All along, employers have come to believe that they must issue a written Election Notice to COBRA-eligible employees to let them know their rights under the law. But apparently, that’s not the case at all.
The U.S. District Court for the Northern District of Illinois just ruled in a lawsuit filed by a terminated worker against her former employer that:
the [COBRA] statute does not specify the form the [Election] notice must take.
This ruling is sure to open more than a few eyes nationwide.
Fired after ADA accommodation request
Here’s a brief rundown of what happened.
Elisa Madonia was a customer service representative for real estate management firm S 37 Management, Inc. when she was diagnosed with stage III esophageal cancer.
Madonia requested that her employer allow her to work a four-day workweek while she underwent chemotherapy and radiation treatment. Madonia requested she be granted this flexibility as a reasonable accommodation under the Americans with Disabilities Act (ADA).
The employer refused her accommodation request and terminated her.
Following her termination, S 37 Management presented Madonia with a separation agreement, which would release the employer from all of Madonia’s employment-related legal claims in exchange for the company paying all of her COBRA premiums.
At that time, Madonia was told her insurance coverage would be cancelled if a check for her premiums wasn’t immediately tendered to the insurer. Madonia apparently paid the premiums herself to keep her coverage from lapsing, as the court noted she refused to sign the agreement but “accepted her right to continue her medical coverage.”
She then sued S 37 Management claiming, among other ADA allegations (we’ll get to those in a minute), the employer failed to provide her with a COBRA Election Notice.
Verbally notified of COBRA rights
The company fought to get all of Madonia’s claims dismissed, and it was successful in doing so.
When it came to her COBRA claims, the court ruled she had two things working against her:
- S 37 Management verbally notified her of her rights to continue her insurance coverage under the COBRA statute, which fulfilled the company’s notice requirements under the law, and
- One of the qualifying events that triggers the need to provide the COBRA Election Notice is the loss of insurance coverage, which never actually occurred because Madonia paid the premiums to keep her coverage. Therefore, the employer was never actually required to provide the notice.
The first point, however, is obviously the big kahuna for employers.
Following the ruling, we here at HR Morning did a double-take ourselves. But sure enough, a review of the Department of Labor’s (DOL) COBRA guidance confirmed it: Nowhere does the guidance actually say the COBRA Election Notice must be provided in written form.
Here’s the relevant portion of the DOL’s guidance:
COBRA Election Notice – After receiving a notice of a qualifying event, the plan must provide the qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.
The election notice should include:
- The name of the plan and the name, address, and telephone number of the plan’s COBRA administrator;
- Identification of the qualifying event;
- Identification of the qualified beneficiaries (by name or by status);
- An explanation of the qualified beneficiaries’ right to elect continuation coverage;
- The date coverage will terminate (or has terminated) if continuation coverage is not elected;
- How to elect continuation coverage;
- What will happen if continuation coverage isn’t elected or is waived;
- What continuation coverage is available, for how long, and (if it is for less than 36 months), how it can be extended for disability or second qualifying events;
- How continuation coverage might terminate early;
- Premium payment requirements, including due dates and grace periods;
- A statement of the importance of keeping the plan administrator informed of the addresses of qualified beneficiaries; and
- A statement that the election notice does not fully describe COBRA or the plan and that more information is available from the plan administrator and in the SPD.
The Department has developed a model election notice that plans may use to satisfy their obligation to provide the election notice. The model election notice is available on the EBSA Web site. In order to use this model election notice properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information. Use of the model election notice, appropriately completed, will be considered by the Department to be good faith compliance with the election notice content requirements of COBRA.
Now, of course, it would be hard to provide all of the info the DOL lists in its guidance verbally. But it can be done — and apparently, that’s acceptable.
Unfortunately, the court in this case didn’t dive into what exactly Madonia was told when S 37 Management satisfied the COBRA notice requirement.
Other COBRA regs not discussed
The court also appears to have overlooked two other important requirements under COBRA in this case:
- the need for employers to give a qualified beneficiary at least a 60-day election period, and
- the fact that employees must be given 45-days to pay the initial COBRA premium after they’ve elected COBRA coverage.
Perhaps the court felt none of these factors were relevant given that it had determined no COBRA qualifying event had actually taken place.
The ADA claims
Now let’s get to Madonia’s ADA allegations.
She claimed she was illegally terminated and was a victim of disability discrimination because S 37 Management failed to accommodate her disability under the ADA.
The court, however, threw her ADA claims out, saying she failed to prove that she was an individual qualified to receive the ADA’s protections.
It said to be a qualified individual under the ADA, Madonia had to show that she had a disability and that she could perform the essential functions of her job with or without a reasonable accommodation.
While there was no doubt she had a disability, the court ruled she failed to show she could perform the essential functions of her job under the four-day workweek she requested.
Cite: Madonia v. S 37 Management, Inc.