Benefits and Compensation

Transportation Authority Immune from COBRA Claims Under PHSA, Court Finds

Technically, continuation coverage rules under the Public Health Service Act (PHSA) apply to employees of state and local governments. Often, however, the problem is one of enforcement. It is not always easy to prevail in a case alleging continuation coverage violations against a state or local government. One of those reasons could be “sovereign immunity”—a doctrine under which a state cannot be held liable for certain legal actions brought by individuals in that state.

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A local transportation authority cannot be sued as a state or local government employer for alleged continuation coverage violations under the PHSA, the federal District Court of the District of Columbia held. The employer is protected by the same rules that prevent states from being sued by their own citizens or citizens of another state. The case is Hall v. Wash. Metro. Area Transit Auth., 2020 U.S. Dist. LEXIS 183477 (D.D.C., October 2, 2020).

Facts of the Case

Tracy Hall sued her former employer, the Washington Metropolitan Area Transit Authority (WMATA), for various employment-law clams, including a continuation coverage notice claim under the PHSA, for allegedly failing to provide an election notice after her termination of employment. She sought a variety of damages, including appropriate equitable relief.

The court noted that Title XII of the PHSA extends COBRA’s requirements to group health plans sponsored by state or local government employers, including “any agency or instrumentality of … a State or political subdivision.” The WMATA argued that because it is “a state agency of Maryland, Virginia and the District of Columbia,” it “enjoys the Eleventh Amendment [sovereign] immunity of both Maryland and Virginia as the two state signatories to the WMATA Compact.” This meant it ought to be immune from Hall’s claim.

Eleventh Amendment sovereign immunity shields the states against “any suit in law or equity” brought by their own citizens or citizens of another state. The D.C. Circuit Court of Appeals has “repeatedly” held that the WMATA enjoys this type of immunity. In an exception to this rule, however, suits for equitable relief may be maintained against state officers in their official capacities if the complaints allege an ongoing violation of federal law and seek prospective relief.

Hall attempted to frame her claim as one seeking equitable relief in order to circumvent the WMATA’s sovereign immunity. The court noted her argument failed because she did not name as a defendant any of the WMATA’s officers.

Alternatively, Hall argued that the WMATA waived its sovereign immunity when it received a letter from its third-party administrator (TPA) that referred to the TPA’s disclosure responsibilities under the Employee Retirement Income Security Act (ERISA). In that letter, the TPA advised the WMATA “in a single sentence” it would disclose all information requested by the plan fiduciary or plan administrator in order to comply with ERISA.

The court noted that, although a state or state instrumentality may waive its sovereign immunity, it must make a clear declaration to that effect. The one sentence did not come close to proving a waiver of sovereign immunity, the court held. It was a statement made by the TPA that merely described its obligations under ERISA—which does not apply to the WMATA’s employee benefit plans—and did not even mention COBRA or the PHSA. Accordingly, the court granted summary judgment to the WMATA.

Conclusion

When dealing with alleged COBRA violations subject to the PHSA, the legal analysis is different than it is under ERISA, which addresses legal responsibilities for private employers. The analysis requires a review of the underlying facts (i.e., was there a COBRA violation?), but it also requires a fairly sophisticated analysis of applicable law to determine whether the suit can even be brought.