Brooklyn Bedding LLC sent to qualifying employees “deficient” COBRA notices that failed to properly explain their right to continued health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a proposed class action alleges.
Per the 15-page complaint, the notices were not “written in a manner calculated to be understood by the average plan participant” and included only part of the legally required information. Moreover, the documents failed to state, for example, an address to which payments could be sent, the plan administrator’s identity, and how coverage could be lost prematurely, according to the lawsuit.
“Simply put, Defendant’s COBRA notice and process violates the law,” the complaint scathes, alleging that qualifying former employees have suffered both economic and informational injury due to the mattress maker’s conduct.
The plaintiff, a former Brooklyn Bedding worker who was terminated for reasons other than gross misconduct, claims the defendant’s COBRA notice “both confused and misled” him to the extent that he lost health insurance and incurred medical bills.
Group health plan administrators such as Brooklyn Bedding must send proper COBRA notices to plan participants and beneficiaries who lose coverage as a result of a qualifying event, such as termination, the lawsuit explains. As the case tells it, proper COBRA notice is “of enormous importance” given employees are not expected to know instinctively of their right to continued health insurance coverage.
Although the Department of Labor has issued a model COBRA form to facilitate compliance, the defendant only “partially adhered to” the model notice, the lawsuit alleges. The complaint charges the defendant’s COBRA notices served the company’s best interest in that “critical parts” of the form were omitted or altered.
According to the suit, the defendant failed to include in its COBRA notices:
An explanation of how to enroll in COBRA and a physical election form;
The amount each qualified beneficiary is required to pay for coverage;
An address to which payments can be mailed as well as the consequences, if any, of delayed payment;
A description of qualified beneficiaries who are recognized by the plan as being entitled to continuation coverage;
An identification of the qualifying event;
A description of the circumstances under which the maximum period of coverage may be extended;
An explanation of the importance of providing a current address to the plan administrator; and
An explanation of the consequences of failing to elect or waive coverage.
In all, the lawsuit claims Brooklyn Bedding failed to provide “all required explanatory information” and therefore failed to provide notice “written in a manner calculated to be understood by the average plan participant”—both requirements under the federal Employee Retirement Income Security Act of 1974 (ERISA) as amended by COBRA.
The plaintiff claims the defendant’s deficient notice resulted in his inability to make an informed decision as to whether to elect COBRA coverage. In fact, because of the lack of information, the case says, the plaintiff was unable to elect COBRA coverage and lost health insurance as a result.
The plaintiff looks to represent all participants and beneficiaries in the defendant’s insurance plan who, during the applicable statute of limitations period, were sent a COBRA notice by the Brooklyn Bedding as a result of a qualifying event and did not elect continuation coverage.
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