Appeals Judges Uphold Minimal COBRA Damages

January 23, 2004 ( - A federal appeals court has upheld $2,200 in penalties to the former warehouse manager of a Long Island, New York company because the pipe fabrication firm didn't give him the proper benefits paperwork.

>The US 3 rd Circuit Court of Appeals turned away plaintiff Steven Veneziano’s appeal of a lower court award of just over $1,000 for his company’s having sent Veneziano an inadequate notice of his rights to continuing medical coverage under the Consolidate Omnibus Reconciliation Act of 1985 (COBRA), EBIA reported.

>US District Judge Stephen Orlofsky of the US District Court for the District of New Jersey made the award at the statutory amount of $2 per day. The award was for Veneziano’s former employer, Long Island Pipe Fabrication & Supply only sending a “cursory” cover letter two months after he left the firm in January 1998 about his COBRA coverage rights.

>Orlofsky also awarded Veneziano $5 per day – or just over $1,200 – as a penalty for not getting a copy of the benefit plan’s SPD as he demanded. Veneziano was diagnosed with HIV after leaving the firm. Although his coverage was dropped after his departure, it was eventually reinstated under COBRA, but left him uninsured from June 15, 1998 to August 1, 1998.

>Although Veneziano incurred no unreimbursed medical expenses during this gap in coverage, he nevertheless filed a lawsuit against his former employer, claiming, among other things, statutory damages under ERISA Section 502(c) for failure to provide an adequate COBRA election notice.

>The appeals court upheld Orlofsky’s awards, saying that he had not abused his discretion in determining their amounts.

>In its report, EBIA said proposed COBRA regulations from the US Department of Labor (DoL), likely to become final this year, will probably form the basis for qualified beneficiaries’ claims relating to the inadequacy of COBRA notices.

The case is Veneziano  v. Long Island Pipe Fabrication & Supply, 79 Fed. Appx. 506, 2003 U.S. App. LEXIS 21735 (3d Cir. 2003). A copy of the appeals court ruling is: .