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Solid Recordkeeping Charms Court in COBRA Case

Picture this: You terminated an employee, and mailed him or her a COBRA election notice, but the notice apparently got lost in the mail. Now your ex-employee is suing you for failing to inform him or her of their COBRA continuation rights. Is there anything you can do to prove a COBRA notice was sent to them?

According to a recent court case, the answer is yes – provided you’re diligent about recordkeeping.

Solid Evidence

In DeBene v. BayCare Health System, Inc. (11th Cir. May 31, 2017), Paul DeBene alleged that his former employer, BayCare, had not provided him with the necessary COBRA election notice after his employment terminated. He even called BayCare to inquire about his COBRA continuation rights and mistakenly was told he was not eligible because the benefits specialist he spoke to misread a code in the computer system.

Nevertheless, BayCare prevailed in the lower court and on appeal because it was able to produce solid evidence of its practices in sending out COBRA notices, and how they were followed with respect to DeBene. Specifically, they were able to show that DeBene was coded into BayCare’s database as COBRA-eligible, that this information was transferred to BayCare’s COBRA administrator in a timely manner, and that a COBRA election notice was generated for DeBene. They also were able to produce a copy of the actual notice that was sent to him. Additionally, they provided evidence that other recipients of notices mailed the same day as DeBene’s were able to elect coverage successfully and that none of them had reported not receiving their respective notices.

These pieces of evidence were enough to show that the employer had fulfilled its obligation to send a notice to DeBene in a manner “reasonably calculated” to ensure actual receipt. That the plaintiff did not receive the paper notification was immaterial as to whether BayCare had satisfied its obligations to send a COBRA notice.

In Good Faith

The court contrasted BayCare’s actions with those of an employer in an earlier case, where the employer had provided its third party administrator (TPA) with the necessary information to send a COBRA election notice to a former employee, and instructed the TPA to send the COBRA notice. However, the employer produced no evidence showing the TPA actually had done so.

The court held that an employer can comply with the statute if they sent a COBRA notice “in a good faith manner reasonably calculated to reach” the former employee. On the other hand, the employer could not be found to be acting in good faith by simply hiring an agent and then instructing the agent to send notice, “where there is no evidence that the agent sent out a notice” to the former employee. By contrast, BayCare was able to show not only that it notified its TPA, but also was able to provide evidence that a notice was actually sent to DeBene, fulfilling BayCare’s obligations under the statute.

Proof and Procedures

The comment from the benefits specialist who mistakenly told DeBene he was not eligible for COBRA was irrelevant, the court ruled, as her mistaken belief had no bearing on whether or not the COBRA election notice actually was sent. Here, the proof of the COBRA notice generation and mailing procedures – and evidence that they procedures were followed with regard to DeBene specifically – were enough for BayCare to prevail against the claim that it had not provided notice of COBRA continuation coverage rights.

Paycom’s COBRA Administration Services can aid compliance by handling some of the daily COBRA administrative and recordkeeping burdens. Once a qualifying event occurs and is entered into our system, just click “Generate COBRA Notice” and we take it from there! Paycom’s COBRA team maintains diligent records of each notice sent by providing:

  • a copy of the COBRA notice
  • a record of the date it was generated
  • a record of the date it was mailed
  • a copy of the post-office stamped certificate of mailing

Together, these documents and records detail the complete history of each COBRA notice sent, Paycom can help provide evidence that a COBRA notice was sent, should you ever face a situation like the employer in this case.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.