Court Rules COBRA Notification Required When Employment is Terminated

In the case of Fama v. Design Assistance Corp., the court granted a summary judgment for Sarah Fama, a former employee of Design Assistance Corporation. She was awarded $10 per day in statutory damages for each day she did not receive a COBRA notice. The court also found that Design Assistance Corp. did not act in bad faith or with malicious intent in this mater.

Fama filed a lawsuit against her former employer because she never received notice of her right to continue her health care coverage after she was terminated from her position in September 2008. She spoke up when she did not receive the notice, and was later informed that due to a mistake, her health care coverage had not been canceled until January 2009. Her coverage was then retroactively reinstated to continue at no cost to Fama, until September 2009. At this time she was notified of her right to continue coverage under COBRA.

In April 2010, Fama filed a lawsuit against Design Assistance Corp., the plan administrator, and the plan, for failure to notify her of her right to continue her coverage. She sought Employee Retirement Income Security Act (ERISA) statutory penalties, reimbursement, and costs.

The case is Fama v. Design Assistance Corp., D.NJ., No. 1:10-cv-02057-NLH –KMW.