Eighth Circuit Holds Employer Not Liable for Civil Penalties for Failing to Timely Deliver COBRA Notices

A terminated employee sued his prior employer for failing to provide him with notice of his right to COBRA continuation coverage after his termination of employment.?á The COBRA law permits a court to hold a plan administrator personally liable to a plan participant in an amount of up to $110 per day of noncompliance with COBRA?ÇÖs notification requirements. Here, it was undisputed that the employer failed to provide the employee with the required COBRA notices at the employee?ÇÖs initial enrollment and after his termination; however, due to a clerical error, the employer continued to provide the employee with health insurance coverage for nearly two years after the employee?ÇÖs termination.?á Upon discovering the error, the employer retroactively canceled the employee?ÇÖs coverage, and the insurer sought to ?Ç£claw back?Ç¥ the amount of benefits it had paid for the employee.?á After the employee filed suit, the employer reversed course and retroactively reinstated the employee?ÇÖs coverage back to his termination date.?á Because of this remedial action, the U.S. Court of Appeals for the Eighth Circuit reasoned that the employee suffered no prejudice as a result of the employer?ÇÖs failure to provide him with COBRA notices because he continued to receive free, post-termination coverage, and thus the court refused to impose any penalty on the employer.?á This case is an important reminder to employers of the need to properly administer benefit terminations and to timely provide COBRA notices, both at initial enrollment and after a qualifying event. In re Interstate Bakeries Corp., No. 11-1595 (8th Cir. Jan. 25, 2013).