Plan Acted in Bad Faith When It Sent COBRA Notice to Wrong Address

April 29, 2016

 

The Western District of Louisiana found that an employer acted in bad faith when it sent a COBRA election notice to an employee’s old address. The employee in question had submitted a change of address form shortly after his termination. Additionally, the employee alleged that he had informed his employer about his address change four years prior to his termination.

 

Under ERISA, plan administrators are required to provide COBRA election notices to qualified beneficiaries. The plan administrator must provide these notices using “[m]easures reasonably calculated to ensure actual receipt of the mail.” Despite the employee telling the employer immediately after the employee’s termination that he had changed addresses, the employer instructed the third party administrator to send the COBRA election notice to his old address.

 

The issue in this case was that there was a breakdown in the internal process of the company for communicating address changes. The internal process failings of the company, however, did not shield it from ERISA liability. This case highlights the importance of plan administrators having procedures in place to ensure that employees’ address are properly updated throughout all internal systems.

 

Newton v. Prator, 2016 WL 698170 (W.D. La. Feb. 18, 2016)

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