile. A plaintiff who sues under ERISA must exhaust an administrative remedy unless the remedy is futile or inadequate.

However, Roberto alleged that “[n]o administrative remedies exist as a prerequisite to Plaintiff’s claim on behalf of the putative class.” The court held that although the evidence might reveal that Roberto failed to exhaust an administrative remedy, the complaint stated a plausible claim.


COBRA provides that a termination of employment or reduction in hours that results in a loss of coverage is a qualifying event entitling a qualified beneficiary to up to 18 months of COBRA coverage. An employer has up to 30 days to notify a plan administrator of a qualifying event. In turn, the plan administrator has 14 days from the date of that notice to send a COBRA election notice.

As the court noted here, COBRA’s notice requirements do not require that the employer or plan administrator ensure that the qualified beneficiary actually receives the notice. Instead, good-faith efforts must be made to provide the notice. Often, courts will review an employer’s COBRA procedures to ensure that good-faith efforts have been made to provide the notices. Here, the court determined that the method of providing the COBRA election notice (that is, first-class mail to the last known address) was adequate.

As shown in the box below, DOL’s COBRA regulations provide a detailed list of information that should be included in COBRA election notices. A plan administrator that fails to meet COBRA’s notice requirements may be subject to statutory penalties of up to $110 per day.

The 15 content requirements for qualifying event notices

[Editor’s Note: DOL’s model election notice, updated in May 2014, provides less detail than the requirements specified below, which are in the 2004 final regulations.]

  1. The name of the plan under which COBRA coverage is available; and the name, address, and telephone number of the party responsible under the plan for COBRA administration.
  2. The identification of the qualifying event.
  3. The identification, by status or name, of each qualified beneficiary, and the date on which coverage will terminate unless COBRA coverage is elected.
  4. A statement that: (a) each qualified beneficiary has an independent election right; (b) a covered employee or a qualified beneficiary/spouse may elect COBRA coverage on behalf of all other qualified beneficiaries regarding the qualifying event; and (c) a parent or legal guardian may elect COBRA coverage on a minor child’s behalf.
  5. An explanation of other coverage options, such as the Health Insurance Marketplace, and special enrollment opportunity for another group health plan under certain circumstances.
  6. An explanation of the plan’s procedures for electing COBRA coverage, including the election period deadline.
  7. An explanation of the consequences of failing to elect or waiving COBRA coverage.
  8. A description of the COBRA coverage (or a reference to the summary plan description), including the start date.
  9. An explanation of the maximum coverage period, the termination date, and any early termination events.
  10. A description of when COBRA coverage can be extended.
  11. A description of the disability determination procedures and notice requirements
  12. A description of the premium amount.
  13. A description of the premiums due dates, the right to pay on a monthly basis, the grace period, the address to send payments, and the consequences of delayed payment and nonpayment.
  14. An explanation of the importance of keeping the plan administrator informed of the current addresses of qualified beneficiaries.
  15. A statement that the notice does not fully describe all COBRA rights under the law or other plan rights, and that more complete information regarding such rights is available in the SPD or from the plan administrator.

DOL’s model COBRA notices can be found on its website. Employers and plan administrators should consider using the model notices because the DOL considers using them to be good-faith compliance with COBRA’s notice content requirements.

Gwen Cofield is an editorial/communications professional with more than 20 years of experience in the for-profit, non-profit and government sectors.

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