Do your COBRA notices include this? Missing info costs employer $290K
This employer thought its COBRA notices fulfilled its legal obligations. But this recent legal spat revealed two areas employers have to double-check.
A class action lawsuit was filed against SunTrust Banks, claiming the financial institution provided individuals with a deficient COBRA notice.
Specifically, the lawsuit claims SunTrust’s COBRA notice as deficient in two ways:
- it failed to provide the name and address of the party responsible for administering its COBRA plan, and
- it failed to adequately provide an explanation of the plan’s COBRA election process.
Instead, what the notice did was direct recipients to a general HR website and phone number.
And providing just an address and phone number wasn’t adequate enough for SunTrust to get the class action lawsuit dismissed, which it attempted to do.
Corrective measures
After it’s attempts to get the lawsuit tossed failed, SunTrust agreed to settle the dispute.
Under the settlement, SunTrust has agreed to:
- create a settlement fund worth $290,000, which will be used to compensate class members (approximately 9,000 individuals) and pay their attorney’s fees (which the attorneys have agreed to cap at $110,000)
- specifically identify on its COBRA notice the party responsible for administration of its plan’s continuation coverage benefits
- specifically identify on its notice the exact website address where information regarding COBRA coverage and a COBRA election notice can be found, and
- provide an alternative means to obtain a COBRA election form and specifically spell out that a COBRA coverage election form will be mailed out to individuals upon request.
Takeaway for employers: If your COBRA notices don’t spell out who your COBRA administrator is and how to contact it, as well as exactly how to elect COBRA coverage and request an election form, you’ll want to amend your notices ASAP.
