Citigroup Denial of COBRA to Resigned Employee Upheld by Court

June 26, 2009 (PLANSPONSOR.com) - The U.S. District Court for the Western District of New York has agreed with Citigroup's decision not to continue COBRA medical coverage for an employee who resigned as part of a worker's compensation settlement agreement.

The court noted that the terms of the settlement agreement between Kathleen Dobson and Travelers Insurance Company, a subsidiary of Citigroup at the time, provide that Dobson would resign from her employment in exchange for a payment of $125,000. In granting summary judgment to Citigroup, the court agreed with its contention that Dobson “surrendered all benefits attendant to her former employment with the Travelers.”

The medical plan did provide for “continuing coverage” for employees that were terminated and disabled, but Citigroup said it denied Dobson’s request for benefits because she did not meet the criteria for being considered disabled – records did not indicate that she was out on either short term or long term disability or that she was in disability status at the time of her resignation.

The court rejected Dobson’s argument that she was effectively terminated from her employment prior to the October 26, 2001, effective date of the settlement agreement, as she was informed that upon the exhaustion of all of her vacation and other leave time, her employment position would not be held open for her and that her employment would be terminated. However, the court noted that Dobson failed to submit an affidavit in opposition to Citigroup’s motion for summary judgment offering evidence of her argument.

Based on the admissible evidence, the court found that consistent with the terms of the settlement agreement, Dobson resigned her employment with Travelers.

The case isDobson v. Citigroup Inc.,W.D.N.Y., No. 03-CV-0680.

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