Compliance May 12, 2005

Court Refuses Dismissal of COBRA Suit

May 12, 2005 (PLANSPONSOR.com) - A federal judge has refused to throw out a fuel delivery driver's lawsuit under the Consolidated Omnibus Budget Reconciliation Act (COBRA), because it was not clear whether the case qualified for the law's "gross misconduct" exemption.

Reported by

Fred Schneyer

>US District Judge John Tunheim of the US District Court for the District of Minnesota said there were still questions about whether the actions of plaintiff Lloyd Rengo, a driver for Lakehead Oil Co., qualified for an exemption to COBRA’s requirements that departing workers be allowed to continue their health coverage. COBRA covers workers who lose their medical insurance “as a result of a qualifying event.” Being fired for reasons other than “gross misconduct” represents such an event, according to Tunheim.

>After being fired, Rengo sued Lakehead over his allegations of COBRA violations, saying that he never received the required notices and paperwork to allow him to continue his coverage under Lakehead’s plan despite several requests. The company contended that it had mailed the forms with Rengo’s final paycheck and, after not receiving a response, cut off Rengo’s coverage.

>According to Tunheim’s ruling, Rengo’s dispute with his former employer centers around the events of October 6, 2001 when, according to the court, Rengo delayed delivering fuel to a gas station for about 45 minutes to deal with a plumbing emergency at his home. The station ran out of fuel and lost the business of a half dozen customers who had attempted unsuccessfully to fill up during the intervening period, Tunheim said.

“Whether Rengo knew the station was actually out of fuel, whether Rengo was directed to proceed immediately to the station or directed to get to the station as soon as possible, and the extent of damage that Lakehead suffered as a result of Rengo’s actions are all questions of fact that remain in dispute,” Tunheim wrote. “These facts are directed related to whether Rengo’s decision to delay delivery of his load constitutes gross misconduct. Therefore, the Court cannot determine as a matter of law, that Rengo was terminated for gross misconduct, thereby eliminated Lakehead’s obligation to offer continuation benefits.”

>The full text of the opinion in Rengo v. Lakehead Oil Co., D. Minn., No. 03-5478 (JRT/RLE), 4/19/05 can be found here .