Benefits and Compensation, HR Management & Compliance

Former Employees Can’t Sue Employers Under Utah’s Mini-COBRA Statute

In Greek mythology, Panacea was the goddess of universal remedy. She supposedly had a potion of herbs to cure almost any ailment. From the fabled goddess, the English language has adopted the word “panacea” to mean a cure-all or solution to all problems. Often, filing a lawsuit is seen as the way to get all problems in society resolved. In the employment context, employees often see court as the way to get the remedy to their employment difficulties. A cure from a court isn’t always available, however, as a former employee recently found in a case about Utah’s mini-COBRA statute.

What Utah Law Says

Most employers are familiar with the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA. It generally requires employers to provide continued health insurance or other benefits under a group health plan to employees who would otherwise lose them because of a job loss or other transitions. COBRA applies, however, only when an employer has at least 20 full-time employees.

Many states have enacted laws to cover individuals who work for employers with fewer than 20 employees. The laws are typically referred to as “mini-COBRA” laws. Utah has enacted its own statute, codified at Utah Code Section 31A-22-722. Under the statute, an employee covered by a group health policy typically has the right to continued coverage for a period of 12 months after the termination of the coverage.

Section 31A-22-722(3)(a) requires employers to notify terminated employees of their rights under Utah’s mini-COBRA law. The purpose is to advise them of the right to extend group coverage and the payment requirements. The notice must be sent via first class mail within 30 days after the group coverage’s termination date.

Firm Accused of Failing to Give Notice

Calindy Hayden was an employee of Burk & Payne, P.C. (B&P) from February 2018 until July 2018. During the stint, she participated in B&P’s group insurance plan. The employer terminated her in July 2018, which also ended her health insurance benefits. Under Utah’s mini-COBRA statute, however, she was eligible for continued coverage.

A few months after the termination, Hayden had emergency gallbladder surgery. Because she was uninsured at the time, she incurred around $60,000 in medical bills.

Hayden then filed a lawsuit against B&P to recover her medical bills. She claimed the company failed to provide her with the required notice of her right to continue group health benefits under Utah’s mini-COBRA law within 30 days. She asked for her medical expenses, attorneys’ fees, and litigation costs.

Lawsuit Dismissed by District Court

B&P promptly asked the court to dismiss Hayden’s lawsuit, arguing she had no right to sue under the Utah mini-COBRA statute and specifically stating:

  • The state statute didn’t explicitly provide for a right to sue; and
  • There’s no implied claim for relief under the statute.

Essentially, a private right to sue is when a private individual has the right to file a lawsuit for relief from an injury caused by another’s violation of a statute.

The district court agreed with B&P, concluding the mini-COBRA law contains no private right to sue. The judge specifically noted “looking at the language of the statute, the entire chapter as well as this particular [s]ection, 722, that there is not an implied cause of action.” The court noted the Utah Legislature could have explicitly created a private right to sue in the statute (as found in the federal COBRA law) if the lawmakers had intended for such a right to exist.

Court of Appeals Sides with Employer, too

In her appeal to the Utah Court of Appeals, Hayden conceded the mini-COBRA statute doesn’t expressly create a private right to sue. But she argued the district court should have inferred a private claim. She specifically noted if consequences don’t “flow from” a failure to comply with the statute, then the notice requirement “has no meaning.”

The court of appeals nevertheless ruled for B&P and affirmed the district court’s ruling. The appellate court pointed out courts typically won’t recognize private rights to sue if there’s no evidence the option was intended. They are particularly reluctant to “infer” a right from a statute that doesn’t explicitly provide for such a right to sue.

In Hayden’s case, the court determined the statute’s “plain language . . . contains no express indication that the legislature intended to create a private right of action against an employer” for failing to comply with the Utah mini-COBRA law. The court also was unwilling to infer a right to sue under the statute. Accordingly, it affirmed the dismissal. In short, the former employee has no remedy under the statute against B&P.

Bottom Line

There are really two takeaways from the Hayden ruling. First, employees have no private right to sue their former employers for failing to comply with the Utah mini-COBRA statute’s notice requirement. Second, when statutes don’t explicitly provide for a right to sue, the state’s courts aren’t likely to infer such a right without some evidence the legislature intended to create it.

You’d be wise to consult with legal counsel to determine whether the legislature has created a right to sue under various state employment laws that current or former employees may use as the claimed basis for a lawsuit.

Ryan B. Frazier is an attorney with Kirton McConkie in Salt Lake City. You can reach him at rfrazier@kmclaw.com.