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Case Highlights Importance of Adequate Cobra Notice Procedures

The method of delivering required COBRA notices is always a popular topic among plan administrators. COBRA contains no specific requirements as to the manner in which notice must be given. Generally, however, the plan administrator’s good faith effort to notify the participant, by mailing a notice to the participant’s last known address, is sufficient. A new case issued by a federal district court in New York provides additional guidance on the procedures necessary for a plan administrator to adequately establish a presumption that such a notice was sent. 

In Tufano v. Riegel Transp., Inc., an employee was terminated and his health coverage under the employer’s plan ended. Approximately six months after his employment terminated, the employee was diagnosed with a gall bladder condition that required surgery. The employee sued his former employer stating that the employer failed to provide him with the required COBRA election notice. The employer claimed that it had mailed the required COBRA notice to the employee’s last known address. 

The court held in favor of the employee because the employer provided insufficient proof that the employer mailed the required COBRA notice to the employee. The employer could neither prove that it had actually mailed the COBRA notice to the employee, nor could it establish a presumption that the COBRA notice was mailed to the employee. The company employee who was responsible for mailing COBRA notices was not able to specifically identify what documents were distributed or the means by which they were given to employees. The company did not maintain written office procedures regarding how to inform health plan participants of their COBRA rights or any written procedures for the general handling of office documents. Additionally, the plan’s records did not contain evidence that the COBRA notice was actually mailed, such as a post office certificate of mailing evidencing that the COBRA notice was sent. Although the company retained a “file copy” of the COBRA notice that was allegedly sent to the employee, the copy was not signed and had no indication of having been mailed. 

The court ruled that the employer’s practices did not create a “presumption of mailing.” A presumption can be established either by (1) the testimony of the person that mailed the COBRA notice or (2) evidence that the COBRA notice was sent pursuant to office procedures. In this case, the employer’s informal, unwritten COBRA notice practices were not geared so as to ensure the likelihood that a notice was always properly addressed and mailed. Thus, the employer failed to establish a presumption that the notice was actually mailed. 

This case illustrates the importance of having written COBRA administration procedures that are consistently followed. Such procedures might dictate, for example, that COBRA notices be mailed using first-class, certified or registered mail and that a copy of the signed COBRA notice, with evidence of mailing, be maintained in the plan’s records.