A federal Appeals Court has ruled that a COBRA notice to a terminated employee was effective even though it was mailed to an incorrect address and the employee never received it.
Mirelle Vangas was terminated from her job at Montefiore Medical Center in the Bronx, NY, after she was unable to return to work from her FMLA leave. The employer intended to mail her COBRA notice to her home address in the town of Cornwall–on–Hudson but the mailing listed the town as “Cornwallonhuds.”
Testimony from the court case indicated that the abbreviation occurred because of a character limit in the “town” field in the electronic system used to communicate employee data to the third party administrator. The envelope did, however, contain the correct zip code, which was the only one that the town used.
The Notice is in the Mail…Somewhere
Vangas never received the notice in the mail. Therefore, when she sued the employer for disability discrimination (arising out of her termination), she included a claim for failure to provide her with proper notice of her rights under COBRA.
COBRA (the well-known acronym for the Consolidated Omnibus Budget Reconciliation Act) requires that employers notify terminated employees of the right to elect continuing health coverage under the employer’s group health plan but does not specify how the notice is to be given. Courts generally conclude that employers satisfy their obligation if notice is sent by “means reasonably calculated to reach the recipient.”
Failure to give the COBRA notice allows the departing employee to claim coverage through the date that they receive a valid notice, plus a 60-day period to elect COBRA after that new notice. A participant, a participant’s spouse and a participants dependents may each also seek statutory penalties of up to $110 per day for failing to provide a proper COBRA election notice.
Court Delivers Good News to Employer
In this case, the court ruled that the notice was indeed reasonably calculated to reach Vangas despite the abbreviated town name. For one thing, the employer maintained a standard procedure to ensure that notices are properly mailed and they followed that procedure in this instance. In addition, the incorrect abbreviation should not have been a real impediment to her receipt of the notice since, as Vangas acknowledged, she had received similarly addressed mail in the past, some of which didn’t even contain the correct zip code.
In short, the employer made a good faith attempt to mail the notice to Vangas. As such, the Appeals Court affirmed the dismissal of the claim.
Bottom Line
This case underscores that employers do not have an absolute duty to insure that terminated employees receive COBRA notices. Instead, they have a duty to undertake a good faith effort to make sure that the notice is sent. This requires having good procedures in place for the issuance of the notices and a method for evaluating whether the procedures are working effectively.