Do Your COBRA Notices Comply with the Law? If Not, Your Organization Could be Susceptible to a Class Action Lawsuit

Pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), employers with twenty (20) or more employees that provide health insurance must furnish covered employees and their families with certain specific notices that summarize their rights under COBRA after certain events such as termination of employment.  The notices must explain how continuation coverage is offered, how qualified beneficiaries may elect such coverage, and when such coverage can be terminated.

Last month, a federal court held that Marriott International, Inc. must defend a proposed class action lawsuit alleging that the hotel chain provided its employees with deficient COBRA notices of their rights to continued healthcare coverage in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended by COBRA.  In Vazquez v. Marriott International, Inc., the United States District Court for the Middle District of Florida dismissed Marriott’s motion to dismiss a complaint filed by former housekeeper Alina Vazquez (individually and on behalf of all others similarly situated to her) on the grounds that it was premature to determine whether Marriott’s contention that the former employee’s loss of healthcare coverage was attributable to the fact that she could not afford it, as opposed to any deficiency in the COBRA notice.

In her complaint, Ms. Vazquez alleges that Marriott’s COBRA notice violated the law because it failed to:

  1. provide a notice of continued healthcare coverage rights under COBRA in Spanish;
  2. adequately explain the procedures to elect healthcare coverage; and
  3. provide a notice that an average participant would understand.

According to Ms. Vazquez, as a result of Marriott’s deficient COBRA notice, both she and her husband lost their healthcare coverage for approximately two months, incurred significant medical expenses, and now have medical bills that remain unpaid.

Marriott is just the latest employer to be faced with class action suits claiming they failed to comply with COBRA’s notice requirements.  Other companies, including Wal-Mart, SunTrust Banks, and American Bottling Company have also faced similar suits.  In 2016, SunTrust Banks agreed to pay almost $290,000 to settle class action claims that it provided defective COBRA notices to its employees.

In light of these recent cases, employers are well advised to have their COBRA notices reviewed to ensure they comply with the law.

If you would like any assistance in reviewing and, if necessary, revising your COBRA notices, please contact any of the attorneys within the Labor, Employment & Employee Benefits Group.

About Corey Higgins

Corey is an member of the firm's Labor, Employment and Employee Benefits Group. He represents both private- and public-sector employers. His practice covers all areas of labor and employment law, including unfair labor practices, labor arbitration, employment discrimination, non-competition and non-disclosure agreements, unemployment appeals and various other employment-related issues. Corey also routinely counsels employers about the application of various Massachusetts and federal employment laws, including the Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), the Worker Adjustment and Retraining Notification Act (WARN), the Massachusetts Plant Closing Law, the Massachusetts Independent Contractor law, and other Massachusetts wage and hour laws.
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