A recent case provides a reminder for plan administrators of the importance of complying with Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) notice obligations and a good excuse to review health plan COBRA procedures.
In Morehouse v. Steak N Shake, Inc., a former employee brought a suit against her former employer after a workplace injury ultimately led to her losing her employer group health plan coverage. Before her injury, the plaintiff paid for her plan coverage by biweekly payroll deductions. Once injured, the plaintiff went on Family and Medical Leave Act (FMLA) leave and started workers’ compensation benefits. She was not provided a COBRA notice when she began leave. Instead, she continued to be covered under the plan and premiums were deducted from her workers’ compensation benefits. Once her workers’ compensation benefits ended, she was unable to pay her premiums and her plan health coverage was cancelled. She was then terminated from employment following the expiration of the FMLA period. After her plan coverage ended, she purchased health insurance to help pay for surgery to address her injury, but still had more than $30,000 in out-of-pocket costs.