Many cases have recently challenged the technical content in various employer-provided COBRA notices. The premise of these lawsuits has been that even minor deviations from COBRA regulations from the U.S. Department of Labor (DOL) should make a plan administrator liable for penalties even if the notices otherwise included comprehensive COBRA information. Certainly, plan administrators should work hard to ensure COBRA notices are clear and comprehensive; however, a recent decision supports the view that hyper-technical compliance is not the goal—clear explanations of the COBRA rights ought to be enough for compliance purposes.

An employer/plan administrator convinced a court to dismiss a class action claim alleging it violated COBRA’s election notice requirement. A federal district court in Florida agreed that the claims of aggrieved former employee did not sufficiently prove that she was injured by the alleged notice failures. The case is Carter v. Southwest Airlines Co. Board of Trustees, Case No. 8:20-cv-1381-T-02JSS (M.D., Fla., December 14, 2020).

Facts of the Case

Cherrita Carter was terminated from employment with Southwest Airlines on May 8, 2019. Southwest alleged that it sent her a COBRA election notice on May 14, 2019, which she denied receiving. Carter challenged her termination through a union’s grievance process under which her health coverage was maintained—the process specifically provided she was not required to make a COBRA election during the grievance procedure, as coverage would continue.

The union ultimately denied Carter’s grievance on August 5, 2019, which led to the termination of her health coverage. Southwest sent Carter a COBRA election notice on August 6, 2019. Carter acknowledged receiving it but did not elect COBRA coverage. In her lawsuit, Carter claimed that the COBRA notice she received was deficient because it was late, lacked essential information, and confused her.

She filed a class action claim for COBRA notice violations, alleging that Southwest’s notice failures led her to lose coverage, incur significant medical bills, and refrain from seeking necessary medical care. She sought monetary damages, attorneys’ fees, and an injunction barring Southwest from using the defective notice and requiring it to mail corrective notices.

Southwest sought dismissal of the claim, contending that Carter lacked standing because she failed to establish a concrete injury; she never explained specifically how she was harmed by the alleged deficiencies. Southwest also argued that Carter had no claim because the COBRA notice provided to her substantially complied with the applicable laws and regulations. The court looked to case law, as well as the DOL’s notice regulations, in agreeing with Southwest, addressing Carter’s claim as follows.

Late Notice Allegation Fails

Carter claimed that Southwest sent a late COBRA notice on August 6, 2019—90 days after her termination of employment. The court found this “implausible.” Carter made it appear as if she lost coverage immediately after her May termination of employment; however, the court noted that this was not true. She had coverage—likely cheaper than COBRA coverage—at least through August 5, 2019, when the union rejected her grievance and upheld her termination. Furthermore, Southwest explained that Carter was sent her first election notice in May 2019. Carter denied receiving that notice. The court, however, explained that, for COBRA purposes, the legal standard for good-faith compliance is whether the plan administrator sent the notice using methods that are “reasonably calculated” to reach plan participants, such as sending the notice by first-class mail.

Nevertheless, the court determined that Carter had no reason to enroll in COBRA coverage right after her termination of employment, and she had no reason to refrain from seeking medical care until August 5, 2019. Before that point, the court noted that Carter had group health coverage in place. It was, in the court’s opinion, “unclear how [Carter] could be injured by a lack of information about COBRA during a period when she had no need to elect COBRA coverage.” Accordingly, the court held Carter suffered no economic or informational injury that would justify her having standing to bring her claims.

Allegations Notice Deficiencies Also Fail

Next, the court rejected Carter’s claims that the August notice was informationally deficient as follows:

1. It did not include the date the qualifying event occurred. The DOL COBRA notice regulations do not require that plan administrators/employers include the specific date on which the qualifying event occurred, according to the court.
2. It failed to include “the name of the plan.” Carter alleged that the COBRA notice just referred to Southwest Airlines and its group health plan without providing the formal plan name, which was the Southwest Airlines Co. Health and Welfare Benefit Plan. The court held that she failed to prove how the omission of those five words harmed her or her ability to elect COBRA coverage, particularly as the notice clearly related to her termination from Southwest and clearly dealt with COBRA coverage, which was group health plan continuation coverage.
3. It failed to provide contact information for the “plan administrator.” The COBRA notice did have contact information for Southwest. Nevertheless, Carter contended that the DOL COBRA notice regulations require that the notice include the identification of the formal plan administrator, Southwest Airlines Board of Trustees. The court rejected this reasoning, noting that (a) the regulatory provision at issue does not, in fact, mention the term “plan administrator”; (b) the regulations reflect the practical reality that “persons specializing in COBRA administration” are distinct from “plan administrators” because most businesses delegate COBRA administration to third parties; and (c) the DOL’s model election notice instructs parties to include “the Plan Administrator or other party responsible for COBRA administration.”
4. It was not written “in a manner calculated to be understood by the average plan participant.” Carter alleged that the notice confused her; however, the court noted she did not explain how or why it did so and why it impaired her decision to elect COBRA.

Accordingly, the court dismissed Carter’s claims.

Conclusion

As previously reported, numerous COBRA class action cases have challenged COBRA notices based on relatively minor discrepancies with the DOL regulations. The Carter decision is significant because the court stepped back and, effectively, said, “Even if these notices are confusing or missed some technical rules, how exactly did that harm the plaintiff class?” A fundamental rule in litigation is that a plaintiff must demonstrate an injury, and the Carter court was not persuaded that the plaintiff was actually harmed by the alleged deficiencies.

Of course, another court could reach a different conclusion.