Failure to Provide COBRA Notice Results in Penalties Even When Employer Pays the Bills

In Employee Benefits, Employment Law, Healthcare Reform by Coolidge Wall

Regina Honey was pregnant with her second child and experiencing pre-term labor. Her doctor ordered bed rest for about two weeks. When Ms. Honey was ready to return to work at Dignity Health, she was told her employment was terminated. About two months later she was reinstated. However, the pre-term labor returned and her doctor ordered bed rest for the remainder of the pregnancy. Ms. Honey remained on bed rest until her son was born in July 2010.

When the doctor approved her return to work in September 2010, she was never scheduled to return. After several attempts to reach the human resources department, she was told that Dignity Health terminated her employment and benefits retroactively to June 30, 2010. After receiving formal correspondence regarding her termination, Ms. Honey made several attempts to obtain her COBRA notice. Finally, a COBRA notice was issued in December 2010 that covered her and her first child. The notice did not include the newborn.

Ms. Honey was again reinstated in 2011 and as part of the settlement Dignity Health paid her out-of-pocket medical expenses and paid or wrote off her outstanding medical bills for the period of her termination through reinstatement. However, Ms. Honey filed a complaint against Dignity Health claiming it failed to timely provide her COBRA notice.

The court found that the COBRA notice was 168 days late and awarded the children $3,360 each and awarded Ms. Honey $18,480 for the delay. Dignity Health paying the unreimbursed medical expenses did not cure the failure to timely provide the notice.

This case reinforces why employers need to provide timely COBRA notices. Paying the medical expenses does not correct a delinquent notice.

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