COBRA is an acronym for the Consolidated Omnibus Reconciliation Act. That title really doesn't help explain what it is about. Suffice it to say that COBRA is about the continuation of group health plan coverage after certain qualifying events, such as termination of employment or reduced hours. There are some basic statutory elements that have to be met for it to apply. If it does apply, and there was a violation of COBRA rights, a court can award equitable relief in connection with the violation as well as exercise discretion to award a statutory penalty up to $110 per day.

 Here are the basic elements that make up a COBRA case:

1. First, the violation must involve a business that offers group health insurance and has over 20 employees. 29 U.S.C.S. § 1161 says “COBRA shall not apply to any group health plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year.” Thus, for many small employers there is no COBRA right involved. For smaller employers, however, the policy may allow some conversion to an independent single policy, but there is no extension of coverage right.
2. Second, there must be a qualifying event, such as termination of employment (but not for “such employee's gross misconduct”) or reduced hours. 29 U.S.C.S. § 1163 also provides a few other examples of qualifying events, such as death, divorce/legal separation, dependent child ceasing dependency, a covered employee's entitlement to benefits under title XVIII of the Social Security Act, and the employer filing bankruptcy under Title 11, after employee retired.
3. Third, failure by the plan administrator to provide proper notice of the right to continuation of health coverage. This must occur within 14 days after the employer learns of the qualifying event. There is an obligation imposed on the covered employee or beneficiary to provide the employer notice of a qualifying event (such as divorce or legal separation and a few other matters not evident otherwise).  That must occur within 60 days of that event and then the 14 days starts. For employers who terminate an employee or reduce hours causing loss of health coverage, the administrator must be notified of the qualifying event within 30 days. Then the 14 days starts. Multiemployer plans may get longer if the plan provides more time.
4. Fourth, prejudice to the person losing insurance is not required, but then you have to keep in mind that it is discretionary with the judge as to how much the penalty will be. Therefore, the more prejudice is demonstrated the better. For example, large unpaid medical bills or the failure to receive critical treatment, or retroactive termination of benefits may give a judge cause to award more in penalties.
5. Fifth, there is a time limit to file. COBRA does not provide a limitations period, so courts borrow an analogous state provision. See, Harrison v. Digital Health Plan, 183 F.3d 1235 (11th Cir. 1999) where one year was accepted for Georgia plaintiffs due to a statute that limited penalty actions to 1 year.  Alabama lacks the same statute so there is an argument for a longer statute of perhaps two years. Musick v. Goodyear Tire & Rubber Co., 81 F.3d 136 (11th Cir. 1996) borrowed two years for an ERISA breach of fiduciary duty claim which borrowed state law.  The limitation starts under Cummings v. Wash. Mut., 650 F.3d 1386, 1391 (11th Cir. 2011) “… when the plaintiff either knows or should know the facts necessary to bring an improper-notice claim: specifically, that his former employer has failed to provide him with the required notice of his continuation right.”

 Filing a COBRA penalty claim alone without significant prejudice can be very risky for counsel to be paid as it is also discretionary with the court to award penalties, whether to award attorney's fees and the amount of fees. Accordingly, such claims may be best handled if much prejudice is shown or if grouped with other claims.  Or perhaps there is a class-action opportunity.

 A recent case (a COBRA class action) noted that it is important not only for COBRA notice to be provided but it also must be written so that it is understandable and does not contain false or misleading information.

 In Blessinger v. Wells Fargo & Co., No. 8:22-cv-1029-TPB-SPF, 2024 U.S. Dist. LEXIS 143073, at *3 (M.D. Fla. Aug. 12, 2024) a COBRA notice was provided to participants and beneficiaries experiencing a qualifying event, but it wasn't written in a manner calculated to be understood and it contained false and misleading threats of criminal penalties and fines. As a result, the notice discouraged many participants and beneficiaries from seeking the coverage, and many incurred out-of-pocket medical expenses. A one count class-action complaint was filed on this very issue. The class was certified, and the matter was eventually resolved by settlement.

The court recognized that the goals of COBRA were to promote access to health insurance by recently terminated people or others experiencing a qualifying event. The court recognized that the trend is for most hospitals to refuse many forms of treatment without health insurance coverage. The result was that the court approved the $1 million settlement with fees of 30% coming out of that settlement to counsel. Good luck!