Class Action Claims Amazon Corporate Sent Unlawful COBRA Notices Aimed at Discouraging Insurance Coverage Continuation

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A proposed class action lawsuit has been filed in Florida over a number of alleged deficiencies with the right to continued health insurance coverage notices sent by Amazon Corporate, LLC.

The 18-page lawsuit alleges the notices sent by the defendant, who is the sponsor and administrator of the Amazon Group Health & Welfare Plan, fell short of a number of obligations set by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the law that allows for an employee’s health coverage to continue upon termination of employment or another qualifying event. In fact, the United States Department of Labor has issued a model COBRA notice meant to be used by plan administrators when considering whether their own notices are compliant with the stringent informational and explanatory criteria set by the law, per the suit.

As the plaintiff tells it, Amazon Corporate declined to use the government’s model COBRA notice. Instead, the defendant put together a notice that left out critical, legally required information and “needlessly included language meant to deter and otherwise ‘chill’” the election of COBRA benefits, the lawsuit alleges.

“Defendant’s COBRA notice confused [the] Plaintiff, and resulted in his inability to make an informed decision as to electing COBRA continuation coverage,” the case claims, alleging that as a result of the deficient notice, the plaintiff did not elect to continue his health insurance coverage. 

The case claims Amazon Corporate’s COBRA notices have failed to meet the legal standard in that, for one, they were not written in a manner calculated to be understood by the average plan participant. According to the suit, the defendant included an “ominous warning” in its COBRA notices indicating that incomplete information when electing to continue health insurance coverage could result in civil or criminal penalties in an attempt to “scare individuals away from electing COBRA." 

In line with this, the lawsuit further claims the defendant’s COBRA notices “needlessly” reference a potential $50 penalty from the IRS for failing to provide an accurate tax ID number. The plaintiff argues that this information was thrown into Amazon Corporate’s COBRA notices “without context, much less with an explanation of why potential criminal penalties, or IRS penalties” are relevant to the COBRA process. 

“Threats of criminal penalties and IRS fines simply have no place in a COBRA election notice, a process which is supposed to facilitate COBRA coverage election rather than intimidating people into not electing coverage,” the complaint reads. 

Moreover, the defendant’s COBRA coverage notice also contained conflicting information with regard to the date by which the continuation of coverage form is actually due and failed to sufficiently identify the plan’s administrator, the lawsuit claims.