A proposed class action claims the health plan administrator for subscription box service Loot Crate Inc. failed to provide former workers with COBRA notices that complied with federal law. According to the case, defendant PayPro, USA, Inc. supplied workers with a deficient notice that detailed “only part of the legally required information,” which the plaintiff alleges caused her to lose health insurance coverage.
The lawsuit explains that under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the plan sponsor of a group health plan is required to inform employees who experience certain “qualifying events”—such as termination—of their right to continued health coverage. The case stresses that although the U.S. Department of Labor has made available a model COBRA notice that contains the required information “in a manner calculated to be understood by the average plan participant,” the defendant, who does business as PayPro Administrators, issued a COBRA notice that contained various deficiencies.
The plaintiff, who was terminated from her job with Loot Crate in August 2019, alleges that she received a COBRA notice from PayPro dated August 26, 2019 that failed to include:
The amount that each beneficiary would be required to pay for continued coverage;
The consequences of delayed payment;
“All required explanatory information,” such as an explanation that a qualified beneficiary’s decision whether to elect continued coverage would affect future health coverage rights, and where to find more information; and
A description of the qualified beneficiaries who are entitled to continuation coverage.
According to the case, proper COBRA notice is of “enormous importance” as it could affect proposed class members’ access to health insurance coverage. The lawsuit alleges that because the defendant failed to provide a COBRA notice that was “written in a manner calculated to be understood by the average plan participant,” the plaintiff misunderstood the requirements under COBRA and unknowingly forfeited health insurance coverage for her three dependents.
More specifically, the case alleges that ProPay’s notice failed to include the premium amounts for the plaintiff’s beneficiaries, stating only a monthly premium amount of $607.13. This reasonably caused the woman to believe that paying the stated premium would provide coverage for her family, according to the suit.
Only after incurring various medical bills did the plaintiff discover that her health insurance coverage did not extend to her beneficiaries, the case says. Four months after sending the initial COBRA notice, ProPay attempted “to cure the missing and inaccurate information” by sending another notice dated December 5, 2019 that stated the plaintiff owed another $4,049.26 for continuation coverage, according to the complaint. The lawsuit alleges that the defendant “cannot cure its first form’s deficiencies with a ‘follow up’ form” and is liable for the injuries caused to the plaintiff as a result of its misinformation. The plaintiff says she ultimately lost insurance coverage after being unable to pay the “sudden and significant expense” demanded by the defendant.