Former Employee Awarded over $100,000 for COBRA Violation

May 5, 2006 ( - The US District Court for the Eastern District of Tennessee awarded an employee more than $100,000 after his employer defaulted on promises to cover his knee surgery and COBRA coverage.

The Employee Benefits Institute of America (EBIA) reports that the employee had knee surgery a few days after his employer laid him off, but he was assured by his employer that his health coverage would remain for the surgery and that the employer would pay for the first two months of COBRA coverage.

After the surgery, however, the employee learned that his health coverage had been dropped prior to surgery, according to EBIA. Though the employer had deducted premiums for health insurance from the employee’s pay, it had not forwarded the premiums to the insurance company.  Furthermore, the employer had made no arrangements for COBRA coverage.

The employee filed a lawsuit that was not responded to by the named defendants. The court entered judgment against the defendants, finding that the employer’s conduct was “at best incompetent and at worst fraudulent.”

The court awarded the employee’s medical expenses for the knee surgery, which totaled $12,999, and also granted the employee’s request of $16,909.50 in attorneys fees and court costs. The court said it hoped the award would act as a deterrant to other employers from not delivering on health coverage promised.  In addition, the court awarded the maximum statuatory penalty of $110 for 826 days, totalling $90,860, for failure to disclose to the employee of his rights under COBRA. 

The case is Shephard v. O’Quinn, US District Court LEXIS 24252 (E.D. Tenn. 2006).