Kentucky Employer Hit with $2K COBRA Penalty

February 12, 2009 ( - A federal judge has hit a Kentucky firm with a $2,000 penalty and attorneys' fees for being late in notifying a former employee about her rights to continuing health care coverage.

U.S. Senior District Judge Joseph M. Hood of the U.S. District Court for the Eastern District of Kentucky ruled that Commerce Lexington Inc. had acted in bad faith when it delayed notifying former employee Sharon Fiveash of her ability under the Consolidated Omnibus Budget Reconciliation Act (COBRA) to buy health care coverage. Hood assessed the statutory penalty of $100 per day from January 11 to January 31.

According to the ruling, the dispute centered around the COBRA notices to Fiveash after leaving the company in November 2007. According to Hood a letter advised Fiveash of her continuation rights and how to elect those rights, and gave her an April 11 deadline.

Hood ruled that Commerce was responsible for notifying Fiveash of her continuation rights within 44 days of her termination, which was January 11, 2008, and that the proper notice was not furnished until January 31.

The case is Fiveash v. Commerce Lexington Inc., E.D. Ky., No. 5:08-CV-28-JMH.