Questions of Fact Send COBRA Case to Trial

September 3, 2004 ( - Questions surrounding whether or not an employee received proper COBRA notification demands a former worker's case against his former employer and the health plan's third-party administrator (TPA) go to trial.

In dismissing the employer and TPA’s move for summary judgment, a judge in the US District Court of the Northern District of California found the claims against the employer could not be resolved without a trial since there were questions of fact as to whether or not the employee was provided with proper COBRA notice.   Further, the outcome of the employee’s claim that his coverage had been wrongfully terminated depended on whether a proper COBRA election notice had been delivered, according to an EBIA report.  

Additionally, the court dismissed the case against the TPA, ruling the TPA was not an Employee Retirement Income Security Act (ERISA) fiduciary in this case.

Case Details

In the case, the employee claimed that he was not notified of his COBRA rights at the time of his layoff.   Several months after he was laid he, the ex-employee contacted the TPA to ask about COBRA and was then allowed to elect coverage.   However, he also received an invoice for the period that had elapsed since his layoff.   The employee paid the amount, but under protest.

The next month the employee did not make the premium payment until after the end of the grace period and subsequently, his coverage was terminated.   Following the COBRA termination, the employee filed suit for failure to provide notice of his COBRA rights and for wrongful termination of his health coverage.


The employer argued that the TPA had sent a timely COBRA election notice to the employee’s last-known address, yet the employee contended that he had given the employer a more recent address.   Thus, the former workers contended he should not have been required to pay retroactive premiums and that his payment should have been applied to cover premiums for future months, with the result that his coverage should not have been terminated. The court noted that the employer had not established that it could require retroactive premiums if it had failed to notify the employee of his COBRA rights, according to the EBIA report.

However, if the employer had provided the employee with a proper COBRA election notice, then the employer would not have been obligated to allow the employee to join the plan later, and its decisions to require retroactive premiums and to terminate his coverage for nonpayment of premiums would have been appropriate, the court said.   Thus, proper resolution of the case necessitates the need for a trial

The case is Chaganti v. Ceridian Benefits , 2004 U.S. Dist. LEXIS 17075.