Employer's Attention to COBRA Notice Regulations Pays off in Court

by Connie L. Gilchrest

Despite the fact that the Department of Labor (DOL) has yet to release COBRA notice regulations, the federal expectations regarding the Initial Notice are pretty clear.

Northwest Airlines (NWA) paid close attention to those requirements and as a result, was able to successfully defend itself against a COBRA lawsuit.


Carol and Jeffrey Johnson married in January 1995. Jeffrey is an employee of NWA at San Francisco International Airport. The Johnsons enrolled in the NWA group medical plan on March 15, 1995.

At the time of enrollment, NWA sent a COBRA Initial Notice to the Johnsons via U.S. Postal Service first class mail. There was no evidence that the Initial Notice was returned to NWA.

The Initial Notice informed the Johnsons of their rights to continue medical coverage after the occurrence of any number of Qualifying Events. One COBRA Qualifying Event is legal separation, which comes with the responsibility of the employee or other Qualified Beneficiary to notify the employer or plan administrator of the legal separation within 60 days.

"When an employee is in a better position to know of the occurrence of a qualifying event, the employee bears the responsibility of notifying the administrator of the Plan," the court noted.

The Johnsons stopped living together in May or June of 1995, and shortly after Carol filed for legal separation. The legal separation was granted on May 6, 1997.

In December 1997, NWA received Jeffrey's required Open Enrollment Form for 1998's coverage. He instructed NWA to remove Carol from the plan. After learning her health coverage had been cancelled, she informed NWA of the legal separation. On April 3, 2000, Carol filed suit against NWA seeking damages for wrongfully terminating her medical and dental coverage in violation of COBRA.


The court concluded NWA complied with COBRA's Initial Notice requirements. By sending the Initial Notice to the Johnsons' last known address, the NWA benefits department made a good faith effort to reasonably comply with the statute. The court added that the notice clearly outlined the Johnsons' COBRA rights and responsibilities. COBRA law states "each covered employee or qualified beneficiary is responsible for notifying the plan administrator of the occurrence of a qualifying event that is either a dependent child's ceasing to be a dependent child under the generally applicable requirements of the plan or a divorce or legal separation of a covered employee." The group health plan is not required to offer the Qualified Beneficiary an opportunity to elect COBRA if notice is not provided to the plan administrator within 60 days after the later of (1) the date of the Qualifying Event; or (2) the date the Qualified Beneficiary would lose coverage due to the Qualifying Event.

The Court confirmed that COBRA did not need to be offered to Carol.

Carol argued she never received the Initial Notice and did not know of either her obligation to notify NWA of her legal separation or her right to elect COBRA.

The court, however, recognized NWA met all requirements under COBRA and granted the airline its request for dismissal.

This decision is supported by the DOL rules concerning COBRA notices which call for a single Initial Notice to all beneficiaries at the same last known address. The DOL also states that when the spouse's last known address is the same as the covered employee's, the DOL will consider a single mailing address to both the employee and spouse to be good faith compliance.

This law clearly demonstrates the importance of establishing COBRA notice procedures that comply with the federal law. COBRA notices are frequently thought of as documents that only protect the rights of those covered under an employer's group health plan. But they also outline the responsibilities of those individuals and the rights of the employer in the event those responsibilities aren't met.

The judge followed the letter of the law, resulting in a favorable outcome for the employer. NWA adhered to the same procedures COBRA Compliance Systems recommends to its clients.

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