The U.S. District Court for the District of New Jersey awarded a plaintiff statutory damages for a health plan administrator’s failure to provide her with a timely COBRA election notice. In this case, the plaintiff’s employment terminated September 30, 2008, yet coverage under her former employer’s health plan was mistakenly continued until the error was discovered in March 2009. Upon discovery of the error, the plan administrator terminated the plaintiff’s coverage retroactively to January 1, 2009. However, the plaintiff was not provided a COBRA election notice until September 3, 2009.
The COBRA regulations provide that, where the plan administrator is the employer, a participant is entitled to a COBRA election notice within 44 days from the date of his or her qualifying event. A qualifying event is an event, such as the termination of employment, which results in a loss of coverage under a group health plan. Based on the date of her termination of employment, the plaintiff was entitled to receive her COBRA election notice by November 13, 2008.
In its decision, the district court awarded the plaintiff statutory damages of $2,930. Although technically a victory for the plaintiff, this case could have been much more costly to the defendant. The statutory damages awarded to the plaintiff equates to only $10 a day for each day the COBRA election notice was late, even though regulations permit a court to award penalties of up to $110 a day. The district court also declined to assess the plan administrator with attorneys’ fees or the cost of medical expenses the plaintiff incurred during the lapse in coverage.
Although the plan administrator was not assessed significant damages, this case should serve as a reminder for plan administrators to provide timely COBRA election notices to terminating employees, including in situations where their coverage is mistakenly continued for a period of time. (Fama v. Design Assistance Corp., D.N.J. 2012)