Qualified Beneficiary Sues Employer for Multiple Qualifying Event Notice Procedure Failure
A recent court case (Birkhead v. St. Anne’s-Belfield, Inc., 2005 WL 2100587, W.D. Va., April 18, 2005) shows how a lack of a cessation of dependent status notice procedures by the employer brought them to court. The employer interpreted the requirements of providing a multiple qualifying event notice incorrectly and the court found that the employer had not established proper notification procedures.
In this case, Janet Birkhead was an employee with St. Anne’s-Belfield, Inc. and had family coverage under the company’s group health plan. St. Anne’s was the Plan Sponsor and Plan Administrator. Ms. Birkhead retired in August 2002 and she elected COBRA coverage for herself and her family members including her son L. Douglas “Duffy” Birkhead.
On October 17th, 2002 Duffy Birkhead turned 25 and was no longer considered a dependent under the group health plan terms. This event was considered a multiple qualifying event and entitled Duffy up to 36 months of COBRA coverage from the date of the first event.
On November 15th, 2002 the insurer sent St. Anne’s-Belfield, Inc. a notice of the second qualifying event for Duffy. On or around November 20th, 2002 Duffy’s father, who himself was a COBRA qualified beneficiary, apparently contacted St. Anne’s and orally provided them with the notice that Duffy had turned 25 and was no longer considered a dependent under the terms of the group health plan.
St. Anne’s had 14 days to provide a COBRA election notice relative to this multiple qualifying event (of loss of dependent status) yet they never provided a COBRA election notice. Duffy Birkhead sued St. Anne’s for COBRA notice violations.
St. Anne’s argued that a written notice of the multiple qualifying event was not required because according to its interpretation of ERISA Section §606(a)(4)(B):
(B) in the case of a qualifying event described in paragraph (3) or (5) of section 603 where the covered employee notifies the administrator under paragraph (3), any qualified beneficiary with respect to such event, of such beneficiary's rights under this subsection.
In court St. Anne’s indicated, based on their interpretation of the above, that a Plan Administrator only has notice requirement responsibilities when “a covered employee” notifies the administrator of a cessation of dependent status, divorce or legal separation. Because Janet Birkhead, the covered employee in this case, at no time provided notice of the qualifying event directly to St. Anne’s, they argued that its COBRA coverage responsibilities were not triggered. St. Anne’s went on to argue that although the insurer and a qualified beneficiary (Duffy’s father) notified them of the qualifying event, neither of them were “a covered employee”.
The court found St. Anne’s argument less than compelling. The court stated that while §606(a)(4)(B) does in fact state “where the covered employee notifies the Administrator” it was not designed to be “so limiting”. The court went on to say that upon reading the entire text of §606, the reference to “paragraph 3” was a shorthand reference to the qualified beneficiary’s notice obligations describe earlier in the text which states “each covered employee or qualified beneficiary is responsible for notifying the administrator of the occurrence of any qualifying event”.
Because Duffy’s father notified St. Anne’s in a timely manner and was in fact was a qualified beneficiary, the court found that his notice would technically trigger St. Anne’s notice responsibilities. “Given the Court’s assumption that Janet Birkhead’s husband, a qualified beneficiary, provided notice to St. Anne’s, it would not be absurd to find that this notice was adequate, the court stated.
During the course of the proceedings, the court also found that St. Anne’s had not established its own notice procedures. This fact combined with the poor argument described resulted in denying St. Anne’s motion for a summary judgment.
COBRA Solutions - Staff
A recent court case (Birkhead v. St. Anne’s-Belfield, Inc., 2005 WL 2100587, W.D. Va., April 18, 2005) shows how a lack of a cessation of dependent status notice procedures by the employer brought them to court. The employer interpreted the requirements of providing a multiple qualifying event notice incorrectly and the court found that the employer had not established proper notification procedures.
In this case, Janet Birkhead was an employee with St. Anne’s-Belfield, Inc. and had family coverage under the company’s group health plan. St. Anne’s was the Plan Sponsor and Plan Administrator. Ms. Birkhead retired in August 2002 and she elected COBRA coverage for herself and her family members including her son L. Douglas “Duffy” Birkhead.
On October 17th, 2002 Duffy Birkhead turned 25 and was no longer considered a dependent under the group health plan terms. This event was considered a multiple qualifying event and entitled Duffy up to 36 months of COBRA coverage from the date of the first event.
On November 15th, 2002 the insurer sent St. Anne’s-Belfield, Inc. a notice of the second qualifying event for Duffy. On or around November 20th, 2002 Duffy’s father, who himself was a COBRA qualified beneficiary, apparently contacted St. Anne’s and orally provided them with the notice that Duffy had turned 25 and was no longer considered a dependent under the terms of the group health plan.
St. Anne’s had 14 days to provide a COBRA election notice relative to this multiple qualifying event (of loss of dependent status) yet they never provided a COBRA election notice. Duffy Birkhead sued St. Anne’s for COBRA notice violations.
St. Anne’s argued that a written notice of the multiple qualifying event was not required because according to its interpretation of ERISA Section §606(a)(4)(B):
(B) in the case of a qualifying event described in paragraph (3) or (5) of section 603 where the covered employee notifies the administrator under paragraph (3), any qualified beneficiary with respect to such event, of such beneficiary's rights under this subsection.
In court St. Anne’s indicated, based on their interpretation of the above, that a Plan Administrator only has notice requirement responsibilities when “a covered employee” notifies the administrator of a cessation of dependent status, divorce or legal separation. Because Janet Birkhead, the covered employee in this case, at no time provided notice of the qualifying event directly to St. Anne’s, they argued that its COBRA coverage responsibilities were not triggered. St. Anne’s went on to argue that although the insurer and a qualified beneficiary (Duffy’s father) notified them of the qualifying event, neither of them were “a covered employee”.
The court found St. Anne’s argument less than compelling. The court stated that while §606(a)(4)(B) does in fact state “where the covered employee notifies the Administrator” it was not designed to be “so limiting”. The court went on to say that upon reading the entire text of §606, the reference to “paragraph 3” was a shorthand reference to the qualified beneficiary’s notice obligations describe earlier in the text which states “each covered employee or qualified beneficiary is responsible for notifying the administrator of the occurrence of any qualifying event”.
Because Duffy’s father notified St. Anne’s in a timely manner and was in fact was a qualified beneficiary, the court found that his notice would technically trigger St. Anne’s notice responsibilities. “Given the Court’s assumption that Janet Birkhead’s husband, a qualified beneficiary, provided notice to St. Anne’s, it would not be absurd to find that this notice was adequate, the court stated.
During the course of the proceedings, the court also found that St. Anne’s had not established its own notice procedures. This fact combined with the poor argument described resulted in denying St. Anne’s motion for a summary judgment.
COBRA Solutions - Staff
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