Class Action Filed Over PepsiCo COBRA Notices Lands in New York District Court

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A lawsuit recently transferred to New York federal court claims PepsiCo, Inc. violated the Employee Retirement Income Security Act of 1974 (ERISA) by sending insufficient COBRA notices to former health plan participants.

The suit explains that companies like PepsiCo are required to notify health plan participants and their beneficiaries of their option to continue health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) upon the occurrence of a “qualifying event” that terminates their previous health coverage under the plan.

One of the plaintiffs claims, however, that neither he nor his wife was sent sufficient COBRA notice as required by law upon his termination from the company in January 2018. The defendant’s COBRA notification process is flawed, the case argues, in that it only offers some of the legally required information, and does so “in a piece-meal fashion.” In particular, the lawsuit claims PepsiCo’s initial “COBRA Continuation Coverage Enrollment Notice” fails its primary obligation to explain how former plan participants can enroll in continued health coverage.

“Instead,” the complaint states, “Defendant’s COBRA enrollment notice merely directs plan participants to a ‘catch-all’ general H.R. phone number to enroll in COBRA, operated by a third-party guised as Pepsi’s HR call-in center, rather than explaining how to actually enroll in COBRA. But the COBRA notice contains no instructions on how to actually enroll if one calls the phone number.”

Moreover, the notice allegedly contains no address to which COBRA payments must be mailed, nor identifies the plan administrator, and fails to explain that coverage can be lost prematurely by, for example, submitting late payments.

“Without information on how to elect COBRA, or where to send payments, or who is the Plan Administrator, or what happens if timely payments are not made, Defendant’s COBRA enrollment notice simply is not written in a manner calculated to be understood by the average plan participant,” the complaint states.

Following the initial notice, the plaintiffs claim PepsiCo then sent them a second letter titled “Important Information About Your COBRA Continuation Coverage.” Though this notice did contain some of the details missing from the first notice, it failed to cover “all required explanatory information,” the case says.

The defendant’s conduct, the lawsuit claims, has left former plan members such as the plaintiffs without valuable health insurance coverage, which has cost them significant financial injury in the form of medical bills they were forced to pay out-of-pocket.