Compliance May 19, 2006

Termination for Gross Misconduct not COBRA Qualifying Event

May 19, 2006 (PLANSPONSOR.com) - The US District Court for the District of Puerto Rico ruled that an employer did not violate COBRA notice requirements when it failed to present COBRA rights information to an employee fired for gross misconduct.
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Magdalena Pomales worked as a sales consultant for Celulares Telefonica, Inc. (CTI), according to an appellate court opinion. It was discovered that Pomales had falsified some reports of customer information and bypassed CTI’s system of checking customer credit reports and securing a deposit for sales. She was fired.

Pomales sued CTI for sexual harassment, retaliation, and for violation of her COBRA rights.   The district court granted summary judgment in favor of CTI on all claims, saying the employer did not violate COBRA because termination for gross misconduct was not a COBRA qualifying event.

EBIA reports that the district court pointed out that COBRA does not provide a definition of gross misconduct.   In addition, if found that federal and state case law provided little help in defining gross misconduct.

The court decided that the employer only had to prove that the employee engaged in job-related misconduct and was fired for that misconduct, according to EBIA.   CTI did so in this case, the court concluded.

The case is Pomales v. Celulares Telefonica, Inc., Civ. No. 02-1256 (Dist. Puerto Rico 2005).

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