A recent $1.25 million settlement agreement highlights the importance of providing compliant notices under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).
Angela Hicks filed a class action complaint against her husband’s former employer, Lockheed Martin Corporation, alleging Lockheed failed to provide compliant COBRA notices. Hicks sought to represent a class of current and former participants and beneficiaries of Lockheed’s health plan.
On behalf of the class, she claimed that the notices received after a “qualifying event” did not identify the plan administrator, failed to include an address indicating where COBRA payments should be mailed, and failed to include a termination date for COBRA coverage if elected.
Since her husband’s termination was considered a “qualifying event” as defined by the statute, Hicks was entitled to adequate notice under COBRA of the right to continue their health coverage before deciding to obtain health insurance through her employer.
Hicks asked Lockheed to distribute proper COBRA notices to the proposed class members and pay the statutory penalties of $110 to each plan participant and beneficiary for each day of non-compliance.
Lockheed has agreed to settle the lawsuit “solely to purchase peace and in recognition of the substantial expense and burden of continued litigation,” according to the agreement.
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