Participant Loses COBRA Benefits Claim

September 1, 2006 ( - A federal judge in Louisiana has rejected claims that a health plan participant did not receive proper notice of a plan amendment or his rights to continued health coverage.

According to an EBIA news report, the judge ruled that the plaintiff was presumed to have received both notice of his continued health coverage under the Consolidated Omnibus Budget Reconciliation Act ( COBRA ) and a plan amendment governing coverage for disabled participants.

The judge applied the “mailbox rule,” which indicates that a document is presumed to have been received if evidence can be presented to show it was properly sent.

The judge said that a presumption of receipt is created by evidence of a mailing sent pursuant to office procedures followed in the regular course of business. According to the news report, the judge was persuaded by testimony from the company’s benefits manager, who described the company’s mailing procedures, confirmed that the procedures were followed with respect to the plan amendment notice, and stated that he and others had received the notice.

Not only that, according to the judge, but the mailing list used to address the envelopes included the participant’s then-current address.

In the face of that contrary evidence, the court concluded that the participant could not overcome the mailbox presumption with rebuttal testimony that three other participants could not recall receiving the company’s mailings.

This participant was fired after he did not return to work following more than six months of disability leave that resulted from a non-work-related injury. He claimed he did not receive notice of a plan amendment, which provided that disabled terminated employees were no longer covered under the company’s health plan until age 65 but would instead be offered COBRA coverage at active-employee rates.

The company claimed that it sent the participant both a notice of the change and an updated SPD via first-class mail within the timeframes required by ERISA.

The case is Custer v. Murphy Oil USA, Inc., E.D. La. 2006.