Compliance October 15, 2010

Court Finds Private School Failed on COBRA Notice Mandate

October 15, 2010 (PLANSPONSOR.com) – A Puerto Rico private school failed in its duty to inform four former employees of their continuing health coverage rights under COBRA, a federal judge has ruled.
Reported by

U.S. District Judge Francisco A. Besosa of the U.S. District Court for the District of Puerto Rico ruled that federal court case law indicated that the employer was responsible for giving new employees their initial COBRA notices when their coverage started and that the school, Academia Sagrado Corazon, had not done so.

Besosa noted that the plan administrator was mandated to give terminated employees their COBRA notices, but that he could not determine legally who the administrator was. Without that information, and without being able to determine whether the administrator had acted in bad faith or with prejudice, Besosa said he could not impose the legally provided fines for not giving out the notice.

The court rebuffed an argument by the school that penalties should not be levied because the employees had not requested the documents from it; Besosa said the law does not require such a request for penalties to be assessed.

The case is Agosto v. Academia Sagrado Corazon, DPR, No. 08-2392-FAB.

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